![Page 1: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/1.jpg)
CHAPTER 3CHAPTER 3
The (Business) Environment of Marketing
Channels
![Page 2: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/2.jpg)
1. Meaning of Business Environment1. Macro environment2. Task environment*
2. Economic Environment*3. Competitive Environment*4. Social/Cultural Environment5. Technological Environment*6. Legal Environment7. Task environment again
![Page 3: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/3.jpg)
Consists of all externaluncontrollable factors within
which marketing channels exist
Affects channel members and nonmembers, such as facilitating
agencies =
All channel participants
![Page 4: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/4.jpg)
Nonmember participants
Environment
1. Economic (M)2. Socio-cultural (M)3. Competitive (m)4. Technological (M)5. Legal (m)
Producers& Manufacturers
Intermediaries
Target Markets
Facilitatingagencies
Memberparticipants
Focus ofchannel
management
A Question: “Right” boundary of a firm?
M: Macrom: Micro
Suppliers
![Page 5: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/5.jpg)
Major EconomicForces
Recession Inflation
Deflation
Ex) Distributors’ changing concern under turbulent environment
![Page 6: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/6.jpg)
INFLATIONINFLATION
Continued high spending Price IncreaseOR
Spending, fueling a recession
Possible channel strategy:• Reduce manufacturer’s product mix from higher-price to lower-price products (ex: Wal-Mart)• Reduce inventory burden on channel members with:
Streamlined product lineFaster order processing & deliveryHigher inventory turnover through
stronger promotional support
![Page 7: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/7.jpg)
Prices =\= Demand
Challenge for manufacturer:Pass cost-induced price increases through channelwhen built-in cost pressures from labor contracts
were negotiated several years earlier
Ex) Japan’s lost (two) decades
![Page 8: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/8.jpg)
Consumer and/orCorporate
spending =
Channelstrategy: Manufacturers provide channel
member support by financing high inventory costs
Ex) Recession and G.M.
Reduced sales volume
Reduced profitability
Firms caught with large
inventories
![Page 9: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/9.jpg)
Real interest
rates
Demand
Costs
=
1. 2.Strong U.S. Dollar
Difficult to sellproducts throughchannel members
= U.S. products become less competitive
![Page 10: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/10.jpg)
Local Regional National Global in scope
* Opportunity as well as Threat
![Page 11: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/11.jpg)
Horizontal
Intertype
Vertical
Channel System
![Page 12: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/12.jpg)
M
W
R R
W
M
![Page 13: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/13.jpg)
M
R
W
![Page 14: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/14.jpg)
M
W
R
M
W
R
![Page 15: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/15.jpg)
M
R
W
R
W
M
![Page 16: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/16.jpg)
Pervades all aspects of a societyPervades all aspects of a society
Influences both national and international
marketing channels
Influences both national and international
marketing channels
Influences wide variations among channel structures worldwide*
Influences wide variations among channel structures worldwide*
![Page 17: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/17.jpg)
Population Age Patterns
Ethnic Mix
Educational Trends
Family or Household Structure
U.S. pop. Becoming both younger & older # of minority-owned businesses Levels = people more demanding Smaller & more varied
Role of Women
Importance of Time
# = changing shopping needs
![Page 18: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/18.jpg)
Help retailers & wholesalers closely monitor success orfailure of products they handle
Computerized inventory managementPortable computers (iPad)
Smartphones
Effect of IT on Channel Structure: Unbundling and Rebundling Channel Functions
![Page 19: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/19.jpg)
Acceleratingtechnology
“Computer salesPeople”
Mobilerobots 3-D
modeling
Ultra-widebandtechnology
![Page 20: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/20.jpg)
The set of laws that impact marketing channels
• Continually evolving • Affected by changing values, norms, politics,
& precedents• Knowledge of basics helps channel manager
avoid serious & costly legal problems
![Page 21: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/21.jpg)
Sherman Antitrust Act 1890; Fundamental antimonopoly law
Public welfare best served through competition
Clayton Act 1914; Strengthen Sherman Antitrust Act
Prohibits specific practices among competing firms
Federal Trade Commission Act 1914; Established FTC
Power to investigate & enforce
![Page 22: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/22.jpg)
Robinson-Patman Act 1936; Amendment to Clayton Act
Prohibits price discrimination Allows price differentials to different customers
under specific circumstances
Celler-Kefauver Act 1950; Amendment to Clayton Act
Prohibits vertical mergers & acquisitions
![Page 23: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/23.jpg)
• Dual Distribution, or multi-channel distributionProducer or manufacturer uses 2 or more different channel
structures for distributing the same product Exclusive Dealing
Supplier requires its channel members to sell only its products or to refrain from selling directly to competitive suppliers
•Full-Line ForcingSupplier requires channel members to carry a full-line of its products
in order to sell any particular products in supplier’s line
![Page 24: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/24.jpg)
• Price DiscriminationSupplier sells at different prices to the same class of channel
members Price Maintenance
Supplier dictates prices charged by channel members to their customers
• Refusal to DealSupplier has right to refuse to deal with whomever they want as
channel members
![Page 25: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/25.jpg)
• Resale RestrictionsManufacturer attempts to stipulate to whom and in what geographical
market channel members may resell the manufacturer’s products• Tying Agreements
Supplier sells a product to a channel member on condition that the channel member also purchase another product
• Vertical IntegrationFirm owns and operates organizations at other levels of the
distribution channel
![Page 26: CHAPTER 3 The (Business) Environment of Marketing Channels](https://reader036.vdocument.in/reader036/viewer/2022062314/56649e675503460f94b62213/html5/thumbnails/26.jpg)
• Four Major Stakeholders
- Suppliers
- Customers
- Competitors
- ? Where do intermediaries fit?