Post on 04-Apr-2018
7/30/2019 CHAPTER 11 Distribution Channels and Logistics Management
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Distribution Channels
and
Logistics Management
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What is a Distribution Channel?
A set of interdependent organizations(intermediaries) involved in the processof making a product or service available
for use or consumption by the consumeror business user.
Channel decisions are among the most
important decisions that managementfaces and will directly affect every othermarketing decision.
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Why are Marketing IntermediariesUsed?
Greater efficiency in making goodsavailable to target markets.
Offer the firm more than it can achieve
on its own through the intermediaries:Contacts
Experience
SpecializationScale of operation
Match supply and demand.
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Distribution Channel Functions
Contact
Financing
InformationRisk Taking
Promotion
MatchingNegotiation
PhysicalDistribution
All Use Up Scarce Resources
All May Often Be Performed Better Through Specialization
All Can Often Be Shifted Among Channel Members
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Consumer Marketing Channels & Levels
Direct
Indirect
M Super Stocist R1 R2 C
M W R C
M R C
M C
Channel 1
Channel 2
Channel 3
Channel 4
Channel Level - A Layer of Intermediaries that Perform Some Work inBringing the Product and its Ownership Closer to the Buyer.
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Channel Behavior & Conflict
The channel will be most effective when:
each member is assigned tasks it can do best.
all members cooperate to attain overall channelgoals and satisfy the target market.
When this doesnt happen, conflict occurs:
Horizontal Conflict occurs among firms at thesame level of the channel.
Vertical Conflict occurs between different levelsof the same channel.
For the channel to perform well, conflict
must be managed.
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Types of Vertical Marketing Systems
Corporate
Common Ownership at DifferentLevels of the Channel
ContractualContractual Agreement Among
Channel Members
AdministeredLeadership is Assumed by One or
a Few Dominant Members
Greater
Lesser
Degreeof
DirectControl
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Vertical Marketing Systems
VerticalMarketing
Systems (VMS)
Corporate
VMS
Contractual
VMS
AdministeredVMS
RetailerCooperatives
FranchiseOrganizations
WholesalerSponsored
Voluntary Chain
Service-Firm-Sponsored
Franchise System
Manufacturer-Sponsored
WholesalerFranchise System
Manufacturer-Sponsored
RetailerFranchise System
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Innovations in Marketing Systems
Horizontal MarketingSystem
Hybrid MarketingSystem
Two or More
Companies at OneChannel Level JoinTogether to Follow aNew MarketingOpportunity.
Example:Banks in GroceryStores
A Single Firm Sets
Up Two or MoreMarketing Channelsto Reach One orMore Customer
Segments.
Example:Retailers, Catalogs,and Sales Force
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Channel Design Decisions
Analyzing Consumer Service Needs
Setting Channel Objectives & Constraints
ExclusiveDistributionSelectiveDistributionIntensiveDistribution
Identifying Major Alternatives
Evaluating the Major Alternatives
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Channel Management Decisions
Selecting
Motivating
Evaluating
FEEDBACK
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Nature and Importance of MarketingLogistics
Involves getting the right product to the rightcustomers in the right place at the right time.
Companies today place greater emphasis on
logistics because:effective logistics is becoming a key to winning and
keeping customers.
logistics is a major cost element for most
companies.the explosion in product variety has created a need
for improved logistics management.
information technology has created opportunities
for major gains in distribution efficiency.
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Logistics Systems
InventoryWhen to order
How much to orderJust-in-time
CostsMinimize Costs ofAttaining Logistics
Objectives
WarehousingStorage
Distribution
Order ProcessingSubmittedProcessed
Shipped
Logistics
FunctionsTransportationWater, Truck,
Rail,Pipeline & Air
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Transportation Modes
Rail
Nations largest carrier, cost-effectivefor shipping bulk products, piggyback
TruckFlexible in routing & time schedules, efficient
for short-hauls of high value goods
WaterLow cost for shipping bulky, low-value
goods, slowest form
PipelineShip petroleum, natural gas, and chemicals
from sources to markets
AirHigh cost, ideal when speed is needed or to
ship high-value, low-bulk items
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Choosing TransportationModes
1. Speed.
2. Dependability.3. Capability.
4. Availability.
5. Cost.
Checklist for ChoosingTransportation Modes
I d L i i M
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Integrated Logistics Management
Concept Recognizes that Providing Better Customer
Service and Trimming Distribution Costs RequiresTeamwork, Both Inside the Company and Among Allthe Marketing Channel Organizations.
Cross-Functional Teamwork insidethe Company
Building Channel Partnerships
Third-Party Logistics