Chapter 7Chapter 7Electronic Marketing ChannelsElectronic Marketing Electronic Marketing ChannelsChannels1515Objective 1:Technology InternetComputersImpact onDesign & Management of Marketing Channels1515Electronic Marketing Electronic Marketing ChannelsChannelsThe use of the Internet to make products & services available so that the target market with access to computers or other enabling technologies can shop & complete the transaction for purchase via interactive electronic meansObjectives 2 & 3:Not physical availability Web-TV, PDAsActually purchasing products through the use of PCs, Web-TV, PDAs1515Structure of ElectronicStructure of Electronic Marketing ChannelsMarketing ChannelsThree Key Phenomena1. Disintermediation versus reintermediation2. Information flow versus product flow3. Virtual channel structure versus physical channel structure1515Disintermediation andDisintermediation and ReintermediationReintermediationDisintermediationReintermediationIntermediaries become superfluous because producers gain exposure to vast numbers of customers in cyberspaceShifting, changing, or adding middlemen to the channelObjective 4:Amazon.com Auto-By-Tel Corp. Peapod, Inc.Dell Computer Corp.1515Disintermediation Disintermediation versusversus ReintermediationReintermediationNo matter how technologically sophisticated the Internet becomes or how much it is hyped, the laws of economics as they relate to channel structure do not change.Efficiency in the performance of distribution tasks is what ultimately determines what form channel structure will take.=The Internet has not eliminated middlemen, or caused total disintermediation.1515Internet LimitsInternet LimitsObjective 5:Product Flow Cannot be digitized Processed slowly, often by people Is basis for all other flowsnegotiation, ownership, information, & promotion1515Developments & TrendsDevelopments & TrendsObjective 6: Online shopping to $36 billion from mid-1990s to the end of 2002 Online shopping has become a routine shopping choice PCs, peripherals, software, & books accounted for a significant portion of total retail spending on these productsElectronic Marketing ChannelsProfile of Online ShoppersProfile of Online Shoppers1515Highest Percentages Age range of 25 to 54 Income level range $35,000 to about $99,999 College graduates & those with postgraduate education make up 54% Professional/managerial occupations make up 32%1515Future of Online ShoppingFuture of Online ShoppingOnline Sales as a Percentage of Total Retail Sales, 1999 2002YearOnline as % of Retail Sales% Change from Previous Year 19990.70020000.92532.120011.12521.620021.30019.71515Advantages & DisadvantagesAdvantages & DisadvantagesObjective 7:Advantages of Electronic Marketing Channels1. Global scope & reach 2. Convenience/rapid transaction processing 3. Information processing efficiency & flexibility 4. Data-based management & relationship capabilities 5. Lower sales & distribution costs1515Disadvantages of Electronic Marketing Channels1. Lack of contact with actual products & delayed possession 2. Fulfillment logistics not at Internet speed or efficiency 3. Clutter, confusion, & cumbersomeness of Internet 4. Nonpurchase motives for shopping not addressed 5. Security concerns of customersAdvantages & DisadvantagesAdvantages & Disadvantages1515ImplicationsImplicationsObjective 8: Objectives & strategies of the firm & electronic marketing channels Role of electronic marketing channels in the marketing mix Channel design & electronic marketing channels Channel member selection & electronic marketingchannels Channel management & electronic marketing channels Evaluation & electronic marketing channels1515Objectives & Strategies of the FirmObjectives & Strategies of the FirmRole of distribution more complex because of electronic marketing channels =Channel manager must consider whether Internet-based channels fundamentally affect the firms decision about the priority given to distribution1515The Internet arms large numbers of customers with more information about products & services to level the playing fieldThe fourth P, place (distribution), may assume a larger role relative to the other three variables for more & more firmsThe Marketing MixThe Marketing MixChannel DesignChannel Design1515The channel manager of retailers, industrial, and B2B markets should provide “channel-surfing” consumers with whatever channels or combinations of channels they desire =A facet of the development of an effective multichannel marketing strategyChannel Member SelectionChannel Member Selection1515Complexity grows as channel member selection may include the need to avoid conflict with conventional channel members=The need to select members carefullyChannel ManagementChannel Management1515Multichannel challenge of conventional and electronic channels =The fundamental issues of motivating channel members, building cooperation, managing conflict, &