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ld’s now places “express” versions of their stores in many WalMarts. Figure : Multichannel Distribution System ? Multichannel distribution system: – Occurs when a single firm sets up two or more marketing channels to reach one or more customer segments. – Also called hybrid marketing channel system. – Offers many advantages. Channel Behavior and Organization Marketing in Action Multichannel distribution systems allow firms to expand sales and market coverage while tailoring products to diverse needs of market segments. However, the decision to go multichannel often creates conflict. John Deere dealers plained loudly when Lowe’s began selling select products. ? Changing channel anization: – Disintermediation occurs when product and service producers cut out traditional intermediaries or displace resellers with radical new types of intermediaries. ?Youtube video – Futurist David Houle on disintermediation. Channel Behavior and Organization ? Changing channel anization: – Disintermediation presents both problems and opportunities for both producers and resellers. ?Resellers and intermediaries must innovate to survive. ?Producers must seek additional direct channels to remain petitive, though channel conflict often results. Channel Behavior and Organization Marketing in Action Netflix is leading the industry in how movies and entertainment content will be distributed. Users can now stream video over the inter. Channel Design Decisions Designing effective marketing channels by analyzing consumer needs, setting channel objectives, identifying major alternatives, and evaluating them. Firms often struggle between what is ideal and what is practical. Channel Design Decisions ? Analyzing consumer needs: – Do consumers want to buy from nearby locations or are they willing to travel? – Do they want to buyin person, by phone, or online? – Do they value breadth of assortment or do they prefer specialization? – Do consumers want many addon services? ? Firm must balance needs against costs and consumer price preferences. Channel Design Decisions ? Setting channel objectives: – Objectives are stated in terms of targeted levels of customer service. ? Channel objectives are influenced by: – Cost of customerservice requirements. – Nature of the pany. – The firm’s products. – Marketing intermediaries. – Competitors. – Environment. Channel Design Decisions ? Identifying major alternatives: – Types of intermediaries: ?Retailers, “valueadded” retailers, independent distributors, dealers, etc. – Number of marketing intermediaries: ?Intensive, selective, or exclusive distribution. – Responsibilities of channel members. ?Price policies, conditions of sale, territories and services to be performed. Marketing in Action Rolex sells its watches exclusively through only a handful of authorized dealers in any given market. Such limited distribution enhances the brand’s image and generates stronger retailer support. ? Evaluating the major alternatives involves paring each alternative to: – Economic criteria: ? A pany pares the likely sales, costs, and profitability of different channel alternatives. – Control issues: ? How and to whom should control be given? – Adaptive criteria: ? Consideration of longterm channel mitme