MARKETING STRATEGYO.C. FERRELL MICHAEL D. HARTLINE9Distribution and Supply Chain Management

Distribution andSupply Chain ConceptsMarketing ChannelsAn organized system of marketing institutions through which products, resources, information, funds, and/or product ownership flow from the point of production to the final user.Physical DistributionCoordinating the flow of information and products among members of the channel to ensure that products are available in the right places, in the right quantities, at the right times, and in a cost-efficient manner.

Graphical Depiction of a Supply ChainExhibit 9.1

Marketing Channel FunctionsChannel Function SpecializationsSortingBreaking BulkMaintaining InventoriesMaintaining Convenient LocationsProviding ServicesChannel Effectiveness and EfficiencyDistribution Decision Criteria(1) Is the channel effective?(2) Is the channel efficient?

Discussion QuestionSome manufacturers and retailers advertise that customers should buy from them because they eliminate the middleman. Evaluate this comment in light of the functions that must be performed in a marketing channel. Does a channel with fewer members always deliver products to customers at lower prices? Defend your position.

Strategic Issues in Distributionand Supply Chain ManagementMarketing Channel StructureExclusive DistributionSelective DistributionIntensive DistributionChannel Integration (three key factors)ConnectivityCommunityCollaborationCreating and Enhancing Value in the Supply Chain

Discussion QuestionDescribe the characteristics of a product that represent something you would go to great lengths to acquire, thus supporting a manufacturers use of an exclusive distribution strategy. How much more knowledgeable are the salespeople at an exclusive distribution location versus those at an intensive distribution location? Why is this so?

Marketing Strategy in ActionClinique cosmetics uses a selective distribution strategy as their primary marketing channel structure.What is the motivation for using this strategy for this type of product line? What are the apparent benefits that Clinique receives from this strategy?

Maximizing Profit Margin PerformanceExhibit 9.2

Conflict and Collaborationin the Supply Chain (1 of 2)The Basis of Conflict in the Supply ChainFive basic sources of power:Legitimate PowerReward PowerCoercive PowerInformation PowerReferent Power

Factors in SuccessfulSupply Chain CollaborationExhibit 9.3

Conflict and Collaborationin the Supply Chain (2 of 2)Collaborative Supply ChainsCategory management must be:Customer drivenStrategically drivenMultifunctionalFinancially basedSystems dependentFocused on immediate consumer response

Major Components ofCategory ManagementExhibit 9.4

Trends in Marketing Channels (1 of 2)Advancing TechnologyGrowth of Internet and e-commerceRadio frequency identification (RFID)Shifting Power in the ChannelDiscount mass merchandise retailersWal-Mart, Kmart, and TargetCategory focused retailers (category killers)Toys R Us, Lowes, Office Depot, AutoZone, and Best BuyOutsourcing Channel FunctionsOutsourcing is growing rapidly

Category Killers - AutoZone

The Trend in OutsourcingExhibit 9.5

Trends in Marketing Channels (2 of 2)The Growth of Direct Distribution and Nonstore RetailingExamples of Nonstore ChannelsCatalog and Direct MarketingDirect SellingE-CommerceHome Shopping NetworksVendingDirect Response AdvertisingThe Growth of Dual Distribution

Discussion QuestionWhat are the major differences you have experienced in buying a product through a physical retail store, a manufacturers physical store, a catalog, and an online merchant? What have some retailers in your area done to justify their ongoing presence in the channel?

Legal and Ethical Issuesin the Supply ChainDual DistributionExclusive Channel ArrangementsTying ArrangementsCounterfeit Products

FDA Against Counterfeit Drugs