Marketing Channels and Supply Chain Management 10.
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Transcript of Marketing Channels and Supply Chain Management 10.
Marketing Channels and Marketing Channels and Supply Chain ManagementSupply Chain Management
10
10-2
Marketing or Distribution Channel
• A set of interdependent organizations A set of interdependent organizations involved in the process of making a involved in the process of making a product or service available for use product or service available for use or consumption by the consumer or or consumption by the consumer or business user.business user.
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How Channel Members Add Value
• The use of intermediaries results from The use of intermediaries results from their greater efficiency in making their greater efficiency in making goods available to target markets.goods available to target markets.
• Offers the firm more than it can Offers the firm more than it can achieve on its own through the achieve on its own through the intermediaries:intermediaries:– ContactsContacts– ExperienceExperience– SpecializationSpecialization– Scale of operationScale of operation
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How a Distributor Reduces the Number of Channel Transactions
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InformationInformation
Risk TakingRisk Taking
PromotionPromotion
MatchingMatching
PhysicalDistribution
PhysicalDistribution
These functions should be assigned to the channel member who can add the most value for
the cost
Channel Functions
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Consumer and Business Channels
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Channel Behavior
• The channel will be most effective when:The channel will be most effective when:– each member is assigned tasks it can do each member is assigned tasks it can do
best.best.– all members cooperate to attain overall all members cooperate to attain overall
channel goals.channel goals.
• If this does not happen, conflict occurs:If this does not happen, conflict occurs:– Horizontal ConflictHorizontal Conflict occurs among firms at the occurs among firms at the
same level of the channel.same level of the channel.– Vertical ConflictVertical Conflict occurs between different occurs between different
levels of the same channellevels of the same channel
• Some conflict can be healthy competition.Some conflict can be healthy competition.
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Conventional vs. Vertical Marketing System
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Vertical Marketing System (VMS)
• A distribution channel structure in A distribution channel structure in which producers, wholesalers, and which producers, wholesalers, and retailers act as a unified systemretailers act as a unified system
• One channel member owns the One channel member owns the other, has contracts with them, or other, has contracts with them, or has so much power that they all has so much power that they all cooperate.cooperate.
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Corporate VMSCommon Ownership at Different
Levels of the Channel
Contractual VMSContractual Agreements Among
Channel Members
Administered VMSLeadership is Assumed by One or
a Few Dominant Members
Types of Vertical Marketing Systems
Control
High
Low
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Franchise Organization
• Manufacturer-Sponsored Retailer Manufacturer-Sponsored Retailer Franchise SystemFranchise System– Ford and its independent franchised Ford and its independent franchised
dealersdealers
• Manufacturer-Sponsored Wholesaler Manufacturer-Sponsored Wholesaler Franchise SystemFranchise System
• Service-Firm Sponsored Retailer Service-Firm Sponsored Retailer Franchise SystemFranchise System
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Innovations in Marketing Systems
Two or more Two or more companies at one companies at one channel level join channel level join together to follow together to follow a new marketing a new marketing opportunity.opportunity.
Two or more Two or more companies at one companies at one channel level join channel level join together to follow together to follow a new marketing a new marketing opportunity.opportunity.
A single firm sets A single firm sets up two or more up two or more marketing marketing channels to channels to reach one or reach one or more customer more customer segments.segments.
A single firm sets A single firm sets up two or more up two or more marketing marketing channels to channels to reach one or reach one or more customer more customer segments.segments.
Horizontal Horizontal Marketing SystemMarketing System
Horizontal Horizontal Marketing SystemMarketing System
Hybrid Marketing Hybrid Marketing SystemSystem
Hybrid Marketing Hybrid Marketing SystemSystem
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Hybrid Marketing Channel
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Changing Channel Organization
• DisintermediationDisintermediation means that means that more and more, product and service more and more, product and service producers are bypassing producers are bypassing intermediaries and going directly to intermediaries and going directly to final buyers, or that radically new final buyers, or that radically new types of channel intermediaries are types of channel intermediaries are emerging to displace traditional emerging to displace traditional ones.ones.
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Channel Design Decisions
• Analyzing Consumer NeedsAnalyzing Consumer Needs
• Setting Channel ObjectivesSetting Channel Objectives
• Identifying Major AlternativesIdentifying Major Alternatives– Types of intermediariesTypes of intermediaries– Number of intermediariesNumber of intermediaries– Responsibilities of intermediariesResponsibilities of intermediaries
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Types of Intermediaries
• Company sales forceCompany sales force
• Manufacturer’s agencyManufacturer’s agency
• Industrial distributorsIndustrial distributors
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Number of Intermediaries
• Intensive distributionIntensive distribution
• Exclusive distributionExclusive distribution
• Selective distributionSelective distribution
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Evaluating the Major Alternatives
• Economic Criteria:Economic Criteria:– A company compares the likely sales, A company compares the likely sales,
costs, and profitability of different costs, and profitability of different channel alternatives.channel alternatives.
• Control Issues:Control Issues:– How and to whom should control be How and to whom should control be
given?given?
• Adaptive Criteria:Adaptive Criteria:
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Selecting Channel MembersSelecting Channel Members
Managing & Motivating Channel Members Managing & Motivating Channel Members
Evaluating Channel MembersEvaluating Channel Members
Channel Management Decisions
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Public Policy and Distribution Decisions
• Exclusive distributionExclusive distribution
• Exclusive dealingExclusive dealing
• Exclusive territorial agreementsExclusive territorial agreements
• Tying agreementsTying agreements
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Logistics and Supply Chain Management
• Planning, implementing, and Planning, implementing, and controlling the physical flow of controlling the physical flow of goods, services, and related goods, services, and related information from points of origin to information from points of origin to points of consumption to meet points of consumption to meet customer requirements at a profit.customer requirements at a profit.
• Includes:Includes:– Outbound distributionOutbound distribution– Inbound distributionInbound distribution
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Supply Chain Management
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Major Logistics Functions
• WarehousingWarehousing
• Inventory management Inventory management
• TransportationTransportation
• Logistics information managementLogistics information management
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Warehousing
• How many, what types, and where?How many, what types, and where?
• Storage warehousesStorage warehouses
• Distribution centersDistribution centers
• Automated warehousesAutomated warehouses
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Inventory Management
• Must balance between too much and Must balance between too much and too little inventory.too little inventory.
• Just-in-time logistics systemsJust-in-time logistics systems
• RFID, AutoID, or Smart Tag RFID, AutoID, or Smart Tag technologytechnology
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Transportation
• TrucksTrucks
• RailroadsRailroads
• Water carriersWater carriers
• PipelinesPipelines
• AirAir
• InternetInternet
• Intermodal transportationIntermodal transportation
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RailNation’s second largest carrier, cost-effective
for shipping bulk products,
RailNation’s second largest carrier, cost-effective
for shipping bulk products,
Largest carrier Flexible in routing & time schedules, Efficient for short-hauls of high value goods
Largest carrier Flexible in routing & time schedules, Efficient for short-hauls of high value goods
WaterLow cost for shipping bulky, low-value,
non-perishable goods, slowest form
WaterLow cost for shipping bulky, low-value,
non-perishable goods, slowest form
PipelineShip petroleum, natural gas, and chemicals
from sources to markets
PipelineShip petroleum, natural gas, and chemicals
from sources to markets
High cost, ideal when speed is needed or distance markets have to be reached
High cost, ideal when speed is needed or distance markets have to be reached
Transportation Modes
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Intermodal Transportation
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Intermodal Transportation
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Intermodal Transportation
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Intermodal Transportation
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Intermodal Transportation
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Integrated Logistics Management
• The logistics concept that The logistics concept that emphasizes teamwork, both inside emphasizes teamwork, both inside the company and among all the the company and among all the marketing channel organizations, to marketing channel organizations, to maximize the performance of the maximize the performance of the entire distribution system.entire distribution system.
• Involves:Involves:– Cross-functional teamwork inside the Cross-functional teamwork inside the
companycompany– Building logistics partnershipsBuilding logistics partnerships
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Third Party Logistics
Many companies are now outsourcing logistics tasks to companies like Ryder Integrated Logistics. Here, Ryder describes a system it designed to keep Friendly’s refrigerated trucks on the road. “Thanks to Ryder, Friendly’s doesn’t have to worry about breakdowns. Or meltdowns.”
