Key Concepts. A set of interdependent ORGANIZATIONS that ease the transfer of ownership as products move from producer to business user or consumer. Marketing

Key Concepts

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

Who are the channel intermediaries and what value do they provide?

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


Producer

Govt.Buyer


Producer Producer Producer

IndustrialUser

IndustrialUser

IndustrialUser

IndustrialDistributor

IndustrialDistributor

Agents orBrokers

Agents orBrokers

Agent/BrokerAgent/BrokerChannelChannel

IndustrialIndustrialDistributorDistributor

Agent/BrokerAgent/BrokerIndustrialIndustrialChannelChannel

Multiple channels

Strategic channel alliances

Nontraditional channels

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


Customer profilesCustomer profiles

Consumer or IndustrialCustomer


Size of marketSize of market

Geographic location

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



Customer profilesCustomer profiles



Size of marketSize of market

Geographic location



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

What are the issues that influence

channel strategy?

PartneringPartnering

ConflictConflict

LeadershipLeadership

ControlControl

PowerPower

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

Distribution in Service Organizations

Documents

Key Concepts. A set of interdependent ORGANIZATIONS that ease the transfer of ownership as products move from producer to business user or consumer. Marketing