Marketing Channel Environment

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Marketing Channel Environment

• Module 3 chapter 3

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Lecture Overview

• What is the channel environment?
• The nature of the channel environment
• Six key environments

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What is the channel environment?

• External operating environment
• macro-environment
• Six key environments
• Economic
• Competitive
• Socio-cultural
• Technological
• Legal
• Natural

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What is the nature of the channel environment?

• factors external to the firm
• uncontrollable but can be influenced
• dynamic
• uncertain and unpredictable
• short-term and long-term impacts
• need for channel to be flexible - adapt
• changes impacting upon one member of the channel
  impact upon the entire channel

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Analysing the channel environment

• What changes are occurring in each of the seven
  major channel environments?
• changes create opportunities or threats
• What are the implications of these changes for
  the channel management and decision making?
• assess likelihood and significance

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Economic environment

• economic climate
• inflation rates/interest rates/access to credit
• introduction of GST
• unemployment levels
• real income levels - disposable incomes
• balance of trade/value of AUD

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What is the impact of changes in the economic
environment?

• consumer purchasing power and demand
• generic and private label products
• self-service and no-frills options
• inventory levels held by intermediaries and
  product range carried
• capital investment (cost of funds - interest
  rates)
• emphasis on negotiating better terms/prices
• sales/profitability of channel members
• global competitiveness

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Competitive environment

• global and domestic
• direct and indirect
• four main types of competitors
• refer to figure 3.2, p. 88
• 1. horizontal
• 2. intertype
• 3. vertical
• 4. vertical marketing systems

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Horizontal competition

• Competition among channel members of the same
  type at the same level
• department store v department store
• ie Myer v David Jones
• merchant wholesaler v merchant wholesaler
• manufacturer v manufacturer
• Unilever v Colgate-Palmolive

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Intertype competition

• Competition among channel members different types
  at the same level
• ie for cosmetics
• chemist v department store v supermarket
• ie for pens
• newsagent v department store v discount store

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Intertype competition

• can result from scrambled merchandising
• reseller adds products that are related but not
  usually included in the line
• ie shoe stores sell socks and shoe cleaning
  products
• multiple channel strategy can be used to minimise
  direct competition
• sell different product lines through different
  types of channel members

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Vertical competition

• competition among different channel members at
  different levels
• ie manufacturer factory outlet or direct
  marketing channel versus retail outlets
• can be caused by using a dual channel strategy
• selling the same product through different
  channels

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Vertical marketing system competition

• Competition between entire channel systems
• channel v channel
• Coles v Woolworths
• McDonalds v Hungry Jacks
• Goodyear tyres v Bridgestone tyres
• Table 3.1, p. 3.5 (study guide)
• difference between vertical marketing system
  (VMS) and conventional marketing channel

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Socio-cultural environment

• Aging population
• Changing ethnic mix
• Improved education
• computer literacy
• more sophisticated and demanding
• value orientation
• good quality and good service at a fair price
• Changing households
• Working women
• Double-income families
• Non-nuclear families
• Changing roles

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• Changing lifestyles
• AIO
• activities, interests, opinions
• time-poor consumers
• want more leisure time
• want healthier lifestyle

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Other social issues

• environmentalism
• concern for the environment
• consumerism
• concern for the rights of the consumer
• nationalism
• concern for the welfare of the nation

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Technological environment

• automation/computerisation of warehousing
• scanners - UPC /barcodes
• automatic replenishment of inventory
• computerised inventory management
• quick response systems
• EDI
• electronic data interchange
• EFTPOS
• electronic funds transfer at the point of sale

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• teleshopping
• home shopping shows
• telemarketing (0055, 1800)
• telephone banking, BPay
• computer shopping
• electronic marketing
• ATMs
• in-store radio/TV
• satellite tracking

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Legal Environment

• Trade Practices Act (1974)
• three main aims
• prevent unfair competition and protect companies
  from each other
• protect consumers
• protect the interests of society
• S46 - restraint of trade/monopolisation
• S47 - exclusive dealing
• S48 - resale price maintenance

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• S49 - price discrimination
• S50 - mergers
• S52 - misleading or deceptive conduct
• S56 - bait advertising
• S61 - pyramid selling
• S69 - conditions and warranties
• S71 - merchantable quality/fitness for purpose

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Other legal factors

• increased trading hours - penalty rates
• OHS legislation
• superannuation, workcover, affirmative action
• zoning regulations
• product standards
• licenses (liquor etc)
• political climate
• business confidence

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Natural environment

• environmental concerns
• depletion of natural resources
• pollution - noise, air, water
• reverse marketing channels
• recycling
• second-hand shops
• flea markets
• garage sales

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Reverse Marketing

• reverse marketing channel
• consumer becomes the producer of waste products
• high cost of collection, sorting, storage,
  transporting and recycling plants
• short video on recycling

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Show time Video on Recycling
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Summary

• the changing nature of the channel environment
• six key environments
• changes and implications

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Tutorial Program

• Case 4 - Plattsburgh motor service
• Activity 3.2, part 1
• Activity 3.4, part 1 and 2
• Activity 3.6, part 1
• Activity 3.7 part 2