Transcript 2004

Marketing Channels and
Supply Chain Management
Chapter 12
Prepared by
Deborah Baker
Texas Christian University
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Learning Objectives
1. Explain what a marketing channel is and
why intermediaries are needed.
2. Define the types of channel intermediaries
and describe their functions and activities.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Learning Objectives (continued)
3. Describe the channel structures for
consumer and business-to-business
products and discuss alternative channel
arrangements.
4. Define supply chain management and
discuss its benefits.
5. Discuss the issues that influence channel
strategy.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
3
Learning Objectives (continued)
6. Explain channel leadership, conflict, and
partnering.
7. Describe the logistical components of the
supply chain.
8. Discuss new technology and emerging
trends in supply chain management.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Learning Objectives (continued)
9. Discuss channels and distribution
decisions in global markets.
10. Identify the special problems and
opportunities associated with distribution
in service organizations.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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1
Learning Objective
On Line
http://www.heb.com
Explain what a
marketing channel
is and why
intermediaries
are needed.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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1
Marketing Channels
Marketing
Channel
A set of interdependent organizations
that ease the transfer of ownership as
products move from producer to
business user or consumer.
Supply
Chain
The connected chain of all the business
entities, both internal and external to
the company, that perform or support
the logistics function.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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1
Marketing Channel Functions
Specialization and
Division of Labor
Channels
Fulfill
Three
Important
Functions
Overcoming
Discrepancies
Providing Contact
Efficiency
Chap. 12 Marketing 7e Lamb Hair McDaniel
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Specialization and
Division of Labor
1
 Provides efficiency and cost savings
 Attains economies of scale
 Aids producers who lack resources to
market directly
 Builds good relationships with customers
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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1
Overcoming Discrepancies
Discrepancy
of
Quantity
The difference between the
amount of product produced
and the amount an end user
wants to buy.
Discrepancy
of
Assortment
The lack of all the items a
customer needs to receive full
satisfaction from a product or
products.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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1
Overcoming Discrepancies
Temporal
Discrepancy
A situation that occurs when a
product is produced but a
customer is not ready to buy it.
Spatial
Discrepancy
The difference between the
location of a producer and the
location of widely
scattered markets.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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1
Contact Efficiency
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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2
Learning Objective
Define the types
of channel
intermediaries and
describe their
functions and
activities.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Channel Intermediaries
Retailer
A channel intermediary that
sells mainly to customers.
Merchant
Wholesaler
An institution that buys goods
from manufacturers, takes title
to goods, stores them,
and resells and ships them.
Agents and
Brokers
Wholesaling intermediaries who
facilitate the sale of a product by
representing channel member.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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2
Channel Intermediaries
Retailers
Take Title to Goods
Merchant
Wholesalers
Take Title to Goods
Agents
and
Brokers
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Do NOT Take Title to Goods
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2
Factors Suggesting Type of
Wholesaling Intermediary to Use
Chap. 12 Marketing 7e Lamb Hair McDaniel
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Channel Functions
Performed by Intermediaries
2
Contacting/Promotion
Transactional
Functions
Negotiating
Risk Taking
Physically distributing
Logistical
Functions
Storing
Sorting
Facilitating
Function
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Researching
Financing
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2
Logistics
The 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.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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3
Learning Objective
Describe the channel
structures for
consumer and
business-to-business
products and discuss
alternative channel
arrangements.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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3
Direct Channel
A distribution channel in
which producers sell
directly to consumers.
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3
Channels for Consumer Products
Direct
Channel
Producer
Retailer
Channel
Producer
Wholesaler Agent/Broker
Channel
Channel
Producer
Producer
Agents or
Brokers
Consumers
Wholesalers
Wholesalers
Retailers
Retailers
Retailers
Consumers
Consumers
Consumers
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Channels for
Business-to-Business Products
3
Direct
Channel
Direct
Channel
Producer
Producer
Industrial Agent/Broker Agent/Broker
Distributor
Channel
Industrial
Channel
Producer
Producer
Producer
Agents or
Brokers
Agents or
Brokers
Industrial
Distributor
Industrial
Distributor
Industrial
User
Govt.
Buyer
Industrial
User
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Industrial
User
Industrial
User
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3
Business-to-Business Exchanges
on the Internet
On Line
http://www.sherwinwilliams.com
 Linking buyers and sellers
 Dropping the middleman from the supply
chain
 Creating “private exchanges” to automate
the supply chain
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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3
Alternative Channel Arrangements
Multiple Channels
Nontraditional
Channels
Strategic Channel
Alliances
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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4
Learning Objective
Define supply chain
management and
discuss its benefits.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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4
Supply Chain Management
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.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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4
Role of Supply Chain Management
Communicator of
customer demand from
point of sale to supplier
Physical flow process
that engineers the
movement of goods
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Benefits of
Supply Chain Management
4
On Line
http://www.nashfinch.com
Reduced Costs
Greater Supply Chain Flexibility
Improved Customer Service
Higher Revenues
Chap. 12 Marketing 7e Lamb Hair McDaniel
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5
Learning Objective
Discuss the issues
that influence
channel strategy.
Chap. 12 Marketing 7e Lamb Hair McDaniel
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5
Channel Strategy Decisions
Factors
Affecting
Channel
Choice
Level of
Distribution
Intensity
Market Factors
Intensive Distribution
Product Factors
Selective Distribution
Producer Factors
Exclusive Distribution
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Market Factors
Customer Profiles
Consumer or Industrial
Customer
Market Factors
That Affect
Channel
Choices
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Size of Market
Geographic Location
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5
Product Factors
Product Complexity
Product Price
Product Factors
That Affect
Channel
Choices
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Product Life Cycle
Product Delicacy
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5
Producer Factors
Producer Resources
Number of Product Lines
Producer Factors
That Affect
Channel
Choices
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Desire for Channel Control
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5
On Line
http://www.radioshack.com
http://www.sprint.com
http://www.compaq.com
http://www.rca.com
http://www.directv.com
Levels of Distribution Intensity
Intensity Level
Objective
Number of
Intermediaries
Intensive
Achieve mass market
selling.
Convenience goods.
Many
Selective
Work with selected
intermediaries.
Shopping and some
specialty goods.
Several
Exclusive
Work with single
intermediary. Specialty
goods and industrial
equipment.
One
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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6
Learning Objective
Explain channel
leadership, conflict,
and partnering.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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6
Managing Channel Relationships
Channel Power
Channel Control
Social
Dimensions
of Channels
Channel Leadership
Channel Conflict
Channel Partnering
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Channel Power,
Control, and Leadership
6
Channel
Power
A channel member’s capacity to
control or influence the behavior
of other channel members
Channel
Control
A situation that occurs when one
marketing channel member
intentionally affects another
member’s behavior.
Channel
Leader
A member of a marketing channel
that exercises authority/power over
the activities of other members.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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6
Channel Conflict
A clash of goals and methods
between distribution channel members.
Horizontal
Conflict
Occurs among channel members
on the same level
Vertical
Conflict
Occurs among channel members
at different levels
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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6
Channel Partnering
The joint effort of all
channel members to create
a supply chain that serves
customers and creates a
competitive advantage.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Transaction- vs.
Partnership-Based Firms
6
TransactionBased
Partnership-Based
Supplier /
Short-term
Manufacturer Adversarial
Relationships Independent
Price important
Long-term
Cooperative
Dependent
Value-added services
Number of
Suppliers
Many
Few
Information
Sharing
Minimal
High
Investment
Required
Minimal
High
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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7
Learning Objective
Describe the
logistical components
of the supply chain.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Integrated Logistical
Components of the Supply Chain
7
Supply
Chain
Team
Logistics Information System
Sourcing & Procurement
Production Scheduling
Order Processing & Customer Service
Inventory Control
Warehouse & Materials Handling
Transportation
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Sourcing and Procurement
Plan
Purchasing Strategies
Role of
Purchasing
Departments
Develop
Specifications
Select
Suppliers
Negotiate
Price
Negotiate
Service Levels
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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7
Production Scheduling
Traditional Focus Customer Focus
Push / Pull
Strategy
Push
Pull
Start of
Production
Inventory-Based
Customer-Order
Based
Manufacturing
Mass Production Mass Customization
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©2004 South-Western/Thomson Learning
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7
Just-in-Time Manufacturing
A process that redefines
and simplifies
manufacturing by reducing
inventory levels and
delivering raw materials
just when they are needed
on the production line.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Benefits of JIT
 Reduces raw material inventories
 Shortens lead times
 Creates better supplier relationships
 Reduces production and storeroom
costs
 Reduces paperwork
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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JIT Requirements
Receive High-Quality Parts
Meet Supplier
Delivery Commitments
Requirements
for
Manufacturers
Using JIT
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Have a Crisis
Management Plan
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7
Electronic Data Interchange
On Line
http://www.walmartstores.com
Information technology
that replaces paper
documents that accompany
business transactions.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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7
Inventory Control System
A method of developing
and maintaining an
adequate assortment of
materials or products to
meet a manufacturer’s or a
customer’s demand.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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MRP and DRP
Materials
Requirement
Planning
Distribution
Resource
Planning
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
goods from the manufacturer to
the final consumer.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Warehouse and
Materials-Handling
7
Receive goods into
warehouse
Materials
Handling
Functions
Identify, sort, and
label goods
Dispatch the goods to
temporary storage
Recall, select, or pick the
goods for shipment
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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7
Transportation
Cost
Transit Time
Reliability
Criteria
for
Transportation
Mode
Choice
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Capability
Accessibility
Traceability
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Criteria for Ranking
Modes of Transportation
7
Lowest
Highest
Relative
Cost
Transit
Time
Air
Truck
Rail
Pipe
Water
Water
Rail
Pipe
Truck
Air
Reliability
Pipe
Truck
Rail
Air
Water
Capability
Water
Rail
Truck
Air
Pipe
Accessibility
Truck
Rail
Air
Water
Pipe
Traceability
Air
Truck
Rail
Water
Pipe
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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8
Learning Objective
Discuss new
technology
and emerging
trends in supply
chain management.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
54
Trends in
Supply Chain Management
8
Trends
Affecting the
Logistics
Industry
Advanced
Computer Technology
Outsourcing of
Logistics Functions
Electronic
Distribution
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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9
Learning Objective
Discuss channels
and distribution
decisions in global
markets.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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9
On Line
http://www.wto.com
Channels and Distribution
Decisions for Global Markets
Channel structure
and type differ
Global Channel
Development
Gray marketing channels
Awareness of trade legalities
Global Supply
Chain Management
Transportation Issues
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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10
Learning Objective
Identify the special
problems and
opportunities
associated with
distribution in
service
organizations.
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Channels and Distribution
Decisions for Services
10
Minimizing wait times
Managing service capacity
Areas of Focus
for
Service
Distribution
Chap. 12 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Improving service delivery
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