armstrong10_basic

armstrong10_basic - Marketing Channels and Supply Chain...

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Unformatted text preview: Marketing Channels and Supply Chain Management Chapter 10 Road Map: Previewing the Concepts • Explain why companies use distribution channels and discuss the functions these channels perform. • Discuss how channel members interact and how they organize to perform the work of the channel. • Identify the major channel alternatives open to a company. 10 - 2 Road Map: Previewing the Concepts • Explain how companies select, motivate, and evaluate channel members. • Discuss the nature and importance of marketing logistics and supply chain management. 10 - 3 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 - 4 • 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 - 5 Channel Functions • • • • Information Promotion Contact Matching • • • • Negotiation Physical distribution Financing Risk taking 10 - 6 Channel Behavior • The channel will be most effective when: • If this does not happen, conflict occurs: 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). • Some conflict can be healthy competition. 10 - 7 Vertical Marketing System • 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 - 8 • Types of Vertical Marketing Systems • • • Corporate VMS Contractual VMS Administered VMS 10 - 9 Franchise Organization • Manufacturer­Sponsored Retailer Franchise System • Manufacturer­Sponsored Wholesaler Franchise System Service­Firm Sponsored Retailer Franchise System McDonald’s, Avis, and Holiday Inn Coca­Cola’s licensed bottlers Ford and its independent franchised dealers • 10 - 10 Innovations in Marketing Systems • Horizontal Marketing System • Hybrid Marketing System 10 - 11 • 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 - 12 Changing Channel Organization Channel Design Decisions • • • Analyzing Consumer Needs Setting Channel Objectives Identifying Major Alternatives Types of intermediaries Number of intermediaries Responsibilities of intermediaries 10 - 13 Types of Intermediaries • • • Company sales force Manufacturer’s agency Industrial distributors 10 - 14 Number of Intermediaries • • • Intensive distribution Exclusive distribution Selective distribution 10 - 15 • Economic Criteria: Evaluating the Major Alternatives 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 - 16 • • Control Issues: Adaptive Criteria: Channel Management Decisions • • Selecting channel members Managing and motivating channelmembers Evaluating channel members 10 - 17 • Public Policy and Distribution Decisions • • • • Exclusive distribution Exclusive dealing Exclusive territorial agreements Tying agreements 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 • • • • Warehousing Major Logistics Functions Inventory management Transportation Logistics information management 10 - 20 Warehousing • • • • How many, what types, and where? Storage warehouses Distribution centers Automated warehouses 10 - 21 Inventory Management • • • Must balance between too much and too little inventory. Just­in­time logistics systems RFID, AutoID, or Smart Tag technology 10 - 22 Transportation • • • • • • • Trucks Railroads Water carriers Pipelines Air Internet Intermodal transportation 10 - 23 • • 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. Involves: Cross­functional teamwork inside the company Building logistics partnerships Third­party logistics Integrated Logistics Management 10 - 24 ...
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