Chapter 15: Designing and Managing Integrated Marketing Channels
Well integrated marketing channels can be fruitful in delivering more value to customers. Companies are focusing on the whole supply chain from the raw material purchases to producing goods and services and delivering it to final customers. Moreover, marketers are paying more attention towards designing and managing upgraded and evolutionary marketing networks in order to create and provide customer value.
Marketing channels refer to the intermediaries that are involved in making the goods and services available for use or consumption. These organizations are connected in a network and are interdependent. Hence, a company needs to carefully design and manage its channels to ensure the delivery of products to its customers. The decision regarding these distribution channels are crucial as they directly influence other marketing decisions. Therefore, they must be in accordance to other marketing mix elements. Similarly, value network is the network that allows the delivery of value from firm’s suppliers, its supplier’s suppliers to firm’s immediate customers and their end customers. Hence, it considers transferring value at a broader level.
Marketing channels are divided into four levels. Firstly, it is zero level also known as direct marketing in which the manufacturer directly sells to customers without involving any intermediary. A one level channel involves the retailer as an intermediary in the network. A two level channel include two intermediary parties in the channel i.e. wholesaler and retailer. Lastly, a three level channel is based on three intermediaries connected through a channel. They include: wholesaler, jobber and retailer. Similarly, industrial marketing is also based on four levels which involve the industrial distributors as the intermediaries. The worldwide accessibility of internet has greatly promoted the direct marketing and value distribution. However, the choice of marketing channel is based on following factors: analyzing customer needs and wants, establishing channel objectives and constraints and identifying and evaluating major channel alternatives. Once the company has selected the distribution channel, it must select the channel members in order to provide the customers with best services. These members need to be well trained and motivated to encourage efficient performance. There are certain ways adopted by producers to form alliances with these channel parties which include channel power and channel partnership. It is also essential to evaluate the performance of these intermediaries to ensure consistency.