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TRANSCRIPT
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Sales & Distribution
Management
Lecture-26 & 27
Pranab S DebFaculty IBS, Pune
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Schedule of Lecture
Managing marketing channels
Economic cost of retailing
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Establish new channels
1. Channel flow performance
2. Channel structure
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Refine existing channels
1. Gap analysis
2. Channel flow performance
3. Channel structure
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Channel Implementation
1. Identifying power sources
2. Identifying channel conflicts
3. The goal of channel coordination
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Service outputs
1. Bulk breaking
2. Spatial convenience
3. Waiting or delivery time
4. Product variety
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Trends in end-user
preferences
1. B2B buyer preferences
1. Outsourcing
2. Downsizing
3. Alphabet soup
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Trends in end-user
preferences
1. Trends in consumer preferences1. Poverty of time
2. Increased knowledge about products andavailability
3. Increased polarity in incomes
4. Increased number of self-employed workers
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Service output demand (SODs)
is always of prime importance
for marketing channels
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Marketing flows in channels
Marketing flow
1. Physical possession
2. Ownership
3. Promotion
Costs represented
1. Storage and delivery
costs
2. Inventory carrying costs
3. Personal selling,
advertising, sales
promotion, publicity,
public relations costs
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Marketing flows in channels
Marketing flow
4. Negotiation
5. Financing
6. Risking
Costs represented
4. Time and legal costs
5. Credit terms, terms and
conditions of sale
6. Price guarantees,
warranties, insurance,
repair, and after-sales
service costs
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Marketing flows in channels
Marketing flow
7. Ordering
8. Payment
Costs represented
7. Order-processing costs
8. Collections, bad debt
costs
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Zero-based channel
A zero-based channel design is one that:
Meets the target market segments demands forservice outputs
At minimum cost of performing the necessary
channel flows that produce these service outputs
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Equity principle
Compensation in the channel system should
be given on the basis of the degree of
participation in the marketing flows and thevalue created by this participation.That is,
compensation should mirror the normative
profit shares for each channel member
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Channel conflict is a situation
of discord or disagreementbetween channel members
from the same marketing
channel system
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Stages of conflict
Latent
Perceived
Felt
Manifest
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Reasons for channel conflict
Goal in-compatibility
Unclear role definition
New channel partner
Target fixing exercise
Extension of credit
Multiple distributors
Difference in perception
Lack of opportunity
Clash of interest
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Managing channel conflict
Understanding the nature and impact of
conflict
Tracing the source of conflict
Understand the impact of conflict
Strategy and plan of action for resolution
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Industrial marketing channels
are a good example ofbalanced power
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Consumer marketing channels
rely on manipulating thecustomer service variable to
greater or lesser degrees
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In multi-level marketing systems the salesagent sells the companys products and
also recruits other sales agents to keep the
chain getting stronger. His income is a
combination of what he sells and what theagents he has recruited sell. The best
example is that of Amway. Other
companies operating on this system are
Tupperware, Modicare, and Herbalife
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Q & A
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Thanks