1. TOP 10 LEARNING CONCEPTS CHAPTER 15: DESIGNING AND MANAGING INTEGRATED MARKETING CHANNELS Divya Hassaram Ramchandani September 8, 2011 www.diram28.blogspot.com

2. Top 10 Concepts www.diram28.blogspot.com Intro: Marketing Channels – Yes It’s Important! #1: Push vs. Pull Strategy #2: Understanding customer needs #3: The Channel Flows #4: The Channel Level #5: The Channel-Design Decision

3. Top 10 Concepts www.diram28.blogspot.com #6: Identifying and Evaluating Major Channel Alternatives #7: Channel-Management Decisions #8: Channel Integration and Systems #9: Channel Conflict #10: E-Marketing!

4. Intro: Marketing Channels – Yes It’s Important! www.diram28.blogspot.com Do YOU buy meat everyday directly from the producer?

5. Intro: Marketing Channels – Yes It’s Important! www.diram28.blogspot.com Survey Says… 9.6 out of 10 do not. Question is… Where do they buy meat from?

6. Intro: Marketing Channels – Yes It’s Important! www.diram28.blogspot.com The answer… The wet or dry market.

7. Intro: Marketing Channels – Yes It’s Important! www.diram28.blogspot.com Marketing Channels come with an Opportunity Cost.

8. Concept 1: Push vs. Pull Strategy www.diram28.blogspot.com Push Strategy Low Quality Products Therefore, you need to literally “push” to sell the product.

9. Concept 1: Push vs. Pull Strategy www.diram28.blogspot.com Pull Strategy High Quality Products

10. Concept 1: Push vs. Pull Strategy www.diram28.blogspot.com Example 1: El Nido Resort, Palawan Vs. Amanpulo, Palawan Push = Low brand loyalty; Have a lot of discounts to entice people Pull = High brand loyalty; barely any discounts

11. Concept 2: Understanding Customer Needs www.diram28.blogspot.com Habitual Shopper: Purchases from the same places in the same manner over time Example 2.a: The LV-only Shopper – “It’s either LV or nothing at all!”

12. Concept 2: Understanding Customer Needs www.diram28.blogspot.com High-valued Deal Seekers: Knows their needs and “channel surf” a great deal before buying at the lowest possible price. Example 2.b: Ms. Kuripot – “ Baka mas mura sa iba ”

13. Concept 2: Understanding Customer Needs www.diram28.blogspot.com High Involvement Shoppers: Information in all channels, makes their purchase in a low-cost channel but takes advantage of customer support from high-touch channel. Example 2.c: Ms. Plastic – “ Makabili nga ng relo sa Divisoria at ipapaayos ko sa Greenbelt.”

14. Concept 2: Understanding Customer Needs www.diram28.blogspot.com Variety Loving Shoppers: Takes advantage of high-touch services and then buys in their favorite channel – regardless of the price. Example 2.d: Ms. Window-Shopper – “ Baka mas maganda ang damit sa People are People – ay hindi! – sa Forever 21 pa din ako bibili!”

15. Concept 3: Channel Flows www.diram28.blogspot.com Forward Flow: Activity Stems from the Company  Consumer Example 3.a: ShoeMart

16. Concept 3: Channel Flows www.diram28.blogspot.com Backward Flow: Activity stems from the Consumer  Company Example 3.b: ShoeMart

17. Concept 4: Channel Level www.diram28.blogspot.com ZERO-LEVEL CHANNEL: The manufacturer selling directly to the final customer. Example 4.a: Red Ribbon Bakeshop

18. Concept 4: Channel Level www.diram28.blogspot.com ONE-LEVEL CHANNEL: One selling intermediary. Example 4.b: Purple Oven makes the desserts that all the Starbucks in the Philippines sells. Starbucks sells it to the final customers.

19. Concept 4: Channel Level www.diram28.blogspot.com THREE-LEVEL CHANNEL: Three selling intermediaries. Example 4.c: A farmer sells his meat to Monterey, Monterey sells its meat to the Shopwise Meat section. The final customers buy the meat from Shopwise.

22. Concept 6: Identify and Evaluate Major Channel Alternatives www.diram28.blogspot.com Exclusive Distributorship: The only distributor. Example 6.a: Duty Free in Guam is the only place on Guam that can sell the makeup brand: SEPHORA .

23. Concept 6: Identify and Evaluate Major Channel Alternatives www.diram28.blogspot.com Selective Distributorship: Brands are only carried in two or three intermediaries. Example 6.b: The new Goldilocks square-shaped “Polvoron” can only be found as 7-eleven and Ministop. This is not available in the Goldilocks stores too!

24. Concept 6: Identify and Evaluate Major Channel Alternatives www.diram28.blogspot.com Intensive Distributorship: It can be sold anywhere – and can be bought almost anywhere. Example 6.c: Coke Products.

25. Concept 7: Channel-Management Decisions www.diram28.blogspot.com 1. Selecting Channel Members: Just remember… CHANNEL = COMPANY. Example 6.a: Jollibee 2. Training and Motivating Channel Members: The intermediaries of Jollibee are the franchise owners (Example 6.b). Jollibee Main should orient, educate and train the franchise owners as to the products and quality of service.

26. Concept 7: Channel-Management Decisions www.diram28.blogspot.com 3. Evaluating Channel Members Jollibee Main monitors the branches of the franchise owners in terms of profitability and service quality. 4. Modify Channel Design and Implementation If the franchisees branch continues to perform poorly financially – the Jollibee main branch will either acquire the branch and manage it or have the franchisee close the branch.

27. Concept 8: Channel Intergration and Systems www.diram28.blogspot.com Corporate Vertical Marketing Systems (VMS): The company owns the successive stages of production and distribution. Example 8.a: Apple

28. Concept 8: Channel Intergration and Systems www.diram28.blogspot.com Administered VMS: The company coordinates successive stages of production and distribution through the size and power of one of the members. Example 8.b: Campbell Mushroom Soup

29. Concept 8: Channel Intergration and Systems www.diram28.blogspot.com Contractual VMS: Independent firms at different levels of production and distribution. Example: Franchising (of Mang Inasal – for example)

30. Concept 9: Channel Conflict www.diram28.blogspot.com Goal Incompatibility Example: ShopWise selling Hermes bags in their Clothing & Accessories section. Shopwise’s goal: quantity over quality – sell as much as we can Hermes’ goal: quality over quantity

31. Concept 9: Channel Conflict www.diram28.blogspot.com Unclear Roles and Rights Example: A Century Tuna distributor who is supposed to be only exclusive to the Rizal province but sells to all Shopwise branches – a problem arises when the Century Tuna Makati Distributor complains because he too has an exclusive right.