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Distribution Decisions

Distribution Decisions. Jeremy Kees, Ph.D. To get us thinking…. What different channels are available for you to purchase the following products? Through which type of channel do you prefer to purchase the following products? Explain. Automobile Clothing Computer Music LCD / Plasma TV.

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Distribution Decisions

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  1. Distribution Decisions Jeremy Kees, Ph.D.

  2. To get us thinking… • What different channels are available for you to purchase the following products? • Through which type of channel do you prefer to purchase the following products? Explain. • Automobile • Clothing • Computer • Music • LCD / Plasma TV

  3. Some Terms…. • Place Marketing • Distribution • Supply Chain Management • Logistics • Marketing Channels …..all deal with the most efficient means by which to get the product to the consumer

  4. Tonight, let’s talk about… • Marketing Channels • Marketing Intermediaries and Value Networks • Supply Chain Management • Logistics Decisions • Retailing

  5. Marketing Channels (Terms) • Marketing channels—sets of interdependent organizations involved in the process of making a product or service available for use or consumption. • Value network—a system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings.

  6. Marketing Channels • The “Middleman” • Marketing Intermediaries • Traditional Supply Chains

  7. The Role of Marketing Channels • First and foremost…ADDING VALUE! • But more specifically… • Move products from producer to consumer (downstream) • Move payment from consumer to producer (upstream) • There are lots of necessary distribution functions that are outside of our core competency (e.g., transport products, store products, order processing, etc.)

  8. Channel-Design Decisions • Analyze customers’ desired service output levels • For instance, do consumers expect to be able to purchase one of your product at a time? • Establish objectives and constraints • Does your product require special installation/service? • Identify major channel alternatives • There are a very wide variety of channels that have unique strengths and opportunities • Evaluate the major alternatives

  9. Channel-Management Decisions • Selecting channel members • A careless decision here could mean MAJOR headache down the road! • Training and motivating channel members • Channels should be viewed as partners – toward the goal of satisfying customers • Evaluating channel members • Modifying channel arrangements REMEMBER: If a channel member is not adding value It should be modified or eliminated!!

  10. Managing Channel Conflict • Horizontal Conflict • Multichannel Conflict • Vertical Conflict • Wal-Mart versus Vendors • Video

  11. Points of Discussion • Is Wal-Mart good for America?? • Try to be open-minded and unbiased • Make a case for each side of the debate • What lies at the heart of the channel conflict between WM and it’s suppliers? • Are there any ethical issues to consider?

  12. Supply Chain Management (terms) Supply chain management (SCM): Starts before physical distribution, covering procurement of inputs, conversion into finished products, and product movement to final destinations Logistics: Planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from points of origin to points of use to meet customer needs at a profit.

  13. SCM/Logistics Decisions • Order Processing • Warehousing • Inventory • Transportation • The key here is INTEGRATION (through information technology)!!

  14. SCM/Logistics Costs

  15. Transportation Options

  16. Retailing • All activities involved in selling goods or services directly to final consumers for personal, nonbusiness use.

  17. Types of Retailers • Specialty store • Department store • Supermarket • Convenience store • Discount store • Off-price retailer • Superstore • Catalog showroom

  18. Low-end strategy • Low prices • Limited facilities and services • Price-sensitive consumers • Medium strategy • Moderate prices • Improved facilities • Broader base of value- and service-conscious consumers • High-end strategy • High prices • Excellent facilities and services • Upscale consumers Retailing Concepts • Retail Life-Cycle • Wheel-of-Retailing

  19. Retailing Decisions • Target market • Product assortment and procurement • Price • High-markup, lower-volume • Low-markup, higher-volume • Services and store atmosphere • Store activities and experiences • Communications • Location ** POSITIONING!!

  20. New Trends • “Upscale Discounters” • “Experience Retailing” or “Shopertainment”

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