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1、Marketing Channels and Value NetworksMost producers do not sell their goods directly to the final users; between them stands aset of intermediaries performing a variety of functions. These intermediaries constitute a marketing channel (also called a trade channel or distribution channel). Formally,
2、marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption. They are the set of pathways a product or service follows after production, culminating in purchase and use by the final end user.Some intermediaries-s
3、uch as wholesalers and retailers-buy, take title to, and resell the merchandise; they are called merchants. Others-brokers, manufacturers representatives, sales agents-search for customers and may negotiate on the producers behalf but do not take title to the goods; they are called agents. Still oth
4、ers-transportation companies, independent warehouses, banks, advertising agencies-assist in the distribution process but neither take title to goods nor negotiate purchases or sales; they are called facilitators.The Importance of ChannelsA marketing channel system is the particular set of marketing
5、channels a firm employs, and decisions about it are among the most critical ones management faces. In the United States, channel members collectively have earned margins that account for 30% to 50% of the ultimate selling price. In contrast, advertising typically has accounted for less than 5% to 7%
6、 of the final price.Marketing channels also represent a substantial opportunity cost. One ofthe chief roles of marketing channels is to convert potential buyers into profitable customers. Marketing channels must not just serve markets, they must 1also make markets.The channels chosen affect all othe
7、r marketing decisions. The companys pricing depends on whether it uses mass merchandisers or high-quality boutiques. The firms sale force and advertising decisions depend on how much training and motivation dealers need. In addition, channel decisions include relatively long-term commitments with ot
8、her finns as well as a set of policies and procedures. When an automaker signs up independent deal ers to sell its automobiles, the automaker cannot buy them out the next day and replace them with company-owned outlets. But at the same time, channel choices themselves depend on the companys marketin
9、g strategy with respect to segmentation, targeting, and positioning. Holistic marketers ensure that marketing decisions in all these different areas are made to collectively maximize value.In managing its intermediaries, the firm must decide how much effort to devote to push versus pull marketing. A
10、 push strategy uses the manufacturers sales force, trade promotion money, or other means to induce intermediaries to carry, promote, and sell the product to end users. Push strategy is appropriate where there is low brand loyalty in a category, brand choice is made in the store, the product is an im
11、pulse item, and product benefits are well understood. In a pull strategy the manufacturer uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries, thus inducing the intermediaries to order it. Pull strategy is appropriate when the
12、re is high brand loyalty and high involvement in the category, when consumers are able to per ceive differences between brands, and when they choose the brand before they go to the store. For years, drug companies aimed ads solely at doctors and hospitals, but in 1997 the FDA issued guidelines for T
13、V ads that opened the way for pharmaceuticals to reach consumers directly. This is particularly evident in the burgeoning business of prescription sleep aids.SEPRACOR INC.2The increased use of prescription sleep aids is due not so much to an increase in the number of insomniacs, as to the billions o
14、f dollars the drug companies re spending on print and TV advertising. Consider Sepracors ads for Lunesta, featuring a pale green Luna moth flitting around the head of a peaceful sleeper. Sepracor spent $2.98 million in consumer advertising in 2006, and its stock and sales have jumped due to its succ
15、essful campaign. The drug industry as a whole spent more than $4 billion on consumer ads in 2005, more than a fivefold increase in 10 years. Its aggressive pUll marketing strategy has, however, prompted intense debate and scrutiny from Congress. After all, while aggressive advertising of Mercks Viox
16、x generated huge profits, it exposed housands of U.S. adults to heart attack risks. Critics of the new drug ads say the drugs they tout treat symptoms rather than spurring consumers to discoverthe reason they cant sleep (which can range from simple stress to serious illness). Proponents of such ads say that in an era of managed care and shortened doctor visits, ads educate patients and spark important conversations with doctors. Although the pharmaceutical industry is unlik
