Class 2

Question 1

Channel Management

Answer 1

Process where the company develops various marketing techniques and sales strategies to reach the widest possible customer base

• Channels are ways to market and sell products and services. Ultimate aim is to develop a better relationship between customer and product

Question 2

Channel Management: functions

Answer 2

• Helps in developing a program for selling and servicing customers within a specific channel
• Aim is to streamline communication between a business and the customer
• Important to segment the channels according to the characteristics of your customers : needs, buying patterns, success factors, etc. Then customize a program that includes goals, policies, products, sales and marketing program

Question 3

Channel management: goal

Answer 3

• Goal is to establish direct communication with customers in each channel
• Management gets a better idea which marketing channel best suits that particular customer base
• Techniques used in each channel could be different, but the overall strategy must always brand the business consistently throughout the communication

Question 4

Channel Management Foundations (building the supply chain)

Answer 4

Built with :

• Manufacturers
• Wholesalers
• Distributors/dealers
• Agents/brokers
• Retailers

Question 5

Vertical Marketing System (VMS)

Answer 5

Channel mgmt system in which the main members of the distribution channel (producers, wholesalers and retailers) work together as an unified group in order to meet consumers needs

• Advanced form of channel integration, often managed by one member to improve costs, supply consistency, more effective marketing

Question 6

Forward and backward integrations

Answer 6

Forward : retail outlet owned by supplier (ex Esso)

Backward: Supplier owned by retailer (Marks & Spencer)

Question 7

Corporate VMS

Answer 7

• Ownership that of the levels of distribution or production chain that is associated with a single company. Ex Apple

Question 8

Contractual VMS

Answer 8

• Formal agreement involved
• Contract between various levels such as the production or the distribution channel
• Aim is to coordinate the overall process that is related with the main company
• Common form is Franchising

Question 9

Administered VMS

Answer 9

• One member from the production and/or distribution chain has more dominance and organizes the whole nature that is associated with the VMS in an informal manner
• Main company usually dictates its terms and conditions to the other companies that are involved in the same VMS
• Ex Walmart establishes standards for producers of smaller products

Question 10

Advantages of VMS

Answer 10

• Centralized management with direct control over the various levels of the process
• Allows businesses to manage and coordinate various companies in order to gain a larger market share
• High operating efficiency: clear lines of authority and tight span of control. Control of all the elements of production, selling and distribution of its products.

= Eliminate competition and conflicts

Question 11

Disadvantages of VMS

Answer 11

• Strategy: Any lack of leadership at the top can hamper the effectiveness of the entire business because of the centralized control of power
• mgmt: can take a long time for top mgmt decisions to filter down. Reduces the ability of the organization to react quickly to a rapidly changing business climate
• HR: Employees at the bottom of a vertical structure may feel less valued than those higher up in the chain