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13. Marketing Channels & Supply Chains
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Marketing Channels
• Move products from producers to consumers
• Provide time, place, and possession utilities to customers
• Can be direct (producer to end-use buyer) or indirect (producer to intermediary(ies) to end-use buyer)
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Intermediary Roles
• Perform three basic functions, in which are contained the eight marketing functions:– Transactional function
• Buying, selling
– Logistical function• Transporting and storing
– Facilitating function• Gathering marketing information, standardization
and grading, risk taking, and financing
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Channel Intermediaries
• Middleman• Wholesaler• Retailer• Agent• Broker• Distributor• Dealer• Manufacturer’s branches and offices
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Types of Marketing Channels• Vertical marketing systems (VMSs):
– May involve forward or backward integration• Types of VMS’s
– Corporate– Administered– Contractual: 3 types
• Wholesaler-sponsored voluntary chains• Retailer cooperatives• Franchise organizations: 3 types
– Manufacturer-sponsored retailer franchise
– Manufacturer-sponsored wholesaler franchise
– Service-firm-sponsored retailer franchise
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Types of Marketing Channels (Cont.)
• Horizontal marketing systems– 2+ companies pool resources or programs to exploit
opportunity– Symbiotic marketing
• Electronic marketing channels• Multichannel marketing systems
– Single firm uses 2+ channels to reach different customer segments
• E.g., dual distribution
– Benefits: increased market coverage, lower channel cost, more customized selling
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Channel Design Decisions
• Determine degree of target market coverage needed– Types of intermediaries– Distribution intensity
• Intensive• Selective• Exclusive
– Exclusive dealerships– Closed sales territories– Tying contracts
– Responsibilities of intermediaries
• Set channel objectives & determine constraints– Market, product, company/organization, competition
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Channel Conflict, Cooperation, Competition
• Types of conflict– Vertical channel, horizontal channel, multichannel (esp.
gray market)
• Causes of conflict– Goal incompatibility, unclear roles/rights, perceptual
differences, dependence on manufacturer
• Managing conflict– Adoption of super-ordinate goals, exchange of persons,
co-optation, joint membership in trade associations, diplomacy/mediation/arbitration
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Physical Distribution & Logistics Management
• Supply chain• Logistics management
– Customer service (analyze needs)• Information, convenience, and support
– Order processing– Inventory control
• Technology (esp. ERP & RFID)• Vendor-managed inventory
– Materials handling—unitizing & containerization– Warehousing– Transportation
• Carriers, modes• Goals of logistics management
– Minimize total logistics costs– Create customer value delivery system