Alternative Arrangements
Business-to-government, consumer-to-consumer, and institutional markets are additional types of marketing channels.
LEARNING OBJECTIVES
Outline the characteristics of business-to-government, consumer-to-consumer, and institutional marketing channels
KEY TAKEAWAYS
Key Points
- Business-to-government marketing encompasses marketing products and services to various levels of the government, such as federal, state, and local.
- Consumer -to-consumer commerce is the completion of transactions between private individuals or consumers.
- Institutional market consumers are often nonprofit organizations and are not motivated primarily by profits or market share.
Key Terms
- nonprofit: An organization that exists for reasons other than to make a profit, such as a charitable, educational, or service organization.
- Request for Proposal: A formal publicly released document outlining a need and inviting businesses to submit plans to fulfill that need.
The most common marketing channels are business-to-consumer (B2C) and business-to-business (B2B). However, there are also alternative channels that should be discussed. These include business-to-government, consumer-to-consumer, and institutional markets.
United States Capitol: B2G transactions involve working with government entities such as federal, state, and local.
Business-to-government (B2G)
Business-to-government marketing encompasses marketing products and services to various levels of the government, such as federal, state, and local. This is also known as “public sector marketing” and is somewhat similar to business-to-business transactions. However, there usually many more restrictions and strict processes in order to gain government contracts. Usually, government organizations post a request for proposal, and businesses respond to them. Most often, the bid with the lowest cost is accepted.
Garage Sale : Garage sales are one type of consumer-to-consumer business.
Consumer-to-consumer
Consumer-to-consumer commerce is the completion of transactions between private individuals or consumers. The increased use of consumer-to-consumer transactions can be directly related to the growth of electronic, online marketplaces. Craigslist and eBay usually involve consumer-to-consumer transactions. There are also older forms of consumer-to-consumer transactions, such as classified ads and garage sales. Often, these types of transactions are for a lower cost than if they were conducted through a business, as there is some added risk that the product will be defective or otherwise be not as expected.
Institutional Market Consumers: Churches, schools, and hospitals are some examples of institutional market consumers.
Institutional Markets
Institutional markets are very similar to typical business-to-business markets. However, many institutional markets are considered nonprofits, such as churches. Institutional markets differ from typical businesses in that they are not motivated primarily by profits or market share. Rather, institutions tend to satisfy somewhat esoteric, often intangible, needs. Also, whatever profits exist after all expenses are paid are normally put back into the institution. Marketers must be aware that these institutions have different goals and restrictions than normal businesses.
Customer Expectations
A customer can expect varying levels of service and product offerings at different consumer channels.
LEARNING OBJECTIVES
Name the three product categories, and the types of marketing channels where these products are sold
KEY TAKEAWAYS
Key Points
- Retail products are usually classified into three broad categories: food products, hard or durable goods, and soft goods or consumables.
- A customer can generally expect relatively lower customer service and a wide range of products and prices at large consumer markets.
- While a customer may get more personalized service, the range of products is generally lower at smaller retail outlets.
Key Terms
- durable goods: A good that yields services or utility over time rather than being used up when used once.
- consumable: A good that is consumed or depleted upon use.
- outlet: A shop that sells the products of the manufacturers or suppliers that it does business with.
Customer Expectations
Customers expect different things from different types of marketing channels. A department store is, after all, very different from a mom-and-pop store. Retail products are usually classified into three broad categories: food products, hard or durable goods, and soft goods or consumables. Members of a channel of a distribution are also customers of those elsewhere in the channel, and their expectations must also be met.
Durable goods are those that yield services or utility over time rather than being used up when used once. Cars and washing machines are examples of durable goods. Consumable goods are those that are used up when used or otherwise have a limited life, such as clothing.
Clothing: Clothing is generally considered to be a consumable good.
Channel Member Expectations
Channel partners are also customers after all, and their expectations must also be taken into account, to develop and maintain successful relationships with them.
A common issue in channel management is leadership: the role of a channel leader should be understood by all members of the channel so that expectations are managed appropriately. The leader coordinates the goals and efforts of channel members. Some leaders may be positive and open to feedback, while others may be negative and lead based on a system of punishment and strict rules.
It is important to remember that a channel of distribution may be made up of organizations, but those organizations are made up of people. Thus, tending to the “human element” is important. Ideally, a channel member should coordinate their efforts with other members in such a way that the performance of the total distribution system is enhanced. The lack of cooperation that is often apparent is due to the organization structure of many channels, which encourages a channel member to be primarily concerned with channel members immediately adjacent to them, from whom they buy and to whom they sell. Four human dimensions have been incorporated into the study of channel behavior: roles, communication, conflict, and power. It is assumed that an understanding of these behavioral characteristics will increase the effectiveness of the channel.
Warehouse: A distributor, like a warehouse, is part of a channel of distribution. The distributor has to meet customers’ expectations as well as its own.
By ensuring there are no leadership issues and by tackling the human element of the channel of distribution, expectations of the channel members can be effectively met.
Large Retail Outlets
Supermarket: Supermarkets usually offer a wide range of products at average prices.
There are many large retail outlets, and most offer a wide variety of products at average prices. Department stores, supermarkets, and warehouse stores are all large retail outlets. Each will have its own feel and come with its own customer expectations. A shopper at a warehouse store, for example, will expect to find low-cost, high-quantity goods, while a customer at a supermarket expects to find groceries and limited non-food items. Large retail outlets have some things in common, however. A customer can generally expect relatively lower customer service and a wide range of products and prices. Products at these stores often require a more involved decision process and post-purchase evaluation. Depending on the type of store, these outlets generally focus on one or two categories. A department store, for example, will sell both durable and consumable goods.
Smaller Retail Outlets
Mom-and-pop stores, specialty stores, and general stores are all smaller retail outlets. While a customer may get more personalized service, the range of products is generally lower. These stores often focus on a few key categories of products. Conversely, these smaller outlets may offer a wider array of products at low margins, such as a discount store.