10
Marketing Chapter Channels: Delivering Customer Value
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Chapter 1
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Supply Chains and the Value Delivery Network
Producing and making products
available to buyers requires building relationships with upstream and downstream supply chain partners.
Upstream:
Firms that supply the raw materials, components, parts, and other elements necessary to create a good. Downstream: Marketing channel partners that link the firm to the customer.
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Nature and Importance of Marketing Channels
Marketing channel:
A
set of interdependent organizations that help make a product or service available for use or consumptions by the consumer or business users.
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Nature and Importance of Marketing Channels
Key functions performed by channel members:
Transaction
completing:
Information Promotion Contact Matching Negotiation
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Transaction
fulfilling:
Physical
distribution Financing Risk taking
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Nature and Importance of Marketing Channels
Number of channel levels:
The
number of intermediary levels indicates the length of a channel.
Direct marketing channels
Have
Indirect marketing channels
Contains
no intermediary levels between the manufacturer and the customer. one or more intermediaries.
All
channel institutions are connected by several types of flows.
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Channel Behavior and Organization
The channel will be most effective when:
Each
member is assigned tasks it can do best. All members cooperate to attain overall channel goals.
If this does not happen, conflict occurs:
Horizontal
conflict occurs among firms at the same level of the channel (e.g., retailer to retailer). Vertical conflict occurs between different levels of the same channel (e.g., wholesaler to retailer).
Some conflict can be healthy competition.
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Channel Behavior and Organization
Conventional distribution channel:
Consists
of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole.
Vertical marketing system (VMS):
A
distribution channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the other, has contracts with them, or has so much power that they all cooperate.
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Channel Behavior and Organization
Franchise organizations are a common
form of contractual vertical marketing system. Types of franchise organizations:
Manufacturer-sponsored Manufacturer-sponsored Service-firm
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retailer franchise: wholesaler franchise:
Ford and its independent franchised dealers Coca-Colas licensed bottlers
sponsored retailer franchise:
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McDonalds, Avis, and Holiday Inn
Channel and Behavior Organization
Changing channel organization:
Disintermediation
occurs when product and service producers cut out traditional intermediaries or displace resellers with radical new types of intermediaries.
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Channel Design Decisions
Analyzing consumer needs:
Requires
answering key questions to help determine customer needs:
Do consumers want to buy from nearby
locations or are they willing to travel? Do they value breadth of assortment or do they prefer specialization? Do consumers want many add-on services?
Firm
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must balance needs against costs and consumer price preferences.
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Channel Design Decisions
Identifying major alternatives:
Types
of intermediaries:
Company sales force, manufacturers
agency, or industrial distributors
Number
of marketing intermediaries: of channel members
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Intensive, selective, or exclusive distribution
Responsibilities
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Marketing Logistics and Supply Chain Management
Marketing logistics (physical distribution):
Planning,
implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet customer requirements at a profit.
Involves the entire supply chain:
Outbound
distribution Inbound distribution Reverse distribution
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Marketing Logistics and Supply Chain Management
Greater emphasis has been placed on
logistics recently because:
Firms
can gain a competitive advantage when logistics result in better service or lower prices. Improved logistics can lower costs. Increased product variety has created a need for improved logistics management. Improvements in information technology have created the means for major gains in distribution efficiency.
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Marketing Logistics and Supply Chain Management Goals of the logistics system:
Deliver
a targeted level of customer service at the least cost.
Major logistics functions:
Warehousing Inventory
management Transportation Logistics information management
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Marketing Logistics and Supply Chain Management
Warehousing:
How
Inventory
management:
Must
many, what types, and where? Storage warehouses Distribution centers Automated warehouses
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balance between too much and too little inventory Just-in-time logistics systems RFID or smart tag technology
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Integrated Logistics Management
Integrated logistics management:
The
logistics concept that emphasizes teamwork, both inside the company and among all the marketing channel organizations, to maximize the performance of the entire distribution system.
Requires:
Cross-functional
teamwork inside the company Building logistics partnerships Third-party logistics
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