Assignment

On
Designing and Managing
Integrated Marketing Channels
Submitted To
Prof. Dr. Abul Kalam Azad
Professor of University Of Dhaka
Master of Business Administration Department
East West University
Submitted By
Md Yeahyea Kabir
ID#2012-1-95-065
MKT 501
Sec-02

Q: 1 what is Marketing Channel? To maintain the Marketing Channels what are the
strategies? Define.
Answer:
Marketing Channel:
A marketing channel system is the particular set of interdependent organizations
involved in the process of making a product or service available for use or
consumption. Most producers do not sell their goods directly to the final users;
between them stands a set of intermediaries performing a variety of functions.
These intermediaries constitute a marketing channel.
In other words, Marketing channels are sets of interdependent organizations
participating in the process of making a product or service available for use or
consumption. They are the set of pathways a product or service follows after
production, culminating /finishing in purchase and consumption by the final end
user.
To maintain the intermediaries organization uses 2 strategies.

Push Strategies
Pull Strategies

Push Strategy: A push strategy uses the manufacturers sales force, trade promotion
money, and other means to induce intermediaries to carry, promote, and sell the
product to end users. A push strategy is particularly appropriate when there is low
brand loyalty in a category, brand choice is made in the store, the product is an
impulse item, and product benefits are well understood.
As an Example: Bangla Tissue company uses push strategies to sell their products.
It categorizes in low brand loyalty.
Pull Strategy: A pull strategy uses advertising, promotion, and other forms of
communication to persuade consumers to demand the product from intermediaries,
thus inducing the intermediaries to order it. Pull strategy is particularly appropriate
when there is high brand loyalty and high involvement in the category, when
consumers are able to perceive differences between brands, and when they choose
the brand before they go to the store.
As an Example: Basundhara Tissue company uses pull strategies to sell their
products. It categorizes in high brand loyalty. Tissue means Basundhara.

Q: 2 Explain buyer expectations for channel integration.

Answer:
Buyer expects below issues for channel integration

Ability to order a product online and pick it up at a convenient retail location

Ability to return an online-ordered product to a nearby store
Right to receive discounts based on total online and offline purchases.

Example- Meena Bazar online shopping. It fulfills all three expectations.

Q: 3 Members of the marketing channel perform a number of key functions, what

are the functions of marketing channels?
Answer:
A marketing channel performs the work of moving goods from producers to
consumers. It overcomes the time, place, and possession gaps that separate goods
and services from those who need or want them.

The functions of marketing channels are given below.

Gather information
Develop and disseminate persuasive communications
Reach agreements on price and terms
Acquire funds to finance inventories
Assume risks
Provide for storage
Provide for buyers payment of their bills
Oversee actual transfer of ownership

Some of these functions (storage and movement, title, and communications)

constitute a forward flow of activity from the company to the customer; other
functions (ordering and payment) constitute a backward flow from customers to the
company. Still others (information, negotiation, finance, and risk taking) occur in
both directions

Q: 4 Explain Marketing flows for a beverage industry.

Answer:
Beverage industry consists of several marketing flows. The flow starts with Physical
and ends with Promotion. The marketing flows are given below.

Physical Flow:
The physical flow refers to the actual physical movement of the product from the
manufacturer through all of the parties who take physical possession of the product,
from its point of production to final consumers. In the case of beverage industry, the
product comes from beverage and packaging plants several areas by way of
company trucks or common carrier (transportation company) to beverage
distributors (wholesalers), who in turn ship the product (usually in their own vehicle)
to supermarkets, convenience stores, restaurants, and retailers where it is finally
purchased by consumers.
Title Flow:

The title flow represents the interplay of the buying and selling functions associated
with the transfer of title (right of ownership). Notice in the figure that the
transportation firm is not included in this flow because it does not participate in the
negotiator functions. Negotiations involve a mutual exchange between buyers and
sellers at all levels of the channel.
Payment Flow:
Payment flow indicates backward flow. The payment comes from customers to
manufacturers through several intermediaries such as Banks, Dealers, retailers, etc.
Then manufacturer sends money to the suppliers.
Information Flow:
We see that the transportation firm has reappeared in this flow and that all of the
arrows showing the flow of information from the manufacturer to consumers are
two-directional. All parties participate in the exchange of information, and the flow
can be either up or down. For example, Beverage Company may obtain information
from the transportation company about its shipping schedule and rates, and the
transportation company may in turn seek information from the company about
when and in what quantities it plans to ship the product. The flow of information
sometimes bypasses the transportation firm, as shown by the arrow leading from
the manufacturer directly to the wholesalers, retailers, and consumers. This route of
information flow occurs when the information sought does not concern the
transportation company, such as details associated with the buying, selling, or
promotion of beverage products.
Promotion Flow:
Finally, the promotion flow refers to the flow of persuasive communication in the
form of advertising, personal selling, sales promotion, and publicity. Here, a new
component, the advertising agency, is included in the flow because the advertising
agency is actively involved in providing and maintaining the promotion flow,
especially the advertising element of promotion. The two-directional arrow
connected by a line between the manufacturer and the advertising agency is meant
to show that the manufacturer and advertising agency work together closely to
develop promotional strategies. All other arrows show one-directional flow from the
advertising agency or directly from the manufacturer to the other parties in the
marketing channel.

From the perspective of channel management, the concept of flows in marketing

channels helps to convey the dynamic nature of marketing channels. The word flow
suggests movement or a fluid state, and indeed this is the nature of channels of
distribution. Changes, both obvious and subtle, always seem to be occurring. New

forms of distribution emerge, different types of intermediaries appear in the channel

while others drop out, unusual competitive structures close off some avenues of
distribution and open up others.28 Changing patterns of buyer behavior and new
forms of technology add yet another dimension of change. Channel flows must be
adapted to meet these changes. Innovative channel strategies and effective
channel management are needed to make this happen.

Q: 5 Explain consumer Marketing Channels & Industrial Marketing Channels.

Consumer Marketing Channels:

The producer and the final customer are part of every channel. The number of
intermediary levels designates the length of a channel. Figure consumer Marketing
Channel illustrates several consumer goods marketing channels of different lengths.
A one-level channel contains one selling intermediary, such as a retailer. A two-level
channel contains two intermediaries. In consumer markets, these are typically a
wholesaler and a retailer. A three-level channel contains three intermediaries. In the
meatpacking industry, wholesalers sell to jobbers, essentially small-scale
wholesalers, who sell to small retailers. In Japan, food distribution may include as
many as six levels. Obtaining information about end users and exercising control
becomes more difficult for the producer as the number of channel levels increases.

Industrial Marketing Channels:

An industrial-goods manufacturer can use its sales force to sell directly to industrial
customers; or it can sell to industrial distributors who sell to industrial customers; or
it can sell through manufacturers representatives or its own sales branches directly
to industrial customers, or indirectly to industrial customers through industrial
distributors. Zero-, one-, and two-level marketing channels are quite common.
Figure Industrial Marketing Channels shows channels commonly used in B2B
marketing.

Q: 6 what are the strategies based on intermediaries? Explain.

Answer:

Marketing intermediaries refers to resellers, physical distribution firms, marketing

services agencies, and financial intermediaries. These are the people who help the
company promote, sell, and distribute its products to final buyers. Resellers are
those who hold and sell the company's product. They match the distribution to the
customers and include places, such as Wal-Mart, Target, and Best Buy. Physical
distribution firms are places, such as warehouses, that store and transport the
company's product from its origin to its destination. Marketing services agencies are
companies that offer services, such as conducting marketing research, advertising,
and consulting. Financial intermediaries are institutions, such as banks, credit
companies, and insurance companies.
Three strategies based on the number of intermediaries are given below

Exclusive distribution,
Selective distribution, and
Intensive distribution.

Exclusive distribution: Exclusive distribution severely limiting the number of

intermediaries. Its appropriate when the producer wants to maintain control over
the service level and outputs offered by the resellers, and it often includes exclusive
dealing arrangements. By granting exclusive distribution, the producer hopes to
obtain more dedicated and knowledgeable selling.

The use of a single or very few outlets.

Creates high dealer loyalty and considerable sales support.
Provides greater control.
Limits potential sales volume.
Success of the product is dependent upon the ability of a single intermediary.

Example: BMW
Selective distribution: Selective distribution relies on only some of the
intermediaries willing to carry a particular product. Its an intermediary strategy,
with the exact number of outlets in any given market dependent upon market
potential, density of population, dispersion of sales, and competitors' distribution
policies.

Contains some of the strengths and weaknesses of the other two strategies.
It is difficult to determine the optimal number of intermediaries in each
market.
It is up to the channel manager to evaluate these alternatives with respect to
some use of criteria.

Example: KFC Bangladesh

Intensive distribution: Intensive distribution places the goods or services in as

many outlets as possible. The manufacturer attempts to get as many intermediaries
of a particular type as possible to carry the product. Provides for increased sales
volume, wider consumer recognition, and considerable impulse purchasing.

Low price, low margin, and small order sizes often result.
Extremely difficult to stimulate and control the large
intermediaries.

number

of

Example: This strategy serves well for snack foods, soft drinks, newspapers,
candies, and gumproducts consumers buy frequently or in a variety of locations.

Q: 7 what is channel conflict? What type of conflict arises?

Channel Conflict: Channel conflict is generated when one channel members actions
prevent another channel from achieving its goal. In channel distribution, conflict is
not negative, rather, some conflict actually strengthen and improves a channel.
Three types of channel conflict arises

Horizontal Conflict
Vertical Conflict
Multichannel Conflict

Horizontal Conflicts
A horizontal conflict refers to a disagreement among two or more channel members
at the same level. For example, suppose a toy manufacturer has deals with two
wholesalers, each contracted to sell products to retailers in different regions. If one
wholesaler decides to branch its operations into the other wholesalers region, a
conflict will result. If the toy manufacturer doesn't help solve the problem, its
business dealings with both the wholesalers -- and the downstream retailers, as well
-- might be in jeopardy.
Vertical Conflicts
Vertical conflicts involve a disagreement between two channel members on
consecutive levels. For example, if the toy manufacturer discovers its products are
arriving at retail stores later than scheduled, a conflict might develop between the
manufacturer and the wholesaler responsible for shipping to retailers. At the same
time, the retail stores might be in conflict with the wholesaler due to its inability to
ship products on time.

Multichannel Conflicts
Multichannel conflicts refer to disagreements among members in separate
marketing channels. While neither strictly horizontal nor vertical, these conflicts can
affect all members of every channel. For instance, suppose the toy manufacturer
participates in two marketing channels. In the first channel, the manufacturer sells
its products directly to consumers via its official website. In the second channel, the
manufacturer sells its products to wholesalers for resale to retailers. If the toy
manufacturers website sells the products for much lower prices than retail stores,
sales in the second channel will plummet. The resulting conflict will require some
solution that works for both channels.

Q: 8 what are the causes of Channel Conflict? Explain how to manage channel
conflicts.
Answer:
Goal incompatibility
Though channel members share the common goal of maximizing their joint
effectiveness, each is a separate legal entity. Each has its own employees, owners
and interest groups who help shape goals and strategies, some of which may not be
totally compatible with those of other channel members. This incompatibility may
be the underlying cause of stress, ultimately creating conflict.
Unclear roles & rights
Changes in specification of position or poorly defined roles may cause conflict.
Incompatibility develops within channel arrangements as roles and methods of
operation change. Conflict also arises when there is lack of agreement concerning
appropriate domain of members.
Differences in Perception:
Conflict occurs when different channel members differ in methods of achieving
mutual goals or have different solutions to a mutual problem even when they have
a strong desire to cooperate, conflict can result from different perceptions of the
facts.

Achieving rapid market penetration through a low-price policy Vs High

margins and pursues short-run profitability:
Dealers, in contrast, may prefer to work with high margins and pursue short-run
profitability. HP may sell personal computers to large accounts through its own sales
force, but its licensed dealers may also be trying to sell to large accounts.
Territory boundaries and credit for sales:
The manufacturer may be optimistic about the short-term economic outlook and
want dealers to carry higher inventory. Dealers may be pessimistic. In the beverage
category, it is not uncommon for disputes to arise between manufacturers and their
distributors about the optimal advertising strategy. The fortunes of exclusive
dealers, such as auto dealers, are profoundly affected by the manufacturers
product and pricing decisions. This situation creates a high potential for conflict.

Managing Channel Conflict:

Some channel conflict can be constructive and can lead to more dynamic
adaptation in a changing environment. Too much conflict can be dysfunctional,
however, so the challenge is not to eliminate conflict but to manage it better. There
are several mechanisms for effective conflict management:

Adoption: Adoption of super ordinate goals. Channel members come to an

agreement on the fundamental goal they are jointly seeking, whether it is
survival, market share, high quality, or customer satisfaction. They usually do
this when the channel faces an outside threat, such as a more efficient
competing channel, an adverse piece of legislation, or a shift in consumer
desires.
Exchange: Exchange persons between channel levels. General Motors
executives might work for a short time in some dealerships, and some
dealers might work in GMs dealer policy department, as a way of helping
participants appreciate each others viewpoint.
Cooptation: Cooptation is an effort by one organization to win the support of
the leaders of another organization by including them in advisory councils,
boards of directors, trade associations, and the like. As long as the initiating
organization treats the leaders seriously and listens to their opinions,
cooptation can reduce conflict.
Diplomacy: Diplomacy takes place when each side sends a person or group
to meet with its counterpart to resolve the conflict.
Mediation: Meditation means having a skilled, neutral third party reconcile
the two parties interests.
Arbitration: Arbitration occurs when the two parties agree to present their
arguments to an arbitrator and accept the arbitration decision.

Companies can manage conflict by striving for super ordinate goals, exchanging
people among two or more channel levels, coopting the support of leaders in
different parts of the channel, and through diplomacy, mediation, or arbitration to
resolve chronic or acute conflict.

Q: 9 What are the major retailer types? Explain levels of retail service.
There are 9 main types of retailers which can be defined by the size of their
business and the way they in which they sell their products.

The 9 main types of retailers are;

Specialty Store Specializing in specific industries or products, this type of retailer
is able to offer the customer expert knowledge and a high level of service. They also
add value by offering accessories and additional related products at the same
outlet.
Department Store This type of retailer is often the most complex offering a wide
range of products and can appear as a collection of smaller retail stores managed
by one company. The department store retailers offer products at various pricing
levels. This type of retailer
adds high levels of customer service by adding
convenience enabling a large variety of products to be purchased from one retailer.

Supermarkets Generally this type of retailer concentrates in supplying a range of

food and beverage products. However many have now diversified and supply
products from the home, fashion and electrical products markets too. Supermarkets
have significant buying power and therefore often retail goods at low prices.
Convenience Store Usually located in residential areas this type of retailer offers
a limited range of products at premium prices due to the added value of
convenience. Convenience stores are small stores in residential area, often open
24/7, limited line of high-turnover convenience products plus takeout. Drug stores
carry prescription and pharmacies, health and beauty aids, other personal care,
small durable, miscellaneous items.
Discount Retailer This type of retailer offers a variety of discounted products.
They offer low prices on less fashionable branded products from a range of suppliers
by reselling end of line and returned goods at discounted prices. Discount stores are
standard or specialty merchandise; low-price, low-margin, high-volume stores.
Extreme value or hard-discount store carry a more restricted merchandise mix than
discount stores but at even lower prices.
Off-price retailers- This type of retailers carry leftover goods, overruns, irregular
merchandise sold at less than retail.
Superstores: Superstores are huge selling spaces, routinely purchased food and
household items, plus services. Category killers carry a deep assortment in one
category.
Hypermarkets Hypermarkets are huge stores that combine supermarket,
discount, and warehouse retailing.
Catalog showrooms- This type of retailers include a broad selection of highmarkup, fast-moving, brand-name goods sold by catalog at a discount.
Levels of Retail Service:
Retailers meet widely different consumer preferences for service levels and specific
services. They position themselves as offering one of four levels of service.
Self Service: Self-service is the cornerstone of all discount operations. Many
customers are willing to carry out their own locate-compare-select process to save
money.
Self-Selection: Self-selection means that customers find their own goods, although
they can ask for assistance.
Limited Service: Limited service means these retailers carry more shopping goods
and services such as credit and merchandise-return privileges.

Full Service: With full service, salespeople are ready to assist in every phase of the
locate-compare-select process. Customers who like to be waited on prefer this
type of store.

Q: 10 what is wholesaling? What are the functions of Wholesale?

Wholesaling:
In general, wholesalers are more efficient in performing one or more of these
functions. Wholesalers sales forces help manufacturers reach many small business
customers at a relatively low cost. Wholesalers are able to select items and build
the assortments their customers need, saving them considerable work. Wholesalers
achieve savings for their customers by buying large carload lots and breaking the
bulk into smaller units. Wholesalers hold inventories, thereby reducing inventory
costs and risks to suppliers and customers. Wholesalers can often provide quicker
delivery to buyers because they are closer to the buyers.
Functions of Wholesale:

W
ho
le
sa
ler
s

finance customers by granting credit, and finance suppliers by ordering early

and paying bills on time.
Wholesalers absorb some risk by taking title and bearing the cost of theft,
damage, spoilage, and obsolescence.
Wholesalers supply information to suppliers and customers regarding
competitors activities, new products, price developments, and so on.
Wholesalers often help retailers improve their operations by training sales
clerks, helping with store layouts and displays, and setting up accounting and
inventory-control systems.