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The Environment of Marketing Channels

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The Environment of Marketing Channels Marketing Channel and the Environment Marketing channels develop and operate in a complex environment that is continually changing. – PowerPoint PPT presentation

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Title: The Environment of Marketing Channels


1
The Environment of Marketing Channels
2
Marketing Channel and the Environment
  • Marketing channels develop and operate in a
    complex environment that is continually changing.
  • Channel managers must therefore have an
    understanding of the environment and how it can
    influence channel management in order to plan
    effective marketing channel strategies for
    meeting these changes successfully.

3
Major Environment
  • Economic environment
  • Competitive environment
  • Sociocultural environment
  • Technological environment
  • Legal environment

4
Impact of Environment in a Marketing Channel
Context
  • Environment
  • Economic
  • Sociocultural
  • Competitive
  • Legal
  • Technological

Producers and manufacturers
Locus of channel management
Member participants
Intermediaries
Target markets
Nonmember participants
Facilitating agencies
Channel managers analysis of environmental
impact must include all channel participants
5
1. Economic Environment
  • The most obvious and pervasive category of
    variables affecting all members and participants
    in the channel.

6
1. Economic Environment
  • Major economic phenomena
  • Recession 2 consecutive quarters of decline in
    the Gross Domestic Product (GDP), any period in
    which the GDP is stagnant or increasing very
    slowly is often referred to as recessionary or
    at least and economic slowdown.

7
1. Economic Environment
  • Major economic phenomena
  • Inflation Inflation is the rate of increase in
    prices for goods and services.  When the price
    level rises, each unit of currency buys fewer
    goods and services.
  • There are a number of different measures of
    inflation in use. The most frequently quoted and
    most significant ones are the Consumer Prices
    Index (CPI) and the Retail Prices Index (RPI).

www.bbc.com/news/business-12196322
8
1. Economic Environment
  • Major economic phenomena
  • Deflation When the overall price level decreases
    so that inflation rate becomes negative, it is
    called deflation. It is the opposite of the
    often-encountered inflation.

http//economictimes.indiatimes.com/definition/def
lation
9
1. Economic Environment
  • Major economic phenomena
  • Other economic issues
  • Trade deficit
  • National debt/ budget deficit
  • High interest rate

10
2. Competitive Environment
  • Types of competition
  • Horizontal competition
  • Intertype competition
  • Vertical competition
  • Channel system competition

11
1) Horizontal (Intratype) Competition
  • Competition between firms of the same type.

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12
2) Intertype Competition
  • Competition between different types of firms at
    the same channel level.

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13
3) Vertical Competition
  • Competition between channel members at different
    levels in the channel.

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14
4) Channel System Competition
  • Complete channels competing with other complete
    channels.

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15
3. Sociocultural Environment
  • Age patterns of population
  • Changing ethnic mix
  • Educational trends
  • Family or household structure
  • Changing role of women

16
3. Sociocultural Environment
Population Age Patterns Ethnic Mix Educational Trends Family or Household Structure U.S. pop. Becoming both younger older of minority-owned businesses Levels people more demanding Smaller more varied
Role of Women changing shopping needs
17
4. Technological Environment
Scanners Computerized inventory management
Portable computers
Help retailers wholesalers closely monitor
success or failure of products they handle
18
4. Technological Environment
  • Electronic data interchange

EDI Electronic Data Interchange
Enhanced Distribution Efficiency
Links together channel information
systems Provides real-time responses Enhanced
by Internet
19
5. Legal Environment
The set of laws that impact marketing channels

Continually evolving Affected by changing
values, norms, politics, precedents
Knowledge of basics helps channel manager avoid
serious costly legal problems
20
5. Legal Environment
  • Legal issues in channel management
  • Dual Distribution, or multi-channel
    distribution
  • Producer or manufacturer uses 2 or more different
    channel structures for distributing the same
    product
  • Exclusive Dealing
  • Supplier requires its channel members to sell
    only its products or to refrain from selling
    directly to competitive suppliers
  • Full-Line Forcing
  • Supplier requires channel members to carry a
    full-line of its products in order to sell any
    particular products in suppliers line

21
5. Legal Environment
  • Legal issues in channel management
  • Price Discrimination
  • Supplier sells at different prices to the same
    class of channel members
  • Price Maintenance
  • Supplier dictates prices charged by channel
    members to their customers
  • Refusal to Deal
  • Supplier has right to refuse to deal with
    whomever they want as channel members

22
5. Legal Environment
  • Legal issues in channel management
  • Resale Restrictions
  • Manufacturer attempts to stipulate to whom and in
    what geographical market channel members may
    resell the manufacturers products
  • Tying Agreements
  • Supplier sells a product to a channel member on
    condition that the channel member also purchase
    another product
  • Vertical Integration
  • Firm owns and operates organizations at other
    levels of the distribution channel
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