Attaining Competitive Advantage Through Channel Design

1
Attaining Competitive Advantage Through Channel
Design
2
Cycle of Competitive Rationality
3
The Nature of Competitive Advantage

• Superior Resources
• Superior Skills

• Differences must be perceived in the marketplace.
• Leave a footprint in the marketplace.

4
Marketing Channels as Organizational Teams

• Conventional Channel Teams
• Loosely aligned
• Bridge gap between producer consumer
• Agreement
• Goals
• Purpose
• Core competencies
• Rewards and punishments
• Conflict resolution system
• Behavioral norms.

5
Marketing ChannelsIssues and Answers

• What is channel design?
• Decisions associated with forming new or altering
  existing channels.
• Why are design decisions critical?
• They directly influence all other marketing
  decisions.
• Key external resource for many manufacturers.
• How do marketing functions factor into design
  decisions?
• Who performs what channel function more
  efficiently and effectively.
• When is it time for channel redesign?
• When a new firm is established, new product
  introduced, new market targeted, external
  environment change, or when there is a change or
  performance failure of channel members.

6
Five Marketing Functions in an Automobile Channel
7
Channel Design Decisions

• Compromise
• What is ideal
• What is adequate
• What is obtainable

• Respond to SWOT
• Strength
• Weakness
• Opportunity
• Threat

8
Channel Design Options

• Three Dimensions of Variation
• Number of levels in the channel.
• Number of intermediaries at each level.
• Types of intermediaries used at each level.

9
Number of Intermediaries at Each Level
Not all available intermediaries are used
Selective Distribution
10
Types of Intermediaries

• Manufacturers sales force
• Manufacturers representatives
• Industrial
• distributors

11
Consumer Channel Design
Number of Levels
Zero-level
12
Industrial Channel Design
Number of Levels
Zero-level
13
Evaluating Channel Design Alternatives

• Expected sales and costs
• Control and resources
• Flexibility

14
Break-even Cost analysis Company Sales Force and
a Manufacturers Sales Agency
15
Issues of Control vs. Resources in Channel Design
16
Selecting the Best Channel Design

• Analyzing Desired Channel Output Utilities
• Analyzing Channel Objectives and Product
  Characteristics
• Analyzing Market Behaviors and Segments

17
Analyzing Desired Channel Output Utilities

• Convenience (time/spatial) utility
• Lot size utility
• Selection Utility
• Service utility

18
Analyzing Channel Objectives and Product
Characteristics

• Unit value
• Standardization
• Bulkiness
• Complexity
• Stage of Product Life Cycle

19
Changes in Life Cycle and Channels The Case of
Designer Apparel
Introductory Stage
Declining/ Death
Boutique (e.g., service utility)
Offprice Outlets (e.g., convenience utility)
Growth Stage
Mature Stage
Merchandisers (e.g., lot size utility)
Better Department Stores (e.g., selection utility)
20
Growth of Multichannel Marketing Systems

• When a firm uses two or more marketing channels
  to reach one or more marketing segments.
• Dual distribution