Marketing Channel Decision - Admission/Application Essay Example

? Management Management Marketing Channel Decision The market channels perform the task of moving goods from the manufacturers to the final consumers (Kotler & Keller, 2005). It overcomes the place, possession and time that separate services and goods from those who want them. Marketing channel teams are responsible for performing a number of tasks which includes: promotion of products, ordering, risk sharing, payment collection, collection of information, title taking and transfer, and financing of inventories (Kotler & Keller, 2005). The marketing channel decision is one of the most important factor facing marketing managers. An organization’s marketing channel decisions are directly linked with other marketing decision. Most companies usually pay more attention to address other marketing decisions other than channel decisions. This usually costs damages to the organizations. Distribution channel decision frequently involves long-term commitments to other companies (Kotler & Keller, 2005). In theory, the cost of using intermediaries to achieve wider distribution is supposed to be lower. Generally, it is not easy for manufacturers to decide on the cost of selling their products and services directly to the final customers, except by mail order. In practice, if the manufacturer is large enough, the use of intermediaries can occasionally cost more than going direct (Kotler & Keller, 2005). It is, therefore, evident that many theoretical arguments about marketing channel are more concerned with cost than other channel factors. In contrary, practical decisions address customer control issues. Large organizations have the choice to choose other alternatives other than intermediaries, unlike small firms that have no alternatives but to use the intermediaries (Kotler & Keller, 2005). However, many distributors assume that their task in the marketing channel is to introduce products into the beginning of the distribution channel. Notably, this is just part of their responsibility. Suppliers should extend their tasks to manage all processes that are involved in that distribution channel, up to the time the product or service reaches the final consumer. This, therefore, means that channel decision involve a number of other decisions such as channel membership and motivation on the part of the supplier (Kotler & Keller, 2005). Marketing Intermediaries, Training and Motivation Suppliers sometimes outsource selling jobs to intermediaries so as to give up some control over how, and to whom the products and services are sold (Kotler & Keller, 2005). Suppliers prefer working with intermediaries because of their greater efficiencies in making the products and services available for the targeted customers. Through their specialization, experience, scale of operation, and contacts, intermediaries often offer the organizations more than they can achieve on their own. In the distribution channel, intermediaries obtain large quantities of products from the manufacturer, and break them down into broader assortments and smaller quantities required by the customers. Intermediaries are thus charged with the responsibility of matching supply and demand (Kotler & Keller, 2005). Suppliers vary in their abilities to attract qualified marketing intermediaries. Sometimes producers experience hard times selecting the most experienced and qualified intermediaries from a plenty of successful applicants. Clear guidelines and requirements for selecting the most experience intermediary should, therefore, be laid down by every organization. Producers should evaluate each channel member’s growth and profit records, years in business, reputation, and cooperativeness (Kotler & Keller, 2005). After selection, channel members should continuously be motivated to carry out their responsibilities to the best. The firms should not only sell through the intermediaries alone, but also through its channel members. Most organizations consider their intermediaries as their first customers. They may be offered positive motivators such as special deals, sales contests, higher margins, premiums, display allowances and cooperative advertising allowance (Kotler & Keller, 2005). Sometimes the producer chooses to offer them negative motivators, such as threats to stop the contract, slow down delivery and reduce margins. Negative motivators are usually offered to tests the intermediary’s strengths, weaknesses, needs and problems. Most companies often strive to create a long-term relationship with the intermediaries so as to create a marketing system that satisfies both the producer’s and distributor’s needs (Kotler & Keller, 2005). In managing marketing channels, the producer must convince its distributors that they can earn revenue when they become part of the company’s advanced marketing system. Brick-and Click Companies For effective distribution of goods and services, most companies are currently using multi-channels to ensure that their products reach a wide range of customers. For instance, Ecommerce enables customers to electronically exchange services and goods with the manufacturing over a long distance (Kotler & Keller, 2005). E-commerce has increased its importance in various organizations due to the adoption of brick-and-click channel systems. Many organizations are still undecided whether to integrate an online e-commerce channel. Many companies have only opened Websites describing their business but have restricted inclusion of e-commerce in their Websites. Many channel distribution managers assume that online distribution of services or products creates channel conflict (Kotler & Keller, 2005). Integrating e-commerce channel in the distribution channel produces treat of backlash from brokers, retailers, agents, or other intermediaries. Channel distribution managers are, therefore, imposed to challenges of deciding on how to sell products or services both through online and intermediaries. There are three key strategies used by distribution managers to improve the acceptance of e-commerce from intermediaries. These include: offer different products or brands on the Internet, accept orders on the Internet but have intermediaries deliver and collect payment, and offer online partners high commissions to counteract negative impacts on sales (Kotler & Keller, 2005). Organizations, therefore, need to decide on whether to drop all or a portion of their intermediaries and go direct. Managing in Turbulent Environments Assuring profit and competitiveness ability for businesses is the key challenge for managers in a turbulent environment. Igor Ansoff, a strategic management Guru, suggests that for companies to maximize their profitability and competitiveness, they have to match their supporting and strategy capabilities with the environment. He thus developed five levels of turbulence scale for managing businesses in a turbulence environment (Kotler & Keller, 2005). There are some situations in a business, when a rapid change introduced into business’ operations results into low level visibility of the future plans, which interferes with the organization’s historical success strategy. Mangers overcome such challenges by applying concepts of environmental concepts. Level 1: Repetitive Environment This is a business environment where nothing ever changes. In this stable environment, companies do not change their products unless forced by a threat to their survival. These firms are highly structured, and the management team work according to precise job description (Kotler & Keller, 2005). An example of such organizations is Museums. Level 2: Expanding Environment This environment is common in a rapidly growing economic sector. Demand often exceeds supply in this environment, and the price is the main determinant of the purchase decision (Kotler & Keller, 2005). FedEx Inc. is an example of companies that operate in this environment. This firm continuously improves the quality of its services based on experience, and services are not changed in the absence of threats from its key rivals. Success of this firm depends on maximization of market share. Level 3: Changing Environment In this environment, customers’ preferences and desires are the key determinants of a business success (Kotler & Keller, 2005). McDonald is one of the companies which operate in this environment. It strives to improve its products and services with the aim of satisfying customers’ needs. All the company’s in this environment are market-driven and extroverted (Kotler & Keller, 2005). Level 4: Discontinuous Environment This is the most difficult level to deal with in management. At this stage, a successful company may choose to abandon its historical position, and involve itself in a new business (Kotler & Keller, 2005). Changes that are adopted by organizations in this environment are driven by perception of new opportunities that are anticipated in the future. The company is not restricted to particular products, customers and technologies. Its main aim is to move where it can maximize its profit margins. Level 5: Surpriseful Environment This is a business environment that is highly influenced by technology and innovation (Kotler & Keller, 2005). LG is atypical example of a company operating in this environment. LG works to create its own environment, and it is committed to creativity. The future success of this company depends on its ability to produce highly innovative products that are consistent with the latest technological advancements (Kotler & Keller, 2005). It thus operates on a detailed long-term plan. Reference Kotler P, Keller K. L. (2005). Marketing Management. New Jersey: Prentice Hall. Read More