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Chapter 12 - Customer Value

The document discusses marketing channels and customer value. It defines key terms like value delivery network, marketing channels, direct/indirect channels, channel conflict, and vertical marketing systems. It also covers marketing channel design decisions involving identifying alternatives like intensive, exclusive, or selective distribution. Channel management and public policy around distribution are also summarized.

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65 views

Chapter 12 - Customer Value

The document discusses marketing channels and customer value. It defines key terms like value delivery network, marketing channels, direct/indirect channels, channel conflict, and vertical marketing systems. It also covers marketing channel design decisions involving identifying alternatives like intensive, exclusive, or selective distribution. Channel management and public policy around distribution are also summarized.

Uploaded by

Baraa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER 12 – CUSTOMER VALUE

Supply chains and the value delivery network:


- Value delivery network – the network made up of the company suppliers, distributors,
and ultimately customers who “partner” with each other to improve the performance of
the entire system in delivering customer value

Marketing Channels:
- Marketing channel (distribution channel) – a set of interdependent organizations that
help make a product or service available for use or consumption by the consumer or
business user
- Channel level – a layer of intermediaries that perform some work in bringing the
product and its ownership closer to the final buyer
- Direct marketing channel – a marketing channel with no intermediary levels
- Indirect marketing channel – a marketing channel containing one or more intermediary
levels

- Channel conflict – disagreements among marketing channel members on goals and roles
– who should do what and for what rewards
- Conventional distribution channel – consists of one or more independent producers,
wholesalers and retailers, each a separate business seeking to maximize its own profits,
even at the expense of the system as a whole
- Vertical marketing system (VMS) – producers, wholesalers, and retailers act as a unified
system. One channel member owns the others, has contracts with them, or has so much
power that they must all cooperate
- Corporate VMS – combines successive stages of production and distribution under
single ownership- leadership is established through common ownership
- Contractual VMS – independent firms at different levels of production and distribution
join together through contracts to obtain more economies or sales impact then they
could achieve alone
o Franchise organization – a contractual vertical marketing system in which a
channel member, called a franchisor, links several stages in the production-
distribution process
- Administered VMS – coordinates successive stages of production and distribution
through the size and power of one of the parties
- Horizontal marketing system- a channel arrangement in which two or more companies
at one level join together to follow a new marketing opportunity
- Multichannel distribution system – a distribution system in which a single firm sets up
two or more marketing channels to reach one or more customer segments
- Disintermediation - the cutting out of marketing channel intermediaries by product or
service producers, or the displacement of traditional resellers by radical new types of
intermediaries
Marketing channel design decisions:
- Marketing channel design – designing effective marketing channels by analyzing
consumer needs, setting channel objectives, identifying major channel alternatives, and
evaluating them
- Identifying alternatives involves deciding on the number of marketing intermediaries:
o Intensive distribution – stocking product in as many outlets as possible
o Exclusive distribution – giving a limited number of dealers the exclusive right to
distribute the product in their territories
o Selective distribution – the use of more than one but fewer than all the
intermediaries who are willing to carry the company’s products
- Evaluating alternatives involves:
o Economic criteria – compares the likely sales, costs, and profitability of different
channel alternatives
o Control issues – using intermediaries usually means giving them some control
over marketing. Some take more control than others – company generally
prefers to keep as much control as possible
o Adaptive criteria – channels usually involve long term commitments, yet the
company wants to keep the channel flexible so that it can adapt to
environmental changes

Channel management decisions:


- Marketing channel management – selecting, managing and motivating individual
channel members and evaluating their performance over time

Public policy and distribution decisions:


- American Marketing Association (AMA) code puts into question practices around these
issues:
1. Exclusive dealing – when the seller allows only certain outlets to carry its products –
legal as long as they do not substantially lessen competition or tend to create a
monopoly
2. Exclusive territories – illegal when a producer tries to keep a dealer from selling
outside its territory
3. Trying agreements – producer sells to dealer only if dealer will take some or all of
the rest of the line – legal but causes channel conflict
4. Dealers’ rights – the right of producers to drop dealers is somewhat restricted
5. Sources of supply – cheaper oversees labor – ethical issues

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