tailieunhanh - Lecture Marketing channel strategy: Chapter 5 - TS. Đinh Tiến Minh

Learning objectives: Explain why manufacturers prefer more coverage, especially in fast-moving consumer goods industries, combined with a downstream channel member that limits its assortment in their product category, explain why downstream channel members prefer less coverage, combined with a greater assortment in each manufacturer’s product category. | 2/21/2018 Chapter 5: Designing Channel Structures and Strategies DINH Tien Minh LEARNING OBJECTIVES Explain why manufacturers prefer more coverage, especially in fast-moving consumer goods industries, combined with a downstream channel member that limits its assortment in their product category. Explain why downstream channel members prefer less coverage, combined with a greater assortment in each manufacturer’s product category. Recognize why limited distribution is preferable to brands with a high-end positioning or a narrow target market. Describe the special challenges of multiple formats and dual distribution. Managers gain insights that enable them to make three strategic channel decisions pertaining to 1. 2. 3. Channel intensity Channel types Dual distribution 1 2/21/2018 CHANNEL INTENSITY DECISIONS Intensive distribution means that a brand can be purchased from many possible outlets in a trading area. An extreme version is saturation, which implies that it is available in every possible outlet. Exclusive distribution means in contrast that the brand can be purchased only through one vendor in a trading area. General rule: The more intensively a manufacturer distributes its brand in a market, the less the manufacturer can influence how channel members perform marketing channel functions. Downstream Channel Members' Perspective on Intensive Distribution For downstream channel members More intense brand coverage can spell the ruin of their channel advantage. Each downstream- channel member prefers exclusivity. 2 2/21/2018 From the manufacturers perspective, intra-brand price competition at the retail level is desirable—at least in the short term Bait-and-switch Free riding A retailer will not tolerate free riding indefinitely. Upstream Channel Members' Perspective on Intensive Distribution For upstream suppliers, wide coverage makes it easier for buyers to find brands. Downstream channel partners