Success Strategies in Channel Management

1
Success Strategies in Channel Management

• New and Different Channel Forms and Trends

2
Channel Roles and the Marketing Mix
Changing Models and Demands of Distribution
Channels
Relationships and the Interaction Process
Changes
Synthetic Channels of Distribution
More Movement Towards Indirect Channels
3
Changing Models and Demands of Distribution
Channels

• The standards for achieving customer satisfaction
  have clearly changed.
• Examples of the importance of exchange utility
  are virtually endless.
• Take, for example, the notion of time utility.
  Many consumers have come to expect one-hour
  service on everything from film processing to
  prescription eyeglasses.

• Time utility applies to each link in the
  marketing channel. Emergent information
  technologies have changed the rules by which
  fast-service is judged.
• From just-in-time manufacturing to quick-response
  retailing, time-saving tools for managing the
  flows of goods and services have become expected
  in marketing channels.
• Marketing channel environments today are marked
  by a nearly borderless world.

4
Channel Roles and the Marketing Mix

• Marketing channels will be a particularly
  important agent for change in the marketplace.
  The future introduction of new distribution
  channels and new channel designs will undoubtedly
  promote changes in business practices and alter
  consumer lifestyles throughout the world.
• For instance, these changes are likely to
  transform current modes of thinking about
  customer satisfaction.
• Customer satisfaction in the future will be
  measured long after the initial sale.

• Environmental changes are also contributing to
  situations in which products and services once
  limited to regional distribution are now readily
  accessible in seemingly improbable markets.
• Will the widespread availability of (traditional)
  products in new and unusual markets frustrate
  marketing channel members' efforts to forge
  differential advantages in future marketplaces?
• Hardly, but the nature of competitive advantages
  themselves are likely to change..

5
Three techniques are likely to dominate the means
by which channel managers carve out differential
advantages in the future

• Value-Added Packages. Future channel members
  will be able to gamer a competitive edge (and new
  market share) if and only if they provide
  unprecedented value to their customers.
• Channel Specialization. As the demands of
  markets grow more complex, channel members will
  have to become more specialized. This
  specialization will be customer-driven, rather
  than product-oriented. Channel members of the
  future will likely focus their attention on
  specially identified market segments. These
  channel members are also likely to seek out
  linkages with exchange partners that offer
  competencies similar to their own in other,
  select market segments.

• Channel Extramediary Roles.
• Another major transitional movement in marketing
  channels will involve the emergence of the
  extramediary as a dominant channel role.
• This new role underscores the growing trend
  toward outsourcing.

6

• Growth of Extramediaries
• Extramediaries enjoy the capacity to enhance
  exchange relationships by filling value gaps.
• We can expect the decline of traditional channel
  roles (i.e., merchants, wholesalers, and
  brokers). Many traditional channel roles will be
  replaced by highly specialized extramediaries.

• Reassurance and Social Responsibility
• Consumers faced with less control
  (globalisation/internet), will seek greater
  reassurance via credibility building factors
  (Social responsibility/triple bottom lines etc.)
  and this protection will be backed by global
  government pressure
• Movements aimed at protecting the environment
  itself will likely be the most powerful impetus
  for change in channels environments.

7
What other changes lie just over the
environmental horizon?

• More recycling of resources eg virtually all
  shipping containers will be reusable,
• New intermediaries will emerge for the sole
  purpose of facilitating convenient and
  cost-effective waste recovery, and
• Consumers will be required, by law, to recycle
  packaging and certain products.

• "Significant new sets of trade regulations in the
  global market-place. These changes will favour
  the biggest players in world trade and expand
  power gaps between developed and developing
  nations."
• Increased deregulation in the distribution and
  transport of goods within and between countries.
• Technological advances themselves will exercise
  notable effects on future channel relationships.
• Increased coordination and cooperation and less
  conflict among channel partners.

8
Changes

• Similar prescriptions for building long-lasting
  channel relationships are almost certain to
  continue in the new millennium. In the future,
  marketing channel members are likely to pursue
  non-traditional conflict resolution strategies.
• The development of successful internal channel
  environments in the future will likely pivot on
  the issue of whether exchange partners featuring
  complimentary strengths can find one another.
  More vicarious learning will foster international
  cooperation among exchange partners. -

• "Quality is not a manufacturing principleit is a
  process that involves each and every channel
  member."
• Self-service, or the provision for customers to
  handle and select merchandise themselves in a
  retail channel without supervision, is a major
  channel innovation of the twentieth century.

9
More Movement Towards Indirect Channels

• One of the most fundamental structural shifts
  that we believe will alter the face of many
  markets in the future is the progressive
  introduction of electronic commerce.
• More "category killers" which will devastate
  previously stable sectors.

• The introduction of electronic commerce in more
  industries decreasing the need for large
  back-room processing operations, e.g. travel
  industry, consumer banking, other financial
  services such as insurance, etc.
• the expansion of electronic commerce for
  business-to-business and business-to-consumer
  sales.
• More call-centres.
• The diversification of retailing channels.

10
Synthetic Channels of Distribution

• Also termed hybrid or fulfilment channel, the
  synthetic channel of distribution calls for the
  manufacturer to literally farm out different
  channel tasks to different companies and
  organizations that specialize in performing
  various channel business functions.
• It is harder to control performance and
  reputation when channel tasks are divided among
  different companies. And managing a channel takes
  up a great deal of your time.

• Delegate those activities that your organisation
  cannot easily or profitably perform.
• Locate and employ sales "guns for hire"a direct
  or indirect sales force that closes sales for
  you.

11
Relationships and the Interaction Process

• The future of marketing channels lies in
  long-term, ongoing and flexible relationships."
  In future channel settings interaction processes
  will be increasingly open and will feature a
  multilayered sharing of information and
  resources.
• Several other projections pertaining to
  interaction processes within marketing channel
  settings

• Network Development. Increasing numbers of
  complex networks will develop between channel
  members. Channel members will literally connect
  with one another in an expanding number of ways
  in the next decade.
• Standard Information Formats. A movement toward
  standardized formats will expedite goods,
  service, and information flows. Obstacles and
  bottlenecks in channels of distribution will thus
  be reduced.
• Increased Interdependency. The continued
  emergence of strategic alliances and channel
  networks will serve as a catalyst for additional
  structural changes in marketing channels. In
  particular, channel designs should become
  shorter.