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ING INTEGRATED MARKETING CHANNELS 15 C H A P T E R LEARNING OBJECTIVES After reading this chapter, students should: Know what is a marketing channel system and a value network Know what work marketing channels perform Know how channels should be designed Know what decisions companies face in managing their channels Know how companies should integrate channels and manage channel conflict Know what are the key issues with e-commerce CHAPTER SUMMARY Most producers do not sell their goods directly to final users. Between producers and final users stands one or more marketing channels, a host of marketing intermediaries performing a variety of functions. Marketing-channel decisions are among the most critical decisions facing management. The company’s chosen channel(s) profoundly affect all other marketing decisions. Companies use intermediaries when they lack the financial resources to carry out direct marketing, when direct marketing is not feasible, and when they can earn more by doing so. The most important functions performed by intermediaries are information, promotion, negotiation, ordering, financing, risk taking, physical possession, payment, and title. Manufacturers have many alternatives for reaching a market. They can sell direct or use one-, two-, or three-level channels. Deciding which type(s) of channel to use calls for analyzing customer needs, establishing channel objectives, and identifying and evaluating the major alternatives, including the types and numbers of intermediaries involved in the channel. Effective channel management calls for selecting intermediaries and training and motivating them. The goal is to build a long-term partnership that will be profitable for all channel members. Marketing channels are characterized by continuous and sometimes dramatic change. Three of the most important trends are the growth of vertical marketing systems, horizontal marketing systems, and multichannel marketing systems. All marketing channels have the potential for conflict and competition resulting from such sources as goal incompatibility, poorly defined roles and rights, perceptual differences, and interdependent relationships. Companies can manage conflict by striving for superordinate goals, exchanging people among two or more channel levels, co-opting 1
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Chapter-by-Chapter Instructional Material the support of leaders in different parts of the channel, encouraging joint membership in and between trade associations, employing diplomacy, mediation or arbitration, or pursuing legal recourse. Channel arrangements are up to the company, but there are certain legal and ethical issues to be considered with regard to practices such as exclusive dealing or territories, tying agreements, and dealers’ rights. E-commerce has grown in importance as companies have adopted “brick-and-click”
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