The Effects of the Internet on Channel Strategy

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The Effects of the Internet on Channel Strategy

Ryan Andrew

MM 574

June 11, 2009

Consumers walk into a grocery store on any given day, pick up the food or beverages they need, pay and head home. Few people stop to think or contemplate how the Tombstone pizza they purchased for dinner ended up in the frozen food section of the local grocer. They merely place the pizza in the oven and in 15 minutes dinner is served. The process of delivering the Tombstone pizza to the consumer, through the grocer, from Kraft Foods is the distribution channel strategy. The Tombstone example could include any number of items or companies. Goods or products have to start someplace and in this case, Kraft Foods is the producer. Customers in the grocer or retail establishment are the consumers. The middleman in this scenario is the wholesaler, or in other words, the grocery store or retail store. The middleman helps the market flow and would be considered the marketing channel in any business transaction where goods or products are exchanged. Whereas marketing “is a social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others,” the marketing channel is a the actual exchange relationships within marketing. Today, marketing channels are not so much a distribution process as a relationship orientation. (Pelton, Strutton, & Lumpkin, 2007) According to our text, marketing channels are created because of a need for the marketplace to be better serviced. Since marketing is constantly changing, so are the marketing channels that are used. Because of this constant change, new marketing channels are constantly being conceived to be able to move the market forward. But, for a marketing channel to be successful, they must operate as a team connecting the producer and the consumer, consistently being able to move resources and products from the point of origin to the point of consumption. (Pelton, Strutton, & Lumpkin, 2007) The purpose of the channel relationship is to move the products to the consumers and for this to happen, each member is responsible for marketing functions that will convince the consumer to buy. These marketing functions as a whole include: gathering information, promoting the product, negotiating terms, ordering and communicating user demand up the channel, financing, assuming responsibility along the way, assuming possession and billing, and transferring ownership between all parties involved. These shared marketing responsibilities are made successful based on four key elements. These concepts of successful marketing channels include pooled resources, collective goals, a connected system and flexibility. Pooled resources, as discussed before means everyone needs to be on the same team, work in unison and complete the marketing channel. The goal is to get the product to the consumer and sometimes that means marketing efforts from both the producer and the wholesaler to promote the item. The meaning of collective goals within marketing channels is the willingness to sacrifice individual for team. A shared purpose for all members of the channel helps unite organizations. Often times, a mission statement or common these delivers purpose to the organization from the top to the bottom. A connected system is essential, as organizations cannot exist without markets. Competition between businesses emerges through marketing channels and forces business and markets to thrive. Enterprise grows because of the marketplace and its channels. Market channels must be flexible to be successful. Channels must be open to change, and willing to evolve, or even to allow new channels to permeate the marketplace. (Pelton, Strutton, & Lumpkin, 2007) While developing a successful brand and a product in itself is crucial to the success of a company, we have learned that creating an effective way to market and distribute is just as crucial a challenge to the business....
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