Department of Finance, CU

PRINCIPLES OF MARKETING
CHAPTER 01

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Course Outline
Chapter 01: Introduction to Marketing

Chapter 02: Company and Marketing Strategy

Chapter 03: Analyzing the marketing environment

Chapter 04: Customer insights through marketing information and research

Chapter 05: Customer value-driven strategy

Chapter 06: Product, services, and Brands

Chapter 07: Pricing

Chapter 08: Marketing channels

Chapter 09: Integrated marketing communication

Chapter 10: Marketing in digital age & ethical backdrop

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Short Bio Hoque, M.Z.
▪ BBA and MBA in Finance, University of Chittagong, (2005)
▪ Lecturer, Department of Finance, University of Chittagong
(2006)
▪ Assistant Professor, Department of Finance, University of
Chittagong (2009), Associate Professor (2016).
▪ MSc in Management, Economics and Consumer Studies,
Wageningen University, Netherlands (2013-2015)
▪ PhD in Business Economics (May 01, 2017-April 08, 2022) at
the School of Business and Economics of the Arctic
University of Norway (UiT).
▪ Professor (2022), Department of Finance, University of
Chittagong.

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Introduction to Marketing

Understanding the
What Is Marketing? Marketplace and
Customer Needs

Designing a Preparing an
Customer-Driven Integrated Marketing
Marketing Strategy Plan and Program

Building Customer Capturing Value from

Relationships Customers

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Today’s Marketing

Marketing, more than any other business

function, deals with customers.

Building customer relationship based on

customer value & satisfaction is at the very heart
of modern marketing.

Today, marketing must be understood not in the

sense of making a sale-”telling & selling”-but in
the new sense of “satisfying customer needs”.
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Consumer Value

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What is Marketing?

Marketing is an organizational function and a

set of processes for creating, communicating,
and delivering value to customers and for
managing customer relationships in ways that
benefit the organization and its stakeholders.

Marketing is the performance of business

activities which direct the flow of goods &
services from producer to consumer or user in
order to best satisfy the customer and
accomplish the company’s objective.

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The Marketing Process

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Understanding the Marketplace
and Customer Needs/Core marketing
concepts

Customer Needs, Wants:- Form that Demands:- Wants

Needs:- States of needs take as they are
Wants, and shaped by culture and to be backed by
deprivation
Demands individual personality buying power

Physical— Social— Individual—

food, clothing, belonging and knowledge and
warmth, safety affection self-expression

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Understanding the Marketplace
and Customer Needs/Core
marketing concepts

Market offerings:- are some combination of products,

services, information, or experiences offered to a market to
satisfy a need or want

Marketing myopia:- is focusing only on existing wants and

losing sight of underlying consumer needs

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Understanding the Marketplace
and Customer Needs/Core marketing
concepts

Customer Value and Satisfaction, Expectations

Customers
Value and satisfaction

Marketers
Set the right level of
expectations
Not too high or low

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Understanding the Marketplace
and Customer Needs/Core marketing
concepts

Exchange:- is the act of obtaining a desired object

from someone by offering something in return.

Transaction:- a trade of values between two parties.

Markets:- are the set of actual and potential buyers

of a product

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Designing a Customer-Driven
Marketing Strategy

❖ Marketing strategy:- is the art and science of

choosing target markets and building profitable
relationships with them.
 What customers will we serve?
➢ Selecting Customers to Serve:-

✓ Market segmentation- refers to dividing the markets

into segments of customers

✓ Target marketing- refers to which segments to go

after
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Designing a Customer-Driven
Marketing Strategy

Choosing a Value
Proposition: Set of benefits
How can we best serve or values a company
these customers? promises to deliver to
customers to satisfy their
needs.

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 Designing a Customer-Driven
Marketing Strategy
❖ Marketing Strategy Orientations

Production Product Selling

concept concept concept

Marketing Societal
concept concept
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Designing a Customer-Driven
Marketing Strategy

Production concept :- is the idea that

consumers will favor products that are available
or highly affordable.

Product concept:- is the idea that consumers

will favour products that offer the most quality,
performance, and features. Organizations
should therefore devote their energy to making
continuous product improvements.

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Designing a Customer-Driven
Marketing Strategy

Selling concept :- is the idea that

consumers will not buy enough of the
firm’s products unless it undertakes a
large scale selling and promotion effort.

Marketing concept:- is the idea that achieving

organizational goals depends on knowing the
needs and wants of the target markets and
delivering the desired satisfactions better than
competitors do.

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Designing a Customer-Driven
Marketing Strategy
➢ Societal marketing:- concept is the idea that a company
should make good marketing decisions by considering consumers’
wants, the company’s requirements, consumers’ long-term interests,
and society’s long-run interests.

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Preparing an Integrated
Marketing Plan and Program

The marketing mix:- set of tools (four Ps) the firm

uses to implement its marketing strategy. It
includes product, price, promotion, and place.

Integrated marketing program: a comprehensive

plan that communicates and delivers the
intended value to chosen customers.

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Building Customer Relationships

▪ Customer Relationship Management (CRM):

The overall process of building and
maintaining profitable customer relationships
by delivering superior customer value and
satisfaction.

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Building Customer Relationships

▪ Relationship Building Blocks: Customer

Value and Satisfaction
Customer- Customer
perceived value satisfaction

• The difference • The extent to

between total which a product’s
customer value perceived
and total performance
customer cost matches a
buyer’s
expectations

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Building Customer Relationships

Customer Relationship Levels and Tools

▪ Basic Relationships—many low-margin
customers.
▪ Full Partnerships---few high-margin customers.
The Changing Nature of Customer Relationships
▪ Relating with more carefully selected customers
uses selective relationship management to target
fewer, more profitable customers.

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Capturing Value from Customers

• Creating Customer Loyalty and Retention

• Customer lifetime value-- is the value of the
entire stream of purchases that the customer
would make over a lifetime of patronage.

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 Capturing Value from Customers

Growing Share of Customer

Share of customer --is the portion of the customer’s

purchasing that a company gets in its product
categories.

Customer equity-- is the total combined customer

lifetime values of all of the company’s customers.
The more loyal the firm's customers, the higher the
firm’s customer equity.
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Capturing Value from Customers

Building Customer Equity:

Right relationships with the right customers

involves treating customers as assets that need to
be managed and maximized.

Different types of customers require different

relationship management strategies.

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The Changing Marketing
Landscape
New consumer frugality: a
strong value consciousness
Uncertain Economic Marketers focus on value
that dictates trade-offs in
Environment for the customer
price, brand, and
convenience

Digital Age Internet & mobile

Marketers have great new
People are connected communication devices
tools to communicate with
continuously to people and creates environment for
customers
information worldwide online marketing

Rapid Globalization Sustainable Marketing Not-for-Profit Marketing

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Thanks!

QUESTION?

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Chapter Two

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 The Company’s The Demographic
The Company’s
Macro Marketing
Microenvironment
environment Environment

The Economic The Natural The Technological

Environment Environment Environment

The Political and Responding to the

The Cultural
Social Marketing
Environment
Environment Environment

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Includes the actors and forces outside
marketing that affect marketing management’s
ability to build and maintain successful
relationships with customers.

Is made up of a microenvironment & macro

environment.

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 Microenvironment consists of the actors close to
the company that affect its ability to serve its
customers, the company, suppliers, marketing
intermediaries, customer markets, competitors,
and publics.

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 A) The Top Finance R&D
Company management

Purchasing Operations Accounting

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B) Suppliers

Suppliers are those who supply the inputs like raw materials
and components etc. to the company.

Provide the resources to produce goods and services;

Treat as partners to provide customer value.

Uncertainty regarding the supply or other supply constraints

often compels companies to maintain high inventories
causing cost increases.
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C) Marketing Intermediaries
• Help the company to promote, sell and
distribute its products to final buyers.
• Types of Marketing Intermediaries
• Resellers
• Marketing services agencies
• Physical distribution firms
• Financial intermediaries
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D) Competitors
Every organization, whether big or small, has
competition and competitors.

So the company has to keep a constant check on

its competitors.

Firms must gain strategic advantage by positioning

their offerings against competitors’ offerings.

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E) Publics

Any group that has an actual or potential

interest in or impact on an organization’s ability
to achieve its objectives.
• Financial publics
• Media publics
• Government publics
• Citizen-action publics
• Local publics
• General public
• Internal publics
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F) Customers
 The main purpose for the existence of most
organizations is to satisfy the needs and wants of
the customers. The firm aims to please the
customer and earn a profit in return.
 Consumer markets

 Business markets
 Government markets
 International markets

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 Macro environment---the larger societal
forces that affect the microenvironment.

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A) Demographic Environment

Demography: the study of human populations--

size, density, location, age, gender, race,
occupation, and other statistics.
Demographic environment: involves people,
and people make up markets.

Demographic trends: shifts in age, family

structure, geographic population, educational
characteristics, and population diversity.
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 Increasing number of Increasing number of stay-
working women at-home dads

Change in where people

work
Move from rural to • Telecommuting
metropolitan areas • Home office

Changes in the Workforce

• More educated Generational marketing is
• More white collar important in segmenting
• Markets are becoming more
diverse people by lifestyle of life
• International state instead of age.
• National

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B) Economic environment
It consists of factors that affect consumer purchasing power and
spending patterns.

Industrial economies are richer markets

Subsistence economies consume most of their own agriculture and

industrial output

Value marketing-offering financially cautious buyers greater value—

the right combination of quality and service at a fair price.

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C) Natural environment: natural resources
that are needed as inputs by marketers or
that are affected by marketing activities.

Trending…

• Increased shortages of raw materials

• Increased pollution
• Increased government intervention
• Increased environmentally sustainable strategies

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D) Technological Environment

It has affected every aspect of our lives from how we shop, to how
we travel to how we communicate. Technology has also greatly
affected businesses around the world.

Most dramatic force in changing the marketplace

New products, opportunities

Concern for the safety of new products.

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E) Political environment -- laws, government
agencies, and pressure groups that influence or
limit various organizations and individuals in a
given society.
 Legislation regulating business

 Increased legislation

 Changing government agency enforcement

 Increased emphasis on ethics

 Socially responsible behaviour

 Cause-related marketing

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F) Cultural environment -- consists of institutions and
other forces that affect a society’s basic values,
perceptions, and behaviours.

Persistence of Cultural Values---

Core beliefs and values --- are persistent and are

passed on from parents to children and are reinforced
by schools, churches, businesses, and government.

Secondary beliefs and values--- are more open to

change and include people’s views of themselves,
others, organizations, society, nature, and the universe.

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 Macro-Environment – Marketing
Environmental Analysis
 Micro-Environment – Marketing
Environmental Analysis
 Internal Environment – Marketing
Environmental Analysis

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 Views on Responding

Uncontrollable Proactive Reactive

• React and • Aggressive • Watching and

adapt to actions to reacting to
forces in the affect forces forces in the
environment in the environment
environment

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Customer-Driven
Market
Marketing
Segmentation
Strategy

Differentiation
Market Targeting
and Positioning
Dividing a
market into
smaller
Segmenting consumer markets
segments with
distinct needs,
characteristics,
or behavior
that might
Segmenting business markets
require
separate
marketing
strategies or
mixes.
Segmenting international markets

Requirements for effective

segmentation
 Geographic Demographic
segmentation segmentation

Psychographic Behavioral
segmentation segmentation
 Demographic segmentation
:-divides the market into
Geographic segmentation:-
groups based on variables
divides the market into
different geographical units such as age, gender, family
size, family life cycle, income,
such as nations, regions,
occupation, education,
states, counties, or cities
religion, race, generation,
and nationality
Age and life-cycle stage segmentation:- is the process
of offering different products or using different marketing
approaches for different age and life-cycle groups
Gender segmentation:- divides the market based on sex
(male or female)

Income segmentation:- divides the market into affluent,

middle-income or low-income consumers

Psychographic segmentation:- divides buyers into

different groups based on social class, lifestyle, or
personality traits
uses, or responses
Occasions
to a product.

Benefits sought User status

Usage rate Loyalty status

 Product Use (How the product is used by
the customer)
 How frequently they purchase (Ex. Single
purchase, Recurring)
 Consumer Type (Retailer, Manufacturer,
Gov., Etc.)
 Industries (Technology, Logistics, Financial,
Etc.)
 Geography (Location of the Customer)
 Purchase Process (The process by which the
sale is carried out).
Geographic Economic
location factors

Political- Cultural
legal factors factors
❑ Intermarket segmentation :
▪ Divides consumers into groups with similar
needs and buying behaviours even though
they are located in different countries
 Measurable: The size,
Accessible: The market Substantial: The market
purchasing power, and
segments can be effectively segments are large or
profiles of the segments can
reached and serv ed. profitable enough to serv e.
be measured.

Differentiable: The segments

are conceptually Actionable: Effective
distinguishable and respond programs can be designed
differently to different for attracting and serving
marketing mix elements and the segments.
programs.
Target market: consists of a set of buyers who share common
needs or characteristics that the company decides to serve.

Evaluating Market Segments

Segment size and growth

Segment structural attractivenessSegment profitability = (Segment size x

Segment adoption percentage x Purchase
behaviour x Profit margin percentage) – Fixed
costs.
Company objectives and resources: adopting marketing mix
to the target market.
 Undifferentiated Differentiated marketing
marketing targets the targets several different
whole market with one market segments and
offer. Mass marketing designs separate offers
for each.
Goal is to achieve higher
sales and stronger More expensive than
position undifferentiated
marketing
Concentrated marketing: targets a small share of a large market.

Limited company resources

Knowledge of the market

More effective and efficient

Micromarketing : is the practice of tailoring products and marketing

programs to suit the tastes of specific individuals and locations.
Local marketing

Individual marketing
✓ Local marketing: involves tailoring brands and
promotion to the needs and wants of local customer
groups
 Cities
 Neighborhoods
 Stores
✓ Individual marketing : involves tailoring products and
marketing programs to the needs and preferences of
individual customers
Also known as:
› One-to-one marketing
› Mass customization
› Markets-of-one marketing
Company Product
resources variability

Product life-cycle
Market variability
stage

Competitor’s
marketing
strategies
❑ Product position is the way the product is defined
by consumers on important attributes—the place
the product occupies in consumers’ minds relative
to competing products.
✓ Perceptions
✓ Impressions
✓ Feelings
❑ Positioning maps: show consumer perceptions of
their brands versus competing products on
important buying dimensions.
 1 2 3 4
Identifying a set of Choosing the right Selecting an overall Communicating
possible competitive positioning strategy and delivering the
competitive advantages chosen position to
advantages to the market
build a position
Competitive advantage is an advantage
over competitors gained by offering
consumers greater value, either through
lower prices or by providing more benefits
that justify higher prices.
 Identifying a set of possible competitive
advantages to build a position by providing
superior value from:

Product Service
differenti differenti
ation ation
Channel People
differenti differenti
ation ation
Image
differenti
ation
 Apple differentiates its products by
pricing them higher than its competitors
implying that the products are better
quality and incorporate the latest
technology.
 The company also stimulates consumer
interest by introducing hype before
product launches through clever
marketing and distribution strategies.
 How many differences to promote?
 Which differences to promote?

Important Distinctive Superior

Communicable Preemptive Affordable

Profitable
Value proposition is the full mix of benefits upon
which a brand is positioned.
To (target segment and need) our (brand)
is (concept) that (point of difference)

Communication and Delivering the Chosen

Position

Choosing the positioning is often easier

than implementing the position.
THANK YOU!!!!!!
Chapter Six
Product, Services, and Brands:
Building Customer Value
 What Is a Product?

Product and Services

Chapter Decisions
Outline Services Marketing

Branding Strategy:
Building Strong Brands
 What Is a Product?
➢ Product is anything that can be offered in a
market for attention, acquisition, use or
consumption that might satisfy a need or
want.
➢ Service is a product that consists of
activities, benefits or satisfaction that is
essentially intangible and does not result in
the ownership of anything.
Levels of
Product
 Core benefit:
This is the basic product and the focus is on the
purpose for which the product is intended. For
example, a warm coat will protect you from the cold
and the rain.
The five
product Generic product:
This represents all the qualities of the product. For a
warm coat this is about fit, material, rain repellent
levels ability, high-quality fasteners, etc.

are:
Expected product:
This is about all aspects the consumer expects to
get when they purchase a product. That coat should
be really warm and protect from the weather and
the wind and be comfortable when riding a bicycle.
 • Augmented product:
The Augmented Level for a product refers to all
additional factors which sets the product apart
from that of the competition. And this particularly
involves brand identity and image.
• Is that warm coat in style, its colour trendy and
made by a well-known fashion brand? .
Cont.
• Potential product:
This is about augmentations and transformations
that the product may undergo in the future. For
example, a warm coat that is made of a fabric that
is as thin as paper and therefore light as a feather
that allows rain to automatically slide down.
 Consumer
products
Product and
Service
Classifications
Industrial
products
 Consumer products
• Consumer products are products and
services for personal consumption.
• Classified by how consumers buy them:
• Convenience products
• Shopping products
• Specialty products
• Unsought products
 Industrial products
Industrial products:
• Products purchased for further processing or
for use in conducting a business
• Classified by the purpose for which the
product is purchased:
• Materials and parts
• Capital
• Supplies & services
 Product and
Service Decisions
• Depend on three factors:
✓Individual Product and Service
Decisions
✓Product Line Decisions
✓Product Mix Decisions
Individual Product and Service Decisions
 Product or service
attributes
Communicate and deliver the benefits
• Quality
• Features
• Style and design
✓ Product Quality Level:- is the level of
quality that supports the product’s
positioning.
Product or service attributes

✓ Product features
• are a competitive tool for differentiating a
product from competitors’ products
• are assessed based on the value to the
customer versus the cost to the company
✓ Style describes the appearance of the product.
✓ Design contributes to a product’s usefulness
as well as to its looks.
 Branding, packaging,
labels, PSS
➢ Brand is the name, term, sign, or design—or a
combination of these—that identifies the maker
or seller of a product or service.
➢ Packaging involves designing and producing the
container or wrapper for a product.
➢ Labels identify the product or brand, describe
attributes, and provide promotion.
➢ Product support services
 Product Line Decisions

❖Product line is a group of products that are

closely related because they function in a
similar manner, are sold to the same customer
groups, are marketed through the same types
of outlets, or fall within given price ranges.
❖ Product line Expanding:
• Line filling:-involves adding more items with
the existing one.
• Line stretching:-lengthen its product beyond
its current range.
 Product Mix Decisions

• Product mix consists of all the products and

items that a particular seller offers for sale
• Width
• Length
• Depth
• Consistency
 Services Marketing
Service Marketing consists of two words i.e.
Service & Marketing.
✓Services are the activities, benefits or
satisfactions which are offered for sale or
satisfactions, which are provided in connection
with the sale of goods.
✓Marketing is getting and keeping customers.
✓So, Service Marketing means the art and
science of those techniques, methods or
services to increase the sale of either tangible
goods or intangible ones.
Nature and Characteristics of a Service
 Service firms often require
additional strategies:
Marketing Service-profit chain
Strategies
for
Service Internal marketing
Firms
Interactive marketing
 Service-profit chain

Service-profit chain links service firms do profits

with the employee and customer satisfaction:-
• Internal service quality
• Satisfied and productive service employees
• Greater service value
• Satisfied and loyal customers
• Healthy service profits and growth
 ❑ Internal marketing Internal marketing is the
promotion of a company's objectives, products
and services to employees within the
organization. The purpose is to increase employee
engagement with the company's goals and foster
brand advocacy.
• Internal marketing must precede external
marketing.
Internal & ✓ Interactive marketing means that service
Interactive quality depends heavily on the quality of the
buyer-seller interaction during the service
encounter.
• Service differentiation
• Service Quality
• Service productivity
Service marketing strategies
 Branding Strategy: Building Strong
Brands
Brand equity:-The differential effect that knowing the
brand name has on customer response to
the product or its marketing.
Customer-
Category

Brand development strategies

Thanks!
Question?
 Chapter-7
P RICIN G: U N D E RS TAN D IN G
AND CAP T URING
CU S TOME R VALU E

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 What Is a Price?

Major Pricing Strategies.

Topic
Internal and External
Considerations Affecting
Outline
Price Decisions.

9/4/2023 2
 What is a Price?
▪ Price is the amount of money
charged for a product or service. It is
the sum of all the values that
consumers give up in order to gain the
benefits of having or using a product
or service.
▪ It is the only element in the
marketing mix that produces revenue;
all other elements represent costs.

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Major Pricing Strategies
Customer Value-Based Pricing
• Understanding how much value consumers place on the
benefits they receive from the product and setting a price that
captures that value.
•It uses the buyers’ perceptions of value, not the sellers’ cost,
as the key to pricing.
• Value-based pricing is customer driven
Cost-based pricing
•Setting prices based on the costs for producing, distributing,
and selling the product plus a fair rate of return for effort and
risk.
•Cost-based pricing is product driven

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Cost based vs Value based
Pricing

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Types of value based pricing
▪ Good-value pricing: Offers the right
combination of quality and good service at a fair
price.
▪ Value-added pricing: Determine the price based
on how much a consumer thinks a product is
worth given its quality or features.

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 Cost-Based Pricing

Types of costs

Fixed Variable Total

costs costs costs

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 Costs as a
Function of
Production
Experience
▪ Experience or learning
curve is when average
cost falls as production
increases because fixed
costs are spread over
more units.

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Cost-plus/Markup
pricing
▪ Cost-Plus Pricing- adds a standard
markup to the cost of the product.
▪ Benefits
◦ Sellers are certain about costs
◦ Prices are similar in industry and
price competition is minimized
◦ Buyers feel it is fair
▪ Disadvantages
◦ Ignores demand and competitor
prices

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Break-Even Analysis and Target
Profit Pricing
▪ Break-even pricing is the price at which total
costs are equal to total revenue and there is no
profit.
▪ Target profit pricing is the price at which the
firm will break even or make the profit it’s seeking.

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Setting the Price
• Unit cost Pricing
Unit Cost = variable cost + (fixed cost/unit sales)
• Markup price
Markup price= unit cost/ (1 – desired return on sales)
• Target-Return Pricing
Target-return price = unit cost + (desired return X
investment capital)/unit sales
• Break-even volume
Break-even volume = fixed cost / (price – variable cost)

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Break-Even Analysis and Target Profit
Pricing

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Competition-based pricing

▪ Setting prices based on competitors’ strategies,

costs, prices, and market offerings.
▪ Consumers will base their judgments of a
product’s value on the prices that competitors
charge for similar products.

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 Considerations in Setting Price

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 Other Internal and External
Considerations Affecting Price Decisions

❑ Internal Factors: Company’s overall marketing strategy,

objectives & mix as well as other organizational
consideration.
❑ Target costing: Starts with an ideal selling price based
on consumer value considerations and then targets costs
that will ensure that the price is met.
❑ External Factors: Nature of the market & demand,
competitors’ strategies & prices, & other environmental
factors.

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The Market and Demand

Before setting prices, the marketer must understand the

relationship between price and demand for its products.
❑ The demand curve shows the number of units the
market will buy in a given period at different prices.
❑ Normally, demand and price are inversely related.
❑ Higher price = lower demand
❑ For prestige (luxury) goods, higher price can equal higher
demand when consumers perceive higher prices as higher
quality.

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Elasticity of demand
➢ Price elasticity of demand illustrates the
response of demand to a change in price.
➢ Inelastic demand occurs when demand hardly
changes when there is a small change in price .
➢ Elastic demand occurs when demand changes
greatly for a small change in price.

Price elasticity of demand = % change in quantity demand

% change in price

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Additional
external factors
▪ Economic conditions
▪ Resellers response to price
▪ Government
▪ Social concerns

9/4/2023 18
 Thank you!
QUES TION?

9/4/2023 19
 Chapter-8

MARKETING
CHANNELS
TOPIC OUTLINE
• Supply Chains and the Value Delivery
Network
• The Nature and Importance of Marketing
Channels
• Channel Behavior and Organization
• Channel Design Decisions
• Channel Management Decisions
• Marketing Logistics and Supply Chain
Management
SUPPLY CHAIN

• An entire system of producing

and delivering a product or
service, from sourcing the raw
materials to the final delivery of
the product or service to end
users.
 SUPPLY CHAIN VIEWS
• Supply chain “make and sell” view includes
the firm’s raw materials, productive inputs,
and factory capacity.
• Demand chain “sense and respond” view
suggests that planning starts with the needs
of the target customer, and the firm responds
to these needs by organizing a chain of
resources and activities with the goal of
creating customer value.
 SUPPLY CHAINS AND THE
VALUE DELIVERY NETWORK

• Value delivery network is the firm’s suppliers, distributors, and

ultimately customers who partner with each other to improve
the performance of the entire system.
• Value delivery network is a part of supply chain of a company
and includes all its direct participants involved in production,
distribution, marketing, customer service, etc. for given
geographical area.
• Production system uses feedback sales history to produce the
right product in required quantity.
 HOW CHANNEL
MEMBERS ADD VALUE
• Intermediaries offer producers greater efficiency in making
goods available to target markets. Through their contacts,
experience, specialization, and scale of operations,
intermediaries usually offer the firm more than it can
achieve on its own.
• From an economic view, intermediaries transform the
assortment of products into assortments wanted by
consumers.
• Channel members add value by bridging the major time,
place, and possession gaps that separate goods and
services from those who would use them.
CHANNEL MEMBERS ADD VALUE

Information Promotion Contact Matching

Physical
Negotiation Financing Risk taking
distribution
SUPPLY CHAIN PARTNERS

• Upstream partners include raw material suppliers, components, parts,

information, finances, and expertise to create product or service.
❑ Downstream partners include the marketing channels or distribution
channels that look toward the customer.
NUMBER OF CHANNEL LEVELS
CHANNEL BEHAVIOR

• A marketing channel interacts with the firms that they partnering with
each other. Every member depends on others.
• For example, A Toyota dealer depends on Toyota that Toyota designs
their cars to meet the customer demand.
• Another hand, Toyota depends on their dealer to attract its target
customers, persuade them to buy Toyota cars & provide after-sale
services.
• Every Toyota dealer depends on their dealers to ensure good sales that’ll
uphold the brand’s reputation.
CHANNEL CONFLICT

• There are two types of channel conflict.

• Horizontal conflict
• Vertical conflict
• Horizontal conflict is disagreements among firms at the same levels of
the channel. See an example: Toyota may complain that their other
dealers in the city offers high prices & they don’t maintain the actual
quality.
• Vertical conflict is disagreements among different levels of the same
channel. See an example: Burger kings want to introduce grilled chicken
but their franchises are not agreed with these statements.
MARKETING SYSTEMS: VERTICAL

• The entire channel member performs together.

• Their work must be specified & if any conflict arises that should be
managed technically.
• Conventional distribution channels consisting of one or more independent
producers, wholesalers & retailers operate a separate business seeking to
maximize its profits.
HORIZONTAL
MARKETING
SYSTEMS • In this system, two or more companies
join together to adopt a new marketing
strategy.
• They can combine their finances,
production, and resources to accomplish
their target.
MULTICHANNEL DISTRIBUTION SYSTEM
CHANNEL DESIGN DECISIONS

Analyzing Setting
consumer channel
needs objectives

Identifying
major
Evaluation
channel
alternatives
CHANNEL
MANAGEMENT
DECISIONS

Selecting Managing Motivating Evaluating

channel channel channel channel
members members members members
SUPPLY CHAIN
MANAGEMENT
• It is the process of managing
upstream and downstream
value-added flows of materials,
final goods, and related
information among suppliers,
the company, resellers, and
final consumers.
MAJOR LOGISTICS FUNCTIONS

Inventory
Warehousing
management

Logistics
Transportation information
management
THANKS!
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