Marketing Channels

1
Marketing Channels Market Structure

• Week 7

2
Objectives

• Implications of the Internet and market structure
• Customer-supplier relationship
• Managing channel conflicts
• Marketplace models
• Value chain activities and the Internet

3
Implications of the Internet Market Structure

• Relationships between businesses in the marketing
  microenvironment need to be considered when
  assessing the impact of the Internet.
• These relationships include both those with
  channel partners (wholesalers, retailers) and
  suppliers.
• Business-to-business transactions increase
  usually over extranets

4
Channel Structures
Selling organization
Other partners
Suppliers
Channel partners
Consumer customers
Business customers
Business-to-business interactions
Business-to-consumer interactions
5
Some Definitions

• Disintermediation The removal of distributors
  or brokers that formerly linked a company to the
  customers
• Reintermediation The creation of new
  intermediaries between customers and suppliers
  providing services such as supplier search and
  product evaluation
• Virtual marketplace an intermediary site that
  brings together buyer and sellers to trade
• Virtual organization and virtualization an
  organization that uses information and
  communication technology to allow it to operate
  without clearly defined physical boundaries
  between different functions

6
The New Intermediaries
Producer
Wholesaler
Consumer
Retailer
Producer
Wholesaler
Consumer
Retailer
Producer
Wholesaler
Consumer
Retailer
7
Cybermediaries

• Directories (Yahoo!, Excite)
• Search engines (Alta Vista, Infoseek)
• Malls (BarclaySquare, Buckingham Gate)
• Virtual resellers (Amazon, CDNow)
• Financial intermediaries (Digicash)
• Forums, fan clubs and user groups (virtual
  communities)
• Evaluators (screentrade)

8
Virtual Organizations Virtualization

• Processes transcend the boundaries of a single
  form and rare are not controlled by a single
  organizational hierarchy
• Production processes are flexible, with different
  parties involved at different times
• Parties involved in the production of a single
  product are often geographically dispersed
• Given this dispersion, co-ordination is heavily
  dependent on telecommunications and data networks

9
Customer Supplier Relationships

• View customers as opportunities for ongoing
  transactions
• Develop close understanding of customer
  requirements
• Emphasis upon service and building up trust and
  commitment that would lead to win win outcomes
  for both supplier and customer
• Development and cultivation of longer term,
  profitable and mutually beneficial relationships
  between organization and define customer group
• Emergence of inter- and intra-organizational
  coordination
• Maximize customer satisfaction, customer value
  and focus activities on customer retention rather
  than customer acquisition

10
Managing Channel Conflicts

• No Internet sales
• Internet sales by resellers only
• Internet sales by manufacturer only
• Internet sales by all

11
Different Types of Marketplace

• Seller controlled
• Vendor sites, I.e. home site of company with
  e-commerce facilities
• Intermediaries controlled by sellers
• Buyer controlled
• Intermediaries controlled by buyers
• Web site procurement posting, e.g. Zygonet,
  Respond.com
• Purchasing agents and aggregators, e.g. Powerbuy,
  Letsbuyit.com
• Neutral
• Intermediaries not controlled by buyers industry
  (industry.net
• Product specific search engines
  (www.computer.com)
• Information marts
• Business malls, www.Barclaysquare.com
• Auction space, www.ubid.com

12
The Need for Several Representation

• A corporate web site for investor and partner
  information
• The main open consumer web site with
  transactional e-commerce facilities
• Microsites or extranets within the main sites
  with restricted access to key customers
• Versions of the corporate or main site in
  overseas markets
• An intranet web site for internal marketing
  communications
• Microsites within partner sites such as those of
  intermediaries and distributors

13
Different Types of Commercial Arrangement
14
The Seller Marketplace
High
Product differentiation
Low
Low
High
Brand awareness
15
The Buyer Marketplace
Large
Buyer size
Small
Few
Many
Number of suppliers
16
The Internet Value Chain Activities

• Primary activities
• Inbound logistics
• Operations
• Outbound logistics
• Marketing and sales
• Service
• Secondary activities
• Corporate administration and infrastructure
• Human resource management
• Technology development
• Procurement

17
Developments in Supply Chain Management

• 1960s/1970s Physical distribution management
  (PDM)
• 1970s/1980s Logistics management (Just in Time
  JIT)
• 1980s/1990s Supply chain management
• 1990s/2000s Technological interface management
  (TIM)

18
Intranets

• Advantages of a marketing Intranet
• Reduced product life cycles
• Reduced costs
• Better customer service
• Distribution of information
• Information contents
• Staff phone directories
• Staff procedures or quality manuals
• Information for agents such as product
  specifications, discounted prices, competitor
  information, factory schedules
• Staff bulletin or newsletter
• Training courses