Page 102 - Marketing the Basics 2nd

94 Marketing: the Basics
different channels partner up. Such instances are also called cross- promotion. In a cross-promotion situation, partners combine capital, production capabilities and other resources towards some common promotion objective beneficial to the collective. Roles are divided according to the capabilities of each firm, and proceeds are divided according to an agreed upon formula. Since both firms are dependent on each other for success, the potential for enduring conflict is lessened, however, a mechanism is needed to mediate on contentious issues.
One of the drawbacks to a horizontal marketing channel system is that it promotes short-term profit-seeking behaviour. Solely focusing on the short term will lead to the situation where marketers cross-promote dissimilar products together. When two dissimilar products are cross-promoted, the marketer must take into account the suitability of the two products. For example, Bob Dylan, the ageless rock star and counter-culture promoter, was once featured on the front cover of a Victoria’s Secret catalogue, which is renowned for full-page pictures of lingerie-clad supermodels. Unless it’s an expression of post-modern advertising, we find it difficult to understand what is the connection between the two.
HyBRiD MaRkeTing cHanneLs
Finally, the third type of distribution system that allows a firm to dispense responsibilities and manage conflict to ensure the system functions smoothly is called a hybrid marketing channel. A hybrid marketing channel is a distribution system whereby a single firm creates more than one channel to reach one or more target markets. Also known as a multichannel distribution system, hybrid marketing channels are favoured by firms operating in large and complex markets. With multiple channels to their target markets, the firm has more opportunities to tailor the product offering to customer needs, and also expand its market coverage. These two factors enable the firm to gain more power, which translates into negotiating power to mediate in conflict and assign roles. IBM uses this approach, selling its hardware and software through its own sales force, via its stores, on the Internet and through partners such as valued added resellers (VARs) and others.