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A set of interdependent
ORGANIZATIONS that
ease the transfer of
ownership as products
move from producer to
business user or
consumer.
Marketing Channels
Marketing Channels
The connected chain of
all the business entities,
both internal and external
to the company, that
perform or support the
LOGISTICS function.
Supply ChainSupply Chain
Specialization and division of labor Specialization and division of labor
Overcoming discrepancies Overcoming discrepancies
Providing contact efficiency Providing contact efficiency
Creates greater efficiency
Provides lower costs
Achieves economies of scale
Aids producers who lack resources to market directly
Builds good relationships with customers
RetailerRetailer A channel intermediary that sells mainly to FINAL USERS.A channel intermediary that
sells mainly to FINAL USERS.
MerchantWholesalerMerchant
Wholesaler
An institution that BUYS goods from manufacturers, takes title
to goods, stores them, and RESELLS and ships them.
An institution that BUYS goods from manufacturers, takes title
to goods, stores them, and RESELLS and ships them.
Agents andBrokers
Agents andBrokers
Wholesaling intermediaries who facilitate the sale of a product by
REPRESESNTING channel members.
Wholesaling intermediaries who facilitate the sale of a product by
REPRESESNTING channel members.
RetailersRetailers
Merchant WholesalersMerchant
Wholesalers
Agents and
Brokers
Agents and
Brokers
Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods
Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods
Do NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to Goods
Product characteristicsProduct characteristics
Buyer considerationsBuyer considerations
Market characteristicsMarket characteristics
Contacting/Promotion
Negotiating
Risk Taking
Researching
Financing
Physically distributing
Storing
Sorting
FacilitatingFunctions
FacilitatingFunctions
TransactionalFunctions
TransactionalFunctions
Logistical Functions
Logistical Functions
Logistics
LogisticsLogisticsThe process of strategically
managing the EFFICIENT
FLOW AND STORAGE of raw
materials, in-process
inventory, and finished
goods from point of origin to
point of consumption.
CHANNELINTERMEDIARIES
CHANNELINTERMEDIARIES
Retailers
Wholesalers
Agents and Brokers
Retailers
Wholesalers
Agents and Brokers
CHANNELFUNCTIONSCHANNEL
FUNCTIONS
Transactional
Logistical
Facilitating
Transactional
Logistical
Facilitating
Perform
Producer Producer Producer Producer
Consumers Consumers Consumers Consumers
Retailers Retailers Retailers
Wholesalers Wholesalers
Agents orBrokers
WholesalerWholesalerChannelChannel
RetailerRetailerChannelChannel
DirectDirectChannelChannel
Agent/BrokerAgent/BrokerChannelChannel
Producer
IndustrialUser
DirectDirectChannelChannel
Producer
Govt.Buyer
DirectDirectChannelChannel
Producer Producer Producer
IndustrialUser
IndustrialUser
IndustrialUser
IndustrialDistributor
IndustrialDistributor
Agents orBrokers
Agents orBrokers
Agent/BrokerAgent/BrokerChannelChannel
IndustrialIndustrialDistributorDistributor
Agent/BrokerAgent/BrokerIndustrialIndustrialChannelChannel
CONSUMERCHANNELS
CONSUMERCHANNELS
Direct
Retail
Wholesaler
Agent/broker
Direct
Retail
Wholesaler
Agent/broker
BUSINESSCHANNELSBUSINESSCHANNELS
Direct
Industrial
Agent/broker
Agent/brokerindustrial
Direct
Industrial
Agent/broker
Agent/brokerindustrial
ALTERNATIVECHANNELS
ALTERNATIVECHANNELS
Multiple
Nontraditional
Strategicalliances
Multiple
Nontraditional
Strategicalliances
Supply ChainSupply Chain
A management system that
coordinates and integrates all of
the activities performed by supply
chain members into a seamless
process, from the source to the
point of consumption, resulting in
enhanced customer and economic
value.
Physical flow process that engineers the movement of goods
Physical flow process that engineers the movement of goods
Communicator of customer demand from point of sale to supplier
Communicator of customer demand from point of sale to supplier
Means of differentiationMeans of differentiation
Greater supply chain flexibility Greater supply chain flexibility
Improved customer serviceImproved customer service
Higher revenuesHigher revenues
Reduced costs Reduced costs
Factors Factors Affecting Affecting Channel Channel CHOICECHOICE
Factors Factors Affecting Affecting Channel Channel CHOICECHOICE
Producer FactorsProducer Factors
Product FactorsProduct Factors
Market FactorsMarket Factors
Exclusive DistributionExclusive Distribution
Selective DistributionSelective Distribution
Intensive DistributionIntensive Distribution
Level ofLevel ofDistributionDistributionINTENSITYINTENSITY
Level ofLevel ofDistributionDistributionINTENSITYINTENSITY
Market Market FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Market Market FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Customer profilesCustomer profiles
Consumer or IndustrialCustomer
Consumer or IndustrialCustomer
Size of marketSize of market
Geographic location
Product Product FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Product Product FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Product Complexity Product Complexity
Product StandardizationProduct Standardization
Product Life CycleProduct Life Cycle
Product DelicacyProduct Delicacy
Product PriceProduct Price
Market Market FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Market Market FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Customer profilesCustomer profiles
Consumer or IndustrialCustomer
Consumer or IndustrialCustomer
Size of marketSize of market
Geographic location
Product Product FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Product Product FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Product Complexity Product Complexity
Product StandardizationProduct Standardization
Product Life CycleProduct Life Cycle
Product DelicacyProduct Delicacy
Product PriceProduct Price
Producer Producer FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Producer Producer FactorsFactorsThat Affect That Affect ChannelChannelChoicesChoices
Producer Resources Producer Resources
Number of Product LinesNumber of Product Lines
Desire for Channel ControlDesire for Channel Control
IntensiveAchieve mass marketselling. Convenience goods.
Many
Selective
Exclusive
Work with selected intermediaries. Shopping and some specialty goods.
Work with singleintermediary. Specialty goods and industrial equipment.
Several
One
Intensity Level Objective Number of
Intermediaries
ChannelPower
ChannelPower
A channel member’s capacity to CONTROL OR INFLUENCE the behavior of other channel members
A channel member’s capacity to CONTROL OR INFLUENCE the behavior of other channel members
ChannelControl
ChannelControl
A situation that occurs when one marketingchannel member INTENTIONALLY AFFECTS another member’s behavior
A situation that occurs when one marketingchannel member INTENTIONALLY AFFECTS another member’s behavior
Channel Leader
Channel Leader
A member of a marketing channel that EXERCISES AUTHORITY/POWER over the activities of other members
A member of a marketing channel that EXERCISES AUTHORITY/POWER over the activities of other members
LO6
ChannelConflict
ChannelConflict
A clash of goals and methods
between distribution channel
members
A clash of goals and methods
between distribution channel
members
ChannelPartnering
ChannelPartnering
The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage
The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage
Conflicts may occur if channel members:
Have CONFLICTING goals
Fail to fulfill EXPECTATIONS of other channel members
Have IDEOLOGICAL differences
Have different PERCEPTIONS of reality
Supplier / Manufacturer Relationships
Short-termAdversarialIndependentPrice important
Long-termCooperativeDependentValue-added services
Number of Suppliers Many Few
Transaction-Based Partnership-Based
Information Sharing Minimal High
InvestmentRequired Minimal High
ChannelRelationship
Synergy
ChannelRelationship
Synergy
Channel Conflict
Horizontal Vertical
Channel Power,Control, Leadership
Channel Partnering
SupplySupplyChainChainTeamTeam
Sourcing & ProcurementSourcing & Procurement
Production SchedulingProduction Scheduling
Order ProcessingOrder Processing
Inventory ControlInventory Control
Warehouse & Materials HandlingWarehouse & Materials Handling
TransportationTransportation
Lo
gis
tics
In
form
atio
n S
yste
mL
og
isti
cs I
nfo
rmat
ion
Sys
tem
Plan purchasing strategies
Develop specifications
Select suppliers
Negotiate price and service levels
Reduce costs
The Role of Purchasing:The Role of Purchasing:
Push / Pull Strategy
Traditional Focus
Push
Start of Production
Manufacturing
Inventory-Based
Mass Production
Customer Focus
Pull
Customer-Order Based
Mass Customization
A process that redefines and
simplifies manufacturing by
reducing inventory levels and
delivering raw materials JUST
WHEN THEY ARE NEEDED on
the production line.
JITJIT
Reduces raw material inventories Shortens lead times Creates better supplier
relationships Reduces production and storeroom
costs Reduces paperwork
Receive high-quality parts Receive high-quality parts
Meet supplier delivery commitmentsMeet supplier delivery commitments
Have a crisis management planHave a crisis management plan
INFO TECHNOLOGY that
replaces paper documents that
accompany business
transactions with electronic
transmission of the information.
ElectronicData
Interchange
ElectronicData
Interchange
A method of developing
and maintaining an
adequate assortment of
materials or products to
meet a manufacturer’s or
a customer’s demand.
InventoryControlSystem
InventoryControlSystem
MaterialsRequirement
Planning(MRP)
MaterialsRequirement
Planning(MRP)
An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer.
An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer.
DistributionResourcePlanning
(DRP)
DistributionResourcePlanning
(DRP)
An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer.
An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer.
RECEIVE goods into warehouse
DISPATCH the goods totemporary storage
Recall, select, or pick the goods for shipment
Identify, sort, and label goods
LO7
Relative CostTransitTime
Reliability
Capability
Accessibility
Traceability
HighestHighest LowestLowest
Air WaterPipeRailTruck
Water Rail Pipe Truck Air
Pipe Truck Rail Air Water
Water
Truck
Rail Truck Air Pipe
Rail Air Water Pipe
Air Truck Rail Water Pipe
Electronic distributionElectronic distribution
Outsourcing of logistics functionsOutsourcing of logistics functions
Advanced computer technologyAdvanced computer technology
Automatic identification systems- Bar coding- Radio frequency technology
Communications technology
Supply chain software systems
Outsourcing BenefitsOutsourcing Benefits
Reduce inventories
Locate stock at fewer plants and distribution centers
Provide same or better levels of service
Channels and Distribution Decisions for Global Markets
Global Channel Development
Global Channel Development
Channel structure and type differ
Channel structure and type differ
Gray marketing channelsGray marketing channels
Global SupplyChain Management
Global SupplyChain Management
Awareness of trade legalitiesAwareness of trade legalities
Transportation IssuesTransportation Issues
Channels and Distribution Decisionsfor Services
Minimizing wait times
Managing service capacity
Improving service delivery
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