Marketing Channels
Question 1
Porter’s five forces of competition are quite crucial in creating a competitive strategy in any industry (Porter, 1975). A competitive strategy does not only enable a company to defend itself against rivals, but also ensures that the company’s products continue to gain popularity in the market thus enhancing profitability. The five forces of competition as outlined by Porter include threat of new entrants; power of suppliers; power of buyers; availability of substitutes; and existing rivalry among existing companies (Porter, 1975). A marketing manager should therefore, come up with marketing strategies that, would be applicable to all marketing channel levels, so as to be able to beat the competition coming from their rivals.
Marketing channels play a key role in facing the competitive forces existing in an industry. At the manufacturing level, the manufacturer should come up a high quality unique product that would beat that of both existing and new rivals. For example, in the soap manufacturing industry, a manufacturer can decide to manufacture an all purpose soap that is long lasting. Sales promotions as well as pricing will greatly affect the popularity of this soap in the market. The manufacturer should therefore, invest highly on marketing so as to make its product well known to the customers. Furthermore, a marketing manager can implement the strategy of buyer selection so as to lower the bargaining power of buyers such as wholesalers and retailers. Similarly, a manufacturer should invest on total quality management so as to ensure the production of high quality products that will attract many suppliers. This will in turn reduce the bargaining power of the suppliers since the manufacturer has the upper hand as he has a number of suppliers to choose.
At the whole sale level, involved channel members including resellers and dealers should invest on pricing and promotion strategies so as to attract and maintain more customers while at the same time beating the competition from their rivals. For example, the wholesalers can decide to sell bulk products at a cheaper price as compared to that of their competitors. They can also carry out massive marketing campaigns so as to popularize their products.
Finally, at the consumer base, channel base should ensure that they create a high demand for their products by showing the importance of their products to consumers. For example in the cosmetics industry, channel members should work towards convincing women that life without cosmetic products is ‘ugly’. Consequently, the customer base will expand thus enhancing profitability.
Question 2
All distribution members including manufacturers’ representative, distributors/suppliers, retailers and resellers are charged with the key responsibility of value creation, and to achieve this, every member must perform several functions (Bhasin, 2010). These functions are transferred across the channel members. Firstly channel members act as risk takers in the marketing channel. This means that they shield both the manufacturers and customers from the potential risks associated with carrying out channel work.
Secondly, channel members facilitate negotiations between manufacturers and consumers. For instance, they negotiate the pricing of goods so as to ensure that both the manufacturers and consumers are satisfied. Other negotiations such as product specifications and delivery intervals are also performed by the channel members.
Thirdly, channel members provide financial assistance to manufacturers and customers. Certain programs can be offered so as to facilitate the payment process. For examples, channel members can implement programs that allow customers to get goods on credit or even extend the payment period. For manufacturers, channel members ensure that customers honour the payment agreements thus ensuring that manufacturers do not go to a loss due to payment delays.
Another function of channel members is to facilitate the distribution of goods across the supply chain. Suppliers and resellers ensure that goods reach customers at the appropriate time and when needed (Bhasin, 2010). They also ease the burden of goods’ storage especially for manufacturers who do not have adequate storage facilities.
Moreover, maintenance of contacts among all stakeholders including customers, manufacturers and legal authorities is another crucial function of channel members. In other words, channel members act as the bridge between manufacturers and customers and between the regulatory base and the manufacturers. They not only provide crucial information to all groups but also ensure that the established connections are not broken.
Finally, channel members play a critical role in the marketing of products. They inform customers of the new products in the market together with their benefits. They ease the marketing burden for manufacturers by carrying out marketing initiatives of their products.
Question 3
Motivation of channel members is essential in improving channel efficiency as it does not only increase sales and expand the customer base, but also leads to increased profits as profit maximization is achieved (Castro et al. 2009). In motivating channel members, manufacturers implement some incentive programs such as monetary incentives. However, as a manufacturer, I would work towards motivating my channel members using non-monetary incentives since I believe that they work better towards improving the self-esteem of channel members and also lead to self-actualization and creating a sense of belonging. One of my incentives would be provision of free training programs for channel members. This will not only equip them with the critical business skills and knowledge but, will also increase their eagerness to apply these skills in the real world (Castro et al. 2009).
Effective communication is also another essential non-cash incentive that motivates channel members to perform their duties as expected. Communication plays a key role in business operations. When channel members receive vital information, they feel that they are valued by the manufacturer.
I would also motivate my channel members by granting the autonomy in decision making and by allowing them to participate in critical decision making processes. Granting channel members a certain degree of power to make decisions creates the impression that you trust in their abilities (Castro et al. 2009). This in turn, motivates them to work hard since they feel valued and appreciated. The same happens when channel members are allowed to participate in the decision making process.
Furthermore, offering marketing support such as intelligence and promotional support is also another incentive that I would use to motivate my channel members. This proves to the channel members that I am actively involved in the entire process and highly committed to achieving sales goals.
Question 4
The four P’s (product, price, place and promotion) used in the marketing mix are vital in the creation of an effective marketing channel of any type of business (Cole et al. 2012). A sample marketing channel for an electronics store would be as follows:
Manufacturer supplier electronics store customer
The manufacturer should create a product that meets the customers’ needs and specifications so as to attract and maintain a large market share. This means that the products must be of the highest quality possible. The price should also be competitive such that, customers will be attracted to purchase these products, as opposed to those of rivals. Promotion is also a critical role in the marketing mix by ensuring that customers get adequate information regarding the available products. Moreover, the manufacturer should ensure that its goods are easily accessible. That is, the location of its dealers’ and resellers’ shops should be easily accessible to customers. It is the responsibility of the manufacturer to connect the customers’ needs to the distribution channel.
As for the supplier, the most applicable P is promotion whereby suppliers should work hard towards ensuring that it markets the products it supplies through promotions and other marketing strategies. Suppliers can communicate to the customer base about the advantages of using the products. They can also offer free samples to customers.
On the other hand, the electronics store would use the three P’s of promotion, placement and price so as to deliver its functions in the marketing channel. The store can offer such promotions as giving out discounts on items, offering after sale services and provision of warranties. The location of the store also matters. It should be strategically located such that customers find it easy to visit.
