Transcript Key functions performed by channel members

Chapter 10
Marketing Channels: Delivering
Customer Value
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Supply Chains and the
Value Delivery Network
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Producing and making products available to
buyers requires building relationships with
“upstream” and “downstream” supply chain
partners.
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Upstream: Firms that supply the raw materials,
components, parts, and other elements necessary
to create a good.
Downstream: Marketing channel partners that
link the firm to the customer.
Nature and Importance of Marketing
Channels
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Marketing channel:
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A set of interdependent organizations that help
make a product or service available for use or
consumptions by the consumer or business users.
Nature and Importance of Marketing
Channels
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How channel members add value:
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The use of intermediaries results from their greater
efficiency in making goods available to target markets.
Channel members offer the firm more than it can achieve
on its own in terms of:
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Contacts
Experience
Specialization
Scale of operation
Nature and Importance of Marketing
Channels
Key functions performed by channel members:
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Transaction completing:
 Information
 Promotion
 Contact
 Matching
 Negotiation
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Transaction fulfilling:
 Physical distribution
 Financing
 Risk taking
Nature and Importance of Marketing
Channels
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Number of channel levels:
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The number of intermediary levels indicates the
length of a channel.
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Direct marketing channels
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Indirect marketing channels
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Have no intermediary levels between the manufacturer and
the customer.
Contains one or more intermediaries.
All channel institutions are connected by several
types of flows.
Channel Behavior and Organization
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The channel will be most effective when:
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If this does not happen, conflict occurs:
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Each member is assigned tasks it can do best.
All members cooperate to attain overall channel goals.
Horizontal conflict occurs among firms at the same level
of the channel (e.g., retailer to retailer).
Vertical conflict occurs between different levels of the
same channel (e.g., wholesaler to retailer).
Some conflict can be healthy competition.
Marketing Logistics and Supply Chain
Management
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Greater emphasis has been placed on logistics
recently because:
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Firms can gain a competitive advantage when logistics
result in better service or lower prices.
Improved logistics can lower costs.
Increased product variety has created a need for improved
logistics management.
Improvements in information technology have created the
means for major gains in distribution efficiency.
Marketing Logistics and Supply Chain
Management
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Major logistics functions:
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Warehousing
Inventory management
Transportation
Logistics information management
Goals of the logistics system:
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Deliver a targeted level of customer service at the
least cost.
Marketing Logistics and Supply Chain
Management
Transportation alternatives:
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Trucks
Railroads
Water carriers
Pipelines
Air
Integrated Logistics Management
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Integrated logistics management:
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The logistics concept that emphasizes teamwork, both
inside the company and among all the marketing channel
organizations, to maximize the performance of the entire
distribution system.
Requires:
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Cross-functional teamwork inside the company
Building logistics partnerships
Third-party logistics