5. Marketing Channels: To reach a target market, the marketer uses three kinds of marketing channels.
Communication channels deliver and receive messages from target buyers and include newspapers, magazines,
radio, television, mail, telephone, billboards, posters, fliers, compact discs (CDs), audiotapes, and the Internet.
Beyond these, firms communicate through the look of their retail stores and Web sites and other media.
Marketers are increasingly adding dialogue channels such as e-mail, blogs, and toll-free numbers to familiar
monologue channels such as advertisements.
The marketer uses distribution channels to display, sell, or deliver the physical product or service (s) to the buyer
or user. These channels may be direct via the Internet, mail, or mobile phone or telephone, or indirect with
distributors, wholesalers, retailers, and agents as intermediaries.
To carry out transactions with potential buyers, the marketer also uses service channels that include warehouses,
transportation companies, banks, and insurance companies. Marketers clearly face a design challenge in
choosing the best mix of communications, distribution, and service channels for their offerings.
6. Supply Chain: The supply chain is a longer channel from raw materials to components to finished products
carried to final buyers. The supply chain for coffee may start, for example, with the Ethiopian farmers who plant,
and pick the coffee beans, selling their harvest to wholesalers or perhaps a Fair-Trade cooperative. If sold through
the cooperative, the coffee is washed, dried, and packaged for shipment by an Alternative Trading Organization
(ATO) that pays a minimum of $1.26 a pound (Kotler, Keller, 2012). The ATO transports the coffee to the
developing world where it can sell it directly or via retail channels. Each company captures only a certain
percentage of the total value generated by the supply chain’s value delivery system. When a company acquires
competitors or expands upstream or downstream, its aim is to capture a higher percentage of supply chain value.
7. Competition: Competition includes all the actual and potential rival offerings and substitutes a buyer might
consider. For example, an automobile manufacturer can buy steel from U.S. Steel in the United States of
America, from a foreign firm in Japan or Korea, or from a minimill such as Nucor at a cost savings, or it can buy
aluminum for certain parts from Alcoa to reduce the car’s weight, or engineered plastics from Saudi Basic
Industries Corporation (SABIC) instead of steel. Clearly, U.S. Steel would be thinking too narrowly about its
competition if it thought only of other integrated steel companies. In the long run, U.S. Steel is more likely to be
hurt by substitute products than by other steel companies.
8. Marketing Environment: The marketing environment consists of the task environment and the broad
environment. The task environment includes the actors engaged in producing, distributing, and promoting the
offering. These are the company, suppliers, distributors, dealers, and target customer. In the supplier group are
material suppliers and service suppliers, such as marketing research agencies, advertising agencies, banking and
insurance companies, transportation companies, and telecommunications companies. Distributors and dealers
include agents, brokers, manufacturer representatives, and others who facilitate funding and selling to customers.
The broad environment consists of six components: demographic environment, economic environment, social-
cultural environment, natural environment, technological environment, and political-legal environment.
Marketers must pay close attention to the trends and developments in these and adjust their marketing strategies
as needed. New opportunities are constantly emerging that await the right marketing savvy and ingenuity
(Schlippe, 1956).
Marketing Economic Systems
There are two basic kinds of economic systems: planned systems and market-directed systems. Actually, no
economy is entirely planned or market-directed. Most are a mixture of the two extremes.
Planned Economic System
In a planned economic system government planners decide what and how much is to be produced and distributed
by whom, when, and to whom. Producers generally have little choice about what goods and services to produce.
Their main task is to meet their assigned production quotas. Prices are set by government planners and tend to
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