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Marketing Channels and Supply Chain Management Marketing or Distribution Channel A set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user. 10-2 How Channel Members Add Value The use of intermediaries results from their greater efficiency in making goods available to target markets. Offers the firm more than it can achieve on its own through the intermediaries: Contacts Experience Specialization Scale of operation 10-3 How a Distributor Reduces the Number of Channel Transactions 10-4 Channel Functions
These functions should be assigned to the channel member who can add the most value for the cost Information Promotion Contact Matching Negotiation Physical Distribution Financing Risk Taking
10-5 Consumer and Business Channels 10-6 Channel Behavior The channel will be most effective when: each member is assigned tasks it can do best. all members cooperate to attain overall channel goals. 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). If this does not happen, conflict occurs: Some conflict can be healthy competition. 10-7 Conventional vs. Vertical Marketing System 10-8 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. 10-9 Types of Vertical Marketing Systems
Corporate VMS Common Ownership at Different Levels of the Channel (e.g., Sears)
High Contractual VMS Contractual Agreements Among Channel Members (e.g., ACE Hardware) Control Administered VMS Leadership is Assumed by One or a Few Dominant Members (e.g., Kraft) Low 10-10 Franchise Organization ManufacturerSponsored Retailer Franchise System Franchise System Franchise System ManufacturerSponsored Wholesaler ServiceFirm Sponsored Retailer McDonald's, Avis, and Holiday Inn CocaCola's licensed bottlers Ford and its independent franchised dealers 10-11 Hybrid Marketing Channel 10-12 Changing Channel Organization Disintermediation means that more and more, product and service producers are bypassing intermediaries and going directly to final buyers, or that radically new types of channel intermediaries are emerging to displace traditional ones. 10-13 Channel Design Decisions Analyzing Consumer Needs Setting Channel Objectives Identifying Major Alternatives Types of intermediaries Number of intermediaries Responsibilities of intermediaries 10-14 Types of Intermediaries Company sales force Manufacturer's agency Industrial distributors 10-15 Number of Marketing Intermediaries
Intensive Distribution Selective Distribution Exclusive Distribution
10-16 Evaluating the Major Alternatives Economic Criteria: A company compares the likely sales, costs, and profitability of different channel alternatives. How and to whom should control be given? Consider longterm commitment vs. flexibility.
10-17 Control Issues: Adaptive Criteria: Channel Management Decisions
Selecting Channel Members
FEEDBACK Motivating Channel Members Evaluating Channel Members
10-18 Logistics and Supply Chain Management 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. Includes: Outbound distribution Inbound distribution Reverse distribution 10-19 Supply Chain Management 10-20 Major Logistics Functions
Costs Minimize Costs of Attaining Logistics Objectives Transportation Rail, Truck, Water, Pipeline, Air, Intermodal Order Processing Received Processed Shipped Logistics Functions
Inventory When to order How much to order Justintime Warehousing Storage Distribution Automated 10-21 Transportation Modes
Rail Nation's largest carrier, costeffective for shipping bulk products, piggyback Truck Flexible in routing & time schedules, efficient for shorthauls of high value goods Water Low cost for shipping bulky, lowvalue, nonperishable goods, slowest form Pipeline Ship petroleum, natural gas, and chemicals from sources to markets Air High cost, ideal when speed is needed or distance markets have to be reached
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This note was uploaded on 09/11/2008 for the course BNAD 303 taught by Professor Hardesty during the Spring '07 term at University of Arizona- Tucson.
- Spring '07