Transcript Spinoffs and Reverse Spinoffs

Managing Marketing Channels and Supply Chains
Jamie Bute
Caroline Mutonyi
Lisa Schoborg
Morgan Wortham
January 12, 2015
Agenda
Marketing Channels
Vertical Marketing Systems
Marketing Channel Choice Management
Marketing Logistics & Supply Chain Management
Distribution Channel Choice Management
Types of Distribution Strategies
Marketing Channel
Marketing Channel: the transfer of the ownership of goods from production to
consumption
Channel Partners (distributors, wholesalers, and retailers) offer Three Functions:
Transactional
Work as an intermediary between the producer and the customer
Hold onto inventory at their location
Enhance your image by supply the goods to customers in a timely manner
Logistical
Store the products
Provide transportation
Buy in bulk and then split into smaller shipments
Combine product with other products to sell to consumer
Facilitating
Deal with customers
Negotiate Sales
Provide Customer Service
Consumer Product Channels
Direct: Producer sells directly to the end customer
Indirect
Retailers
Wholesalers – Retailers
Agents – Wholesalers – Retailers
Business Product Channels
Direct: Producer sells directly to the end customer
Indirect
Industrial Distributor
Agents
Agents – Industrial Distributor
Electronic Marketing Channels
Radio
Television
Computer
Telephone and Cell Phone
Fax Machine
Email
RSS
Electronic messaging
Direct Marketing Channels
Multichannel Marketing
The practice of interacting with customers using a combination of
indirect and direct communication channels – websites, retail
stores, mail order catalogs, direct mail, email, mobile, etc. – and
enabling customers to take action in response – preferably to buy
your product or service – using the channel of their choice. In the
most simplistic terms, multichannel marketing is all about choice.
Dual Distribution
Involves an arrangement whereby a firm reaches different
buyers by employing two or more different types of channels for
the same basic product.
Vertical Marketing Systems
In normal systems, each piece of the distribution channel operates on
its own for profit
Channel arrangement to bring together parts of the distribution
channel for their mutual benefit
Combine resources
Three systems: Corporate, Contractual, and Administrated
Corporate Systems
A company purchases pieces of the distribution channel
Forward integration
Purchase the next level down in the channel
Backward integration
Purchase the previous level in the channel
Pro: more control
Con: takes a lot of capital
*Contractual Systems
Companies enter into contracts with pieces of the distribution
channel
Wholesaler-sponsored voluntary
Retailer-sponsored cooperatives
Franchising
Administrated Systems
The company does not own or have contracts with pieces of the
distribution channel, but controls activities of the other pieces with
power of size or influence.
Factors Affecting Channel Choice and
Management
Which channel and intermediaries will provide the best coverage of
the target market?
Which channel and intermediaries will best satisfy the buying
requirements of the target market?
Which channel and intermediaries will be the most profitable?
Marketing Channel Choice & Management
Intensive distribution
Place products/services in as many outlets as possible
Exclusive distribution
Place products/services in one retailer at specific geographic area
*Selective distribution
Place products/services in a few retailers in a specific geographic area
Market Logistics
The process of planning, implementing, and controlling
the physical flow of goods, services, and related
information from points of origin to points of consumption
to meet consumer requirements at a profit.
Supply Chain
The supply chain includes all the firms that engage in
activities that are necessary to convert raw materials into a
good or service and put it in the hands of the consumer
or business customer, that perform or support the
LOGISTICS function.
Logistics of Supply Chain
Supply
Chain
Team
Logistics Information System
Sourcing & Procurement
Production Scheduling
Order Processing
Inventory Control
Warehouse & Materials Handling
Transportation
Supply Chain Process
Supply Chain Process Example
Supply Chain Partners
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, resulting in enhanced customer and
economic value.
Role of Supply Chain Management
Communicator of customer demand from point of sale to supplier.
Physical flow process that engineers the movement of goods.
Benefits of Supply Chain Management
Means of differentiation
Reduced costs
Greater supply chain flexibility
Improved customer service
Higher revenues
Distribution Channel Choice Management
A marketing channel consists of individuals and firms involved in
the process of making products or services available for use or
consumption by consumers or industrial use.
Distribution is one of the key elements in the entire marketing
strategy as they help expand your reach and grow revenue.
Distribution
Distribution is a vitally important activity that focuses on how to
reach your target market and the:
location of your business
location of your target market
how to reach your target market
warehousing of your stock
transportation of your stock
Two Types of Distribution Strategies/Channels of
Distribution
Direct Shipment Distribution Strategies
Intermediate Inventory Storage Point
Direct Shipment Distribution Strategies
Advantages:
The retailer avoids the expenses of operating a distribution center
Lead times are reduced
Disadvantages:
Risk-pooling effects are negated
Manufacturer and distributor transportation costs increase
Commonly used scenarios:
Prevalent in the grocery industry
Lead times are critical because of perishable goods
Retail store requires fully loaded trucks
Often mandated by powerful retailers
Manufacturer may be reluctant but may have no choice
Intermediate Inventory Storage Point Strategies
Traditional warehousing strategy
Distribution centers and warehouses hold stock inventory
Provide their downstream customers with inventory as needed
Cross-docking strategy
Warehouses and distribution centers serve as transfer points for
inventory
No inventory is held at these transfer points
Centralized pooling and transshipment strategies
May be useful when there is a large variety of different products
Centralized vs. Decentralized Management
Centralized system
Decisions are made at a central location for the entire supply
network.
Typical objective: minimize the total cost of the system subject to
satisfying some service-level requirements.
Centralized control leads to global optimization.
At least as effective as the decentralized system.
Allow use of coordinated strategies.
Decentralized system
Each facility identifies its most effective strategy without
considering the impact on the other facilities in the supply chain.
Leads to local optimization.
Central vs. Local Facilities
Centralized facilities
Employ both fewer warehouses and distribution centers.
Facilities are located further from customers.
Other factors
Safety stock: Lower safety stock levels with centralized facilities.
Overhead: Lower total overhead cost with centralized facilities.
Economies of scale: Greater economies of scale with centralized
facilities.
Lead time: Lead time to market reduced with local facilities.
Service
Utilization of risk pooling better with centralized
Shipping times better with local
Transportation costs
Costs between production facilities and warehouses higher with local
Costs from warehouses to retailers lower with local
Cross-Docking
Warehouse functions as inventory coordination points rather than
as inventory storage points.
Goods arriving at warehouse from the manufacturer:
- are transferred to vehicles serving the retailers
- are delivered to the retailers as rapidly as possible
Goods spend very little time in storage at the warehouse
Often less than 12 hours
Limits inventory costs and decreases lead times
Conclusion
Managing marketing channels and supply chains is a
critical element of marketing – after all, marketing is
about getting the right product, in the right quantity, to
the right place, at the right time.
Questions?