DISTRIBUTION CHANNLES AND LOGISTICS MANAGEMENT

8/11/2019 DISTRIBUTION CHANNLES AND LOGISTICS MANAGEMENT

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Chapter 12

Distribution Channels

and

Logistics Management

PRINCIPLES OF MARKETING


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Distr ibu t ion Channels

A set of interdependent organizations(intermediaries) involved in the process

of making a product or service availablefor use or consumption.

Channel decisions affect other marketing decisions

involve long-term commitments


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Role o f In termed iaries

Greater efficiency in making goodsavailable to target markets.

Intermediaries provideContacts

Experience

SpecializationScale of operation

Match supply and demand.


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Channel Funct ions

Information

Promotion

Contact

Matching

Negotiation

Physical Distribution

Financing

Risk taking


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Channel Levels

Manufacturer

Wholesaler

Retailer

Consumer


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Channel Behavior and Con f l ic t

The channel will be most effective when:

each member is assigned tasks it can do best.

all members cooperate to attain overall channel goalsand satisfy the target market.

Focus on individual goals leads to conflict

Horizontal Conflict occurs among firms at the same levelof the channel.

Vertical Conflict occurs between different levels of thesame channel.


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Vert ical Market ing Systems

Corporate

common ownership at different channel levels Contractual

contractual agreement among channel members

Administered

leadership assumed by dominant members


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Innovat ions in Market ing Sys tems

Horizontal MarketingSystem

Hybrid MarketingSystem

Two or more

companies at onechannel level jointogether to increasecoverage

Example:Banks in

Grocery Stores

A single firm sets up

two or moremarketing channelsto increase coverage

Example:Retailers,Catalogs, and Sales

Force


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Channel Management Decis ions

Selecting

Motivating

Evaluating

FEEDBACK


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Logis t ics

Involves entire supply chain

Increasing importance of logistics

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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12-12Goals of Log ist ics sys tem

Provide a Targeted Level of Customer Service atthe Least Cost.

Maximize Profits, Not Sales.

Higher Distribution Costs/Higher Customer Service

Levels

Lower Distribution Costs/Lower Customer Service

Levels


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Logis t ics Funct ions

Order Processing

Warehousing

Inventory Management

Transportation

Design system to minimize costs of attainingobjectives


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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

Pipeline

Ship petroleum, natural gas, and chemicalsfrom sources to markets

AirHigh cost, ideal when speed is needed or to

ship high-value, low-bulk items


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12-15Integrated Logis t ics 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

Documents

DISTRIBUTION CHANNLES AND LOGISTICS MANAGEMENT