Transcript NPD and PLC - Marriott School

Marketing Management
More Channels than
the Dish Network
Paul Dishman*, Ph.D.
Department of Business Management
Marriott School of Management
Brigham Young University
Lecture 14
*not affiliated with the Dish Network
Marketing Management
Strategic Channel Change
Involves getting the right product
to the right customers
in the right place
at the right time.
Paul Dishman, Ph.D.
Marketing Management
Strategic Questions
Concerning Channels
What is the
Nature
of Existing Distribution
Channels?
How do Channel
Firms Interact and
Organize to do the
Work of the
Channel?
What Role Does
Physical Distribution
Play in Attracting
and Satisfying
Customers?
What Problems do
Companies Face in
Designing and
Managing Their
Channels?
Paul Dishman, Ph.D.
Marketing Management
What is a Distribution Channel?
• “A set of interdependent organizations
(intermediaries) involved in the process of
making a product or service available for
use or consumption by the consumer or
business user.”
• Marketing Channel decisions are among
the most important decisions that
management faces and will directly affect
every other marketing decision.
Paul Dishman, Ph.D.
Marketing Management
Why are Marketing
Intermediaries Used?
• The use of intermediaries results from their greater
efficiency in making goods available to target
markets.
• Offer the firm more than it can achieve on it’s own
through the intermediaries:
–
–
–
–
Contacts,
Experience,
Specialization,
Scale of operation.
• Purpose: match supply from producers to demand
from consumers.
Paul Dishman, Ph.D.
Marketing Management
How a Marketing Intermediary Reduces
the Number of Channel Transactions
Paul Dishman, Ph.D.
Marketing Management
Distribution Channel Functions
These Functions Should be Assigned to the Channel Member Who Can Perform Them
Most Efficiently and Effectively to Provide Satisfactory Assortments of Goods and
Services to Target Customers.
Risk Taking
Financing
Physical
Distribution
Negotiation
Information
Promotion
Contact
Matching
In this video clip, a Dupont executive speaks about managing
the supply chain and the logistics process for two well-known
brands: Nomex and Kevlar.
Paul Dishman, Ph.D.
Click to play
Click to return
Marketing Management
Number of Channel Levels (Fig. 12.2)
Channel Level - Each Layer of Marketing Intermediaries that Perform Some Work in
Bringing the Product and its Ownership Closer to the Final Buyer.
Short
M
M
M
Direct Channel
C
Indirect Channel
W
R
C
R
C
R
C
Long
M
W
J
Paul Dishman, Ph.D.
Marketing Management
Channel Behavior & Conflict
• The channel will be most effective when:
– each member is assigned tasks it can do best.
– all members cooperate to attain overall channel goals and
satisfy the target market.
• When this doesn’t happen, conflict occurs:
– Horizontal Conflict occurs among firms at the same level of
the channel, i.e retailer to retailer.
– Vertical Conflict occurs between different levels of the same
channel, i.e. wholesaler to retailer.
• For the channel to perform well, each channel
member’s role must be specified and conflict must be
managed.
Paul Dishman, Ph.D.
Marketing Management
Conventional Marketing Channel vs.
a Vertical Marketing System
(Fig. 12.3)
Manufacturer
Wholesaler
Retailer
Consumer
Vertical
Marketing
System
Manufacturer
Wholesaler
Conventional
Marketing
Channel
Retailer
Consumer
Paul Dishman, Ph.D.
Marketing Management
Types of Vertical Marketing
Systems
Corporate
Common Ownership at Different
Levels of the Channel
Degree of
Direct
Control
Contractual
Contractual Agreements Among
Channel Members
Administered
Leadership is Assumed by One or
a Few Dominant Members
Paul Dishman, Ph.D.
Marketing Management
Innovations in Marketing
Systems
Horizontal Marketing
System
Two or More Companies at
One Channel Level Join
Together to Follow a New
Marketing Opportunity.
Example:
Hybrid Marketing
System
A Single Firm Sets Up
Two or More Marketing
Channels to Reach One
or More Customer
Segments.
Example:
Paul Dishman, Ph.D.
Marketing Management
Changing Channel Organization
A Major Trend is Toward Disintermediation
Which Means that Product and Service
Producers are Bypassing Intermediaries
and Going Directly to Final Buyers or
That New Types of Channel
Intermediaries are Emerging to Displace
Traditional Ones.
Paul Dishman, Ph.D.
Marketing Management
Channel Design Decisions
Analyzing Consumer Service Needs
Setting Channel Objectives & Constraints
Identifying Major Alternatives
Intensive
Distribution
Selective
Distribution
Exclusive
Distribution
Paul Dishman, Ph.D.
Marketing Management
Nature and Importance of
Marketing Logistics
• Involves getting the right product to the right
customers in the right place at the right time.
• Companies today place greater emphasis on
logistics because:
– customer service and satisfaction have become the
cornerstone of marketing strategy.
– logistics is a major cost element for most companies.
– the explosion in product variety has created a need for
improved logistics management.
– Improvements in information technology has created
opportunities for major gains in distribution efficiency.
Paul Dishman, Ph.D.
Marketing Management
Goals of the Logistics System
Higher Distribution Costs;
Higher Customer Service
Levels
Goal:
To Provide a Targeted Level of Customer Service
at the Least Cost.
Lower Distribution Costs;
Lower Customer Service
Levels
Paul Dishman, Ph.D.
Marketing Management
Major Logistics Functions
Order Processing
Costs
Received
Processed
Shipped
Minimize Costs of
Attaining Logistics
Objectives
Logistics
Transportation
Rail, Truck, Water,
Pipeline, Air,
Intermodal
Functions
Warehousing
Storage
Distribution
Automated
Inventory
When to order
How much to order
Just-in-time
Paul Dishman, Ph.D.
Marketing Management
Transportation Modes
Rail
Nation’s largest carrier, cost-effective
for shipping bulk products, piggyback
Truck
Flexible in routing & time schedules, efficient
for short-hauls of high value goods
Water
Low cost for shipping bulky, low-value,
non perishable goods, slowest form
Pipeline
Ship petroleum, natural gas, and chemicals
from sources to markets
Air
High cost, ideal when speed is needed or
distance markets have to be reached
Paul Dishman, Ph.D.
Marketing Management
Choosing Transportation Modes
Checklist for Choosing
Transportation Modes
1. Speed
2. Dependability
3. Availability
4. Costs
5. Others
Paul Dishman, Ph.D.
Marketing Management
Integrated Logistics Management
Concept Recognizes that Providing Better Customer
Service and Trimming Distribution Costs Requires
Teamwork, Both Inside the Company and Among All the
Marketing Channel Organizations.
Cross-Functional Teamwork inside the Company
Building Channel Partnerships
Third-Party Logistics
Third party logistics
Many companies are
now outsourcing
logistics tasks to
companies like
Ryder Integrated
Logistics.
Paul Dishman, Ph.D.