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Part 4
Additional Perspectives on Marketing Channels
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Chapter 15

• Electronic Marketing Channels

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Electronic Marketing Channels
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Objective 1
Computers
Technology
Internet
Impact on Design Management of Marketing Chan
nels

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Electronic Marketing Channels
Objectives 2 3
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Not physical availability
Web-TV, PDAs
The use of the Internet to make products servi
ces available so that the target market with acce
ss to computers or other enabling technologies ca
n shop complete the transaction for purchase vi
a interactive electronic means
Actually purchasing products through the use
of PCs, Web-TV, PDAs
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Structure of ElectronicMarketing Channels
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• Disintermediation versus
• reintermediation
• Information flow versus
• product flow
• Virtual channel structure versus
• physical channel structure

Three Key Phenomena


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Disintermediation andReintermediation

Objective 4
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Disintermediation
Reintermediation
Shifting, changing, or adding middlemen to the ch
annel
Intermediaries become superfluous because produce
rs gain exposure to vast numbers of customers in
cyberspace
Amazon.com Auto-By-Tel Corp. Peapod, Inc.
Dell Computer Corp.
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Disintermediation versusReintermediation
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• No matter how technologically sophisticated the
  Internet becomes or how much it is hyped, the
  laws of economics as they relate to channel
  structure do not change.

Efficiency in the performance of distribution
tasks is what ultimately determines what form
channel structure will take.

The Internet has not eliminated middlemen,
or caused total disintermediation.
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Internet Limits
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Objective 5
Product Flow

Cannot be digitized Processed slowly, often
by people Is basis for all other flowsnegot
iation,
ownership, information, promotion
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Developments Trends
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Objective 6
Online shopping to 36 billion from m
id-1990s to the end of 2002 Online shopping h
as become a routine shopping choice PCs, p
eripherals, software, books accounted for a si
gnificant portion of total retail spending on
these products
Electronic Marketing Channels
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Profile of Online Shoppers
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Age range of 25 to 54 Income level range 3
5,000 to about 99,999 College graduates
those with postgraduate education make up 54
Professional/managerial occupations make
up 32
Highest Percentages
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Future of Online Shopping
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Online Sales as a Percentage of Total Retail
Sales, 19992002
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Advantages Disadvantages
Objective 7
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Advantages of Electronic Marketing Channels

• Global scope reach
• Convenience/rapid transaction processing
• Information processing efficiency flexibility
• Data-based management relationship
  capabilities
  
• Lower sales distribution costs

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Advantages Disadvantages
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Disadvantages of Electronic Marketing Channels

• Lack of contact with actual products delayed
• possession
• 2. Fulfillment logistics not at Internet speed or
  efficiency
  
• Clutter, confusion, cumbersomeness of Internet
• Nonpurchase motives for shopping not addressed
• Security concerns of customers

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Implications
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Objective 8

• Objectives strategies of the firm electronic
• marketing channels
• Role of electronic marketing channels in the
• marketing mix
• Channel design electronic marketing channels
• Channel member selection electronic
  marketing
  
• channels
• Channel management electronic marketing
  channels
  
• Evaluation electronic marketing channels

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Objectives Strategies of the Firm
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Role of distribution more complex because of e
lectronic marketing channels Channel manager m
ust consider whether Internet-based channels fun
damentally affect the firms decision about the p
riority given to distribution
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The Marketing Mix
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The Internet arms large numbers of customers wit
h more information about products services
to level the playing field The fourth P, pl
ace (distribution), may assume a
larger role relative to the other three variables
for more more firms
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Channel Design
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The channel manager of retailers, industrial, an
d B2B markets should provide channel-surfing
consumers with whatever channels or combinations
of channels they desire A facet of t
he development of an effective multichannel m
arketing strategy
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Channel Member Selection
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Complexity grows as channel member selection may
include the need to avoid conflict with
conventional channel members The nee
d to select members carefully
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Channel Management
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Multichannel challenge of conventional and ele
ctronic channels The fundamental issues of m
otivating channel members, building cooperation,
managing conflict, coordinating elements of the
marketing mix requires managers full attention
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Evaluation
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Likely to change Unlikely to chang
e Specific criteria for Performa
nce expectations, performing evaluations c
riteria, measurement of technological means for
how well they are being met
doing so by channel members