Created for Saxion Enschede’s third Marketing exam; “Marketing Environment 2”. Content taken primarily from the slides (available here: https://goo.gl/NQuLZv), & the Principles of Marketing book. Contain the following chapters in full: 12, 13, 14, 15, 16 & 17
Created for Saxion Enschede’s third
Marketing exam; “Marketing Environment
2”. Content taken primarily from the
slides (available here:
https://goo.gl/NQuLZv), & the Principles
of Marketing book.
,Table of Contents
Chapter 12: Marketing Channels: Delivering Customer Value ......................................................................................... 1
Supply Chains and the Value Delivery Network ............................................................................................................ 1
The Nature and Importance of Marketing Channels .................................................................................................... 1
How Channel Members add Value ........................................................................................................................... 1
Number of Channel Levels ........................................................................................................................................ 2
Channel Behaviour and Organization ........................................................................................................................... 2
Channel Behaviour .................................................................................................................................................... 2
Vertical Marketing Systems ...................................................................................................................................... 2
Horizontal Marketing Systems .................................................................................................................................. 3
Multichannel Distribution Systems ........................................................................................................................... 3
Changing Channel Organization ................................................................................................................................ 3
Channel Design Decisions ............................................................................................................................................. 3
Analysing Consumer Needs ...................................................................................................................................... 3
Setting Channel Objectives ....................................................................................................................................... 3
Identifying Major Alternatives .................................................................................................................................. 4
Evaluating the Major Alternatives ............................................................................................................................ 4
Designing International Distribution Channels ......................................................................................................... 4
Channel Management Decisions .................................................................................................................................. 4
Selecting Channel Members ..................................................................................................................................... 4
Managing and Motivating Channel Members .......................................................................................................... 2
Evaluating Channel Members ................................................................................................................................... 2
Public Policy and Distribution Decisions ....................................................................................................................... 2
Marketing Logistics and Supply Chain Management .................................................................................................... 2
Nature and Importance of Marketing Logistics ........................................................................................................ 2
Goals of the Logistics System .................................................................................................................................... 3
Major Logistics Functions .......................................................................................................................................... 3
Integrated Logistics Management ............................................................................................................................ 5
Chapter 13: Retailing and wholesaling ............................................................................................................................. 5
Retailing ........................................................................................................................................................................ 5
Types of Retailers ...................................................................................................................................................... 6
Retailer Marketing Decisions ............................................................................................................................ 7
Retailing Trends and Development ........................................................................................................................... 9
Wholesaling................................................................................................................................................................. 10
Types of Wholesalers .............................................................................................................................................. 10
Wholesaler Marketing Decision .............................................................................................................................. 12
Marketing Mix Decisions ......................................................................................................................................... 12
Trends in Wholesaling ............................................................................................................................................. 12
Chapter 14: Communicating Customer Value: Integrated Marketing Communications Strategy ................................. 12
The Promotion Mix ..................................................................................................................................................... 12
Integrated Marketing Communications ...................................................................................................................... 13
The New Marketing Communication Model........................................................................................................... 13
The Need for Integrated Marketing Communications ............................................................................................ 13
A View of the Communication Process ....................................................................................................................... 13
Steps in Developing Effective Marketing Communication ......................................................................................... 14
Identifying the Target Audience ............................................................................................................................. 14
Determining the Communication Objectives ......................................................................................................... 14
Designing a Messages ............................................................................................................................................. 14
Choosing Media ...................................................................................................................................................... 15
Selecting the Message Source ................................................................................................................................ 15
Collecting Feedback ................................................................................................................................................ 15
Setting the Total Promotion Budget and Mix ............................................................................................................. 15
Setting the Total Promotion Budget ....................................................................................................................... 15
Shaping the Overall Promotion Mix ........................................................................................................................ 16
Integrating the Promotion Mix ............................................................................................................................... 16
Socially Responsible Marketing Communication ........................................................................................................ 16
, Advertising and Sales Promotion ............................................................................................................................ 16
Personal Selling ....................................................................................................................................................... 16
Chapter 15: Advertising and Public Relations ................................................................................................................. 16
Advertising .................................................................................................................................................................. 16
Setting Advertising Objectives ................................................................................................................................ 17
Setting the Advertising Budget ............................................................................................................................... 17
Developing Advertising Strategy ............................................................................................................................. 17
Evaluating Advertising Effectiveness and the Return on Advertising Investment .................................................. 20
Other Advertising Considerations ........................................................................................................................... 20
Public Relations ........................................................................................................................................................... 20
The Role and Impact of PR ...................................................................................................................................... 20
Major PR Tools ........................................................................................................................................................ 21
Chapter 16: Personal Selling and Sales Promotion ......................................................................................................... 21
Personal Selling ........................................................................................................................................................... 21
The Nature of Personal Selling: ............................................................................................................................... 21
Managing the Sales Force ........................................................................................................................................... 22
Designing the Sales Force Strategy and Structure .................................................................................................. 22
Recruiting and Selecting Salespeople ..................................................................................................................... 23
Compensating Salespeople ..................................................................................................................................... 23
Supervising and Motivating Salespeople ................................................................................................................ 23
The Personal Selling Process ....................................................................................................................................... 24
Steps in the Selling Process ..................................................................................................................................... 24
Personal Selling and Managing Customer Relationships ........................................................................................ 25
Sales Promotion .......................................................................................................................................................... 25
The Rapid Growth of Sales Promotion .................................................................................................................... 25
Sales Promotion Objectives .................................................................................................................................... 25
Major Sales Promotion Tools .................................................................................................................................. 26
Developing the Sales Promotion Programme ......................................................................................................... 27
Chapter 17: Direct and Online Marketing: Building Direct Customer Relationships ...................................................... 27
The New Direct-Marketing Model .............................................................................................................................. 27
Growth and Benefits of Direct Marketing................................................................................................................... 27
Benefits to Buyers ................................................................................................................................................... 27
Benefits to Sellers ................................................................................................................................................... 27
Customer Databases and Direct Marketing ................................................................................................................ 27
Forms of Direct Marketing .......................................................................................................................................... 27
Direct-Mail Marketing ............................................................................................................................................. 27
Catalogue Marketing ............................................................................................................................................... 27
Telephone Marketing .............................................................................................................................................. 27
Direct-Response Television Marketing ................................................................................................................... 28
Kiosk Marketing ...................................................................................................................................................... 28
New Digital Direct-Marketing Technologies ........................................................................................................... 28
Online Marketing ........................................................................................................................................................ 28
Marketing and the Internet .................................................................................................................................... 28
Online Marketing Domains ..................................................................................................................................... 28
Establishing an Online Marketing Presence ............................................................................................................ 28
Creating a Website .................................................................................................................................................. 29
Public Policy Issues in Direct Marketing...................................................................................................................... 29
Irritation, Unfairness, Deception and Fraud ........................................................................................................... 29
Invasion of Privacy .................................................................................................................................................. 29
A Need for Action .................................................................................................................................................... 29
,Chapter 12: Marketing Channels: Delivering Customer Value
Supply Chains and the Value Delivery Network
Upstream from the company: is the set of firms that supply the raw material / components / parts / information /
finances / expertise needed to create a product or a service. This represents the supply chain. while often taking a “make-
and-sell” view of the business, suggesting that raw material, productive inputs and factory capacity should serve as the
starting point for market planning, the “demand chain” is more appropriate as it suggests a “sense-and-respond” view
of the market. (With the goal of creating customer value).
With the rise of the internet, today’s companies are engaged in building and managing a complex, continuously
evolving value delivery network
Downstream from the company: represents all the different distributors a product have to go through before reaching
its final customer, from the origin to the client. This represents the distribution channel.
The Nature and Importance of Marketing Channels
Value Delivery Network: A network composed of the company, suppliers, distributors and, ultimately, customers who
‘partner’ with each other to improve the performance of the entire system in delivering customer value.
Marketing Channel (Distribution Channel): A set of interdependent organisations that help make a product or service
available for use or consumption by the consumer or business user.
How Channel Members add Value
Producers use intermediaries because of their contacts, experience, specialisation and scale of operation;
rising efficiency in making goods available to target markets.
Direct marketing: no intermediaries/intermediary layers. Opposing: Indirect marketing: Channel containing
one or more intermediary levels.
Members of the marketing channel perform many key functions. Some help to complete transactions:
- Information: gathering and distributing marketing research and intelligence information about actors and
forces in the marketing environment needed for planning and aiding exchange.
- Promotion: Developing and spreading persuasive communications about an offer
- Contact: Finding and communicating with prospective buyers
- Matching: Shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing,
grading, assembling and packaging
- Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or
possession can be transferred.
Others help fulfil the completed transactions:
- Physical Distribution: Transporting and storing goods
- Financing: Acquiring and using funds to cover the costs of the channel work
- Risk Taking: Assuming the risks of carrying out the channel work
The question is: Who will fulfil these functions
1
, Number of Channel Levels
Channel level: A layer of intermediaries that performs some work in bringing the product and its ownership
closer to the final buyer
Physical flow of products
Flow of ownership
Payment flow
Information flow
Promotion flow
Channel Behaviour and Organization
Channel Behaviour
Channel conflict: disagreement on who should do what and for what rewards (Over foals, roles and rewards)
Horizontal Conflict: occurs among firms at the same level of the channel. (Two dealers conflicting over price)
Vertical Conflict: between different levels of the same channel. Some conflict in the channel takes the form of
healthy competition. Preventing them from becoming passive & non-innovative.
Vertical Marketing Systems
A firm/agency or mechanism that provides leadership & has power to assign roles and
manage conflict will help the channel perform. Conventional Distribution channels
often lack such leadership and power, which results in damaging conflict and poor
performance.
Conventional distribution channel: a channel consisting of one or more
independent producer, wholesalers and retailers, each a separate business seeking to
maximise its own profits, even at the expense of profits for the system as a whole.
Vertical marketing systems provide channel leadership. It consists of producers,
wholesalers and retailers acting as a unified system. One channel member owns the
others, has contracts with them and wields so much power that they must all
cooperate. The VMS can be dominated by the producer, the wholesaler or the retailer.
There are three major types of VMS (Vertical Marketing Systems):
1. Corporate VMS: A vertical marketing system that combines successive
stages of production and distribution under single ownership – channel leadership is established through
common ownership
2. Contractual VMS: A vertical marketing system in which independent firms at different levels of
production and distribution join together through contracts
Franchise Organisation: A contractual vertical marketing system, called a franchisor, links several stages In
the production-distribution process. There are three types of franchises:
Manufacturer-sponsored retailer franchise system: network of independent franchised dealers
Manufacturer-sponsored wholesaler franchise system: coca-cola’s licenses bottlers
(wholesalers) in various markets who buy coca-cola syrup concentrate and then bottle and sell
the finished product to retailers in local market.
Service-firm-sponsored retailer franchise system: e.g. Burger King
3. Administered VMS: A vertical marketing system that coordinates successive stages of production and
distribution through the size and power of one of the parties.
2
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