Ch 12 Part 4 | Principles of Marketing | Marketing Channels: Delivering Customer Value | Kotler

Summary

The transcript discusses the concept of disintermediation in marketing channels, where producers bypass intermediaries to reach customers directly, as seen with Black & Decker's online sales. It explores the importance of analyzing customer needs, setting channel objectives, and evaluating alternatives. The script also covers types of distribution, such as intensive, exclusive, and selective, and the evaluation criteria including economic and adaptive factors. International channel design, logistics, supply chain management, and inventory management are also highlighted, with examples like just-in-time systems and RFID for efficient inventory tracking.

Takeaways

• 🛒 Intermediation is when producers bypass traditional intermediaries and sell directly to consumers or use new types of intermediaries.
• 🌐 Black & Decker is an example of a company that has moved from traditional distributors to online sales to reach customers directly.
• 📊 Designing channel strategies involves analyzing customer needs, setting channel objectives, identifying alternatives, and evaluating them.
• 🎯 Channel objectives often include maximizing customer reach, segmenting services, and minimizing cost of customer service.
• 🛍 Types of intermediaries, their number, and responsibilities are crucial decisions in channel strategy, including whether to use intensive, exclusive, or selective distribution.
• 🌟 Exclusive distribution limits a product to certain outlets, exclusive dealing restricts sellers from handling competitors' products, and exclusive territorial agreements confine sales to specific geographic areas.
• 🔄 Adaptive criteria for evaluating channel alternatives include economic viability, control over the brand, and the ability to adapt to market requirements.
• 🌍 International distribution channels must be adaptable to different country-specific structures and consumer behaviors.
• 📈 General management decisions in channel strategy involve selecting, managing, motivating, and evaluating channel members.
• 🚚 Marketing logistics involves the physical distribution of goods and services to meet consumer requirements at a profit.
• 🔄 Reverse logistics refers to the process of managing returns, damaged goods, or recyclable materials back to suppliers.

Q & A

What is intermediation in the context of product distribution?

Intermediation refers to the process where producers bypass traditional intermediaries and sell directly to the final buyer, or when new types of intermediaries emerge that replace traditional ones. It's a strategy where companies aim to reach customers directly without the need for agents, distributors, or wholesalers.

Why might a company like Black & Decker choose to sell directly to consumers online?

Black & Decker might choose to sell directly to consumers online to cut out intermediaries, reduce costs, and have more control over the customer experience, pricing, and branding.

What are the potential benefits and drawbacks of cutting out intermediaries?

Benefits include cost reduction, direct customer relationships, and better control over the product's journey. Drawbacks may involve losing the expertise and reach of intermediaries, increased logistical challenges, and the need for more significant investments in direct sales infrastructure.

How does a company decide on the best channel objectives?

A company decides on channel objectives by analyzing customer needs, setting specific goals, identifying major channel alternatives, and evaluating these alternatives against economic, control, and adaptive criteria.

What are the different types of distribution a company might consider?

A company might consider intensive distribution, exclusive distribution, or selective distribution. Intensive distribution is where products are widely available, like candy. Exclusive distribution is limited to a few outlets, like luxury cars. Selective distribution is somewhere in between, like TVs and home appliances available at selected retailers.

Why is it important for a company to evaluate its channel alternatives?

Evaluating channel alternatives is important to ensure that the chosen distribution strategy aligns with the company's economic goals, provides sufficient control over the brand, and is adaptable to market changes and company requirements.

How does designing international distribution channels differ from domestic ones?

International distribution channels must be adapted to the existing structures within each country, taking into account cultural, legal, and logistical differences. This requires a more nuanced approach to channel strategies that can vary significantly from one country to another.

What are some general management decisions involved in channel management?

General management decisions in channel management include selecting channel members, managing and motivating the seller channel members, and evaluating their performance.

Can you explain exclusive distribution and give an example?

Exclusive distribution is when a seller allows only certain outlets to carry its products. For example, a luxury brand might only sell its products in high-end department stores and not in mass-market retailers.

What is meant by supply chain management in the context of this script?

Supply chain management in this context refers to the process of overseeing the flow of goods from raw materials to end consumers, including procurement, production, distribution, and reverse logistics, ensuring efficient and cost-effective movement of products.

How does just-in-time inventory management benefit a company?

Just-in-time inventory management benefits a company by reducing the amount of capital tied up in inventory, minimizing storage costs, and ensuring that products are fresh and in demand, thereby reducing waste and improving cash flow.