Transcript 201137164342598

Presentation prepared by Robin Roberts, Griffith University and
Chapter 12
Mike Spark, Swinburne University
Technology
Copyright Johnof
Wiley
& Sons 2007
Chapter 12
Marketing channels and
supply-chain management
Chapter 12
Copyright John Wiley & Sons 2007
Chapter Objectives
1. Describe the nature and functions of
marketing channels
2. Identify the types of marketing channels
3. Explore the concepts of leadership,
cooperation and conflict in channel
relationships
4. Recognise common strategies for
integrating marketing channels
5. Examine the major levels of marketing
coverage
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Chapter Objectives (cont'd)
6. Recognise the importance of the role of
physical distribution activities in
supply-chain management
7. Examine the major physical distribution
functions of order processing, inventory
management, materials handling,
warehousing and transportation
8. Understand the nature and functions of
wholesalers
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Technology’s role in distribution
Dial-Up
Broadband
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Marketing channels
and supply-chain management
Marketing Channel
A group of individuals and organisations
directing products from producers to
customers
Marketing Intermediary
Links producers to other intermediaries or
ultimate consumers through contractual
arrangements or through the purchase
and resale of products
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Marketing channels
and supply-chain management
Supply Chain Management
Long-term partnerships among
marketing channel members that
reduce inefficiencies, costs and
redundancies and develop innovative
approaches to satisfy customers
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Technology facilitates
supply-chain management
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The importance
of marketing channels
Marketing channels are a powerful influence
on the rest of the marketing mix.
Create utility
– Time
– Place
– Possession
– Form
Facilitate exchange efficiencies
– reduce search costs for customers
– maintain order in the marketplace
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Typical marketing channels
for consumer products
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Typical marketing channels
for business products
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Distribution intermediaries
Industrial distributor
– takes title to business products and carries
inventories
Manufacturers’ agent
– sells on commission, complimentary
products from several producers
Dual distribution
– Two or more channels to distribute the same
product to same target market
Strategic channel alliance
– An agreement to distribute through channels
with a non-competitor
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Channel leadership and cooperation
Each channel member performs a different
role, agrees to accept certain rights,
responsibilities, rewards and sanctions for
non-conformity
Channel Captain
A dominant member (producer,
wholesaler or retailer) of a marketing
channel or supply chain
Channel Power
The ability of one channel member to
influence another member’s goals
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Channel conflict and cooperation
Sources of channel conflict (disagreements
arising among channel members) include:
– communication difficulties
– conflicts with distributors and retailers
– intermediaries diversifying
Improving Channel Cooperation
– unifying to maintain market order
– agreeing to direct efforts toward common
objectives
– defining each channel member’s tasks
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Channel integration
Members can either combine and control most
activities or pass them on to another member
Vertical Channel Integration
– Two or more stages of the marketing
channel are under one management
Vertical Marketing System (VMS)
– Single channel member management to
achieve efficient, low-cost distribution
Horizontal Integration
– Same level organisations, where operation
is combined under one management
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Intensity of market coverage
The determination of intensity of coverage by
marketers
Intensive Distribution
– uses all available outlets
Selective Distribution
– uses only some available outlets
Exclusive Distribution
– uses a single outlet in a fairly large
geographic area
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Physical distribution in
supply-chain management
Distribution actitivities are an important part of
supply-chain planning and require the
cooperation of all partners
Physical Distribution (Logistics)
– Activities used to move products from
producers to consumers
Outsourcing
– Contracting of distribution tasks to third
parties with specialised logistics skills who
do not have managerial authority within the
marketing channel
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Cost of distribution
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Order processing
Order processing
The receipt and transmission of sales order
information including:
• Order entry
• Order handling
• Order delivery
Electronic Data Interchange (EDI)
A computerised means of integrating
order processing with production,
inventory, accounting and transportation
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Inventory management and
materials management
Inventory management
Developing and maintaining adequate
assortments of products to meet customers
needs
Just-in-Time
Supplies arrive just when needed
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Inventory management and
materials management
Materials management
Physical handling of products and the
transportation required
Unit loading
– boxes of product are palletised and
handled by mechanical means
Containerisation
– consolidation of many small items into a
single large container
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Warehousing
Warehousing is the design and operation of
facilities for storing and moving goods
Private Warehouses
– Company-operated warehouses for storing and
shipping own products
Public Warehouses
– Businesses that lease storage space and related
physical distribution facilities
Distribution Centres
– Large centralised warehouses that focus on
moving rather than storing goods
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Transportation
Involves the movement of products from where
they are made to where they are used.
Transportation modes:
– Railway, road, air and water
– Pipelines
Logistics managers select a transportation
mode based on the optimum combination of:
- Cost
- Speed
- Dependability
- Load flexibility
- Accessibility
- Frequency
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Coordinating transportation
Intermodal Transportation
An integrated transportation approach in
which two or more transportation modes
are used in combination
Freight Forwarders
Organisations that consolidate shipments
from several firms into efficient lot sizes
Megacarriers
Freight firms that provide several modes of
shipment
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Wholesaling
Transactions in which products are bought for
resale, for making other products, or for
general business operations
Wholesaler
An individual or organisation that facilitates
and expedites wholesale transactions
– Physical distribution of goods
– Furnishes channel information to
facilitate and manage channel operations
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Major wholesaling functions
Wholesalers may engage in many supply
chain management activities including:
– Selling and promotion for producers
– Supply-Chain Management
– Inventory Control and Data Processing
– Risk Taking
– Financing and Budgeting
– Marketing Research and Information
Systems
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Services provided by wholesalers
Wholesalers provide essential services to both
producers and retailers. They:
– Serve as an extension of the producer’s
sales force
– may lend financial assistance for the
distribution channel
– transport and warehouse inventories
– assume credit risks of buyers/customers
– may purchase a producers’ entire output
– facilitate channel information
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Types of merchant wholesalers
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Merchant wholesalers
Are independently owned businesses that:
– Take title
– Assume risk
– Buy and resell products to other
wholesalers, retailers or business
customers
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Full-service wholesalers
Perform the widest possible range of
wholesaling functions and cover the
categories of:
General-merchandise wholesalers
– Wide product mix but limited depth
Limited-line wholesalers
– Only a few lines but extensive assortment
Specialty-line wholesalers
– Single product line or only a few items
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Limited-service wholesalers
Provide fewer marketing services, generally
take title to merchandise and cover:
Cash-and-carry wholesalers
– Lending or delivery is not undertaken
Truck wholesalers (or truck jobbers)
– Deliver directly to customers
Drop shippers (or desk jobbers)
– Never handle the product
Mail-order wholesalers
– Use catalogues instead of a sales force
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Services provided by wholesalers
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Agents and brokers
Both negotiate purchases and expedite
sales but do not take title to the products
Agents
– normally represent buyers or sellers on
a permanent basis (manufacturers
agents, commission or factor merchants
and selling agents)
Brokers
– bring buyers and sellers together on a
temporary basis
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Types of wholesalers
Manufacturers’ Sales Branches and Offices
resemble merchant wholesalers’ operations
Sales branches
– Manufacturer-owned intermediaries
– sell products and provide support
– carry inventory, located near customers
Sales offices
– Manufacturer-owned operations that
provide services associated with agents
– Carry no inventory
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Case study exercise
TNT Fashion Express
Take a few minutes to
read the case study
on page 359 of your
text.
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