Transcript distribution channels

Chapter 10
Marketing Channels &
Supply Chain Management
1
Concept
Connections
Explain why companies use distribution channels
and discuss the functions these channels perform.
Identify the major channel alternatives open to a
company.
Explain how companies select, motivate, and
evaluate channel members.
Analyze integrated logistics, including how it may
be achieved and its benefits to the company.
2
Issues Concerning
Distribution Channels
What is the Nature
Of Distribution
Channels?
What Role Does
Physical Distribution
Play in Attracting
and Satisfying
Customers?
How do Channel What Problems do
Firms Interact and Companies Face in
Organize to do the
Designing and
Work of the
Managing Their
Channel?
Channels?
3
What’s a Distribution
Channel (PLACE)
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.
4
Distribution Channel
Manufacturer
Retailer
Distributor
Consumers5
Why are Marketing
Intermediaries Used?
Results from their greater efficiency in
making goods available to target markets.
Offer the firm more than it can achieve on
it’s own:



Contacts,
Experience,
Specialization.
Purpose: match supply from producers to
demand from consumers.
6
How a Marketing Intermediary
Reduces the Number of
Channel Transactions
7
Number of
Channel Levels
Channel Level - Each Layer of Marketing Intermediaries
that Perform Some Work in Bringing the Product and its
Ownership Closer to the Final Buyer.
Channel 1
Direct Channel
M
Channel 2
M
Channel 3
M
C
Indirect Channel
W
R
C
R
C
R
C
Channel 4
M
W
J
8
Channel Behavior &
Conflict
Will be effective when


Each member is assigned tasks it can do best.
All members cooperate to attain overall channel goals
and satisfy the target market.
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.
9
Conventional Marketing
Channel Vs a Vertical
Marketing System
Manufacturer
Wholesaler
Vertical
Marketing
System
Manufacturer
Wholesaler
Conventional
Marketing
Channel
Retailer
Retailer
Consumer
Consumer
10
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
11
Changing Channel
Organization
A Major Trend is Toward Disintermediation
Which Means Producers are Bypassing
Intermediaries and Going Directly to
Final Buyers
That New Types of Channel Intermediaries
are Emerging to Displace Traditional Ones.
12
Channel Design
Decisions
Analyzing Consumer Service Needs
Setting Channel Objectives & Constraints
Identifying Major Alternatives
Intensive
Distribution
Selective
Distribution
Exclusive
Distribution
Evaluating the Major Alternatives
Designing International Distribution Channels
13
Channel Management
Decisions
Motivating Channel Members
FEEDBACK
Selecting Channel Members
Evaluating Channel Members
14
Nature and Importance of
Marketing Logistics
Involves getting the right product to
the right customers in the right place
at the right time.
Companies 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..
Improvements in information technology has
created opportunities for major gains in
distribution efficiency.
15
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
16
Major Logistics
Functions
Costs
Order Processing
Received
Processed
Shipped
Minimize Costs of
Attaining Logistics
Objectives
Transportation
Rail, Truck, Water,
Pipeline, Air,
Intermodal
Logistics
Functions
Warehousing
Storage
Distribution
Automated
Inventory
When to order
How much to order
Just-in-time
17
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
18
Choosing
Transportation Modes
Checklist for Choosing
Transportation Modes
1. Speed
2. Dependability
3. Availability
4. Costs
5. Others
19
Review of Concept
Connections
Explain why companies use distribution channels
and discuss the functions these channels perform.
Identify the major channel alternatives open to a
company.
Explain how companies select, motivate, and
evaluate channel members.
Analyze integrated logistics, including how it may
be achieved and its benefits to the company.
20