Marketing Channels and Supply Chain Management

1. Marketing Channels and Supply Chain Management

2. Why Not Sell Every Product Directly to Consumers? Would it be cheaper? Would it be faster? Would it be more efficient?

3. Channel Functions 1). Information: Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange. 2). Promotion: 3). Contact: with prospective buyers. 4). Matching—buyers with sellers. 5). Negotiation so ownership can take place. 6). Others include: a). Physical distribution (such as transportation and storage). b). Financing. c). Risk taking. Note: The question is not whether these functions must be performed but rather who will perform them. 1). Information: Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange. 2). Promotion: 3). Contact: with prospective buyers. 4). Matching—buyers with sellers. 5). Negotiation so ownership can take place. 6). Others include: a). Physical distribution (such as transportation and storage). b). Financing. c). Risk taking. Note: The question is not whether these functions must be performed but rather who will perform them.

4. Marketing or Distribution Channel A set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.

5. How Channel Members Add Value The use of intermediaries results from their greater efficiency in making goods available to target markets. Offers the firm more than it can achieve on its own through the intermediaries: Contacts Experience Specialization Scale of operation

6. How a Distributor Reduces the Number of Channel Transactions

7. Consumer and Business Channels

8. Channel Behavior The channel will be most effective when: each member is assigned tasks it can do best. all members cooperate to attain overall channel goals. If this does not happen, conflict occurs: 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.

9. Channel Conflict

10. Tupperware Update

11. Conventional vs. Vertical Marketing System

12. Vertical Marketing System (VMS) A distribution channel structure in which producers, wholesalers, and retailers act as a unified system One channel member owns the other, has contracts with them, or has so much power that they all cooperate.

13. Types of Vertical Marketing Systems

14. Franchise Organization Manufacturer-Sponsored Retailer Franchise System Ford and its independent franchised dealers Manufacturer-Sponsored Wholesaler Franchise System Coca-Cola’s licensed bottlers Service-Firm Sponsored Retailer Franchise System McDonald’s, Avis, and Holiday Inn 1]. Manufacturer-sponsored retailer franchise system (automobile industry). 2]. Manufacturer-sponsored wholesaler franchise system (soft-drink industry). 3]. Service-firm-sponsored retailer franchise system (auto-rentals, fast food, hotels business). 1]. Manufacturer-sponsored retailer franchise system (automobile industry). 2]. Manufacturer-sponsored wholesaler franchise system (soft-drink industry). 3]. Service-firm-sponsored retailer franchise system (auto-rentals, fast food, hotels business).

15. Innovations in Marketing Systems Two or more companies at one channel level join together to follow a new marketing opportunity. Example: Banks in grocery stores A single firm sets up two or more marketing channels to reach one or more customer segments. Example: Retailers and catalogs

16. Hybrid Marketing Channel

17. Changing Channel Organization Disintermediation means that more and more, product and service producers are bypassing intermediaries and going directly to final buyers, or that radically new types of channel intermediaries are emerging to displace traditional ones.

18. Disintermediation

19. Channel Design Decisions Analyzing Consumer Needs Setting Channel Objectives Identifying Major Alternatives Types of intermediaries Number of intermediaries Responsibilities of intermediaries

20. Types of Intermediaries Company sales force Manufacturer’s agency Industrial distributors

21. Number of Intermediaries Intensive distribution Exclusive distribution Selective distribution

22. Selective Distribution

23. Evaluating the Major Alternatives Economic Criteria: A company compares the likely sales, costs, and profitability of different channel alternatives. Control Issues: How and to whom should control be given? Adaptive Criteria: Consider long-term commitment vs. flexibility.

24. Channel Management Decisions Selecting Channel Members The first decision that must be reached is to select the channel members. The fact is that some manufacturers vary in their ability to attract qualified intermediaries. At the other extreme is the manufacturer with whom everyone wants to work. The best approach is to determine what characteristics are necessary, and be able to distinguish the better intermediaries. Motivating Channel Members Once selected, intermediaries must be continuously motivated to do their best. They must not only sell through them but to and with them as well. Positive and negative measures are possible—positive is preferred. 1). Many companies are now developing partner relationship management systems to coordinate their whole-channel efforts. Evaluating Channel Members Finally, the producer must regularly check on the intermediary’s performance against set standards. Periodic re-qualification is advised. Be sensitive to the needs of dealers and they will be sensitive to the firm’s needs as well. Selecting Channel Members The first decision that must be reached is to select the channel members. The fact is that some manufacturers vary in their ability to attract qualified intermediaries. At the other extreme is the manufacturer with whom everyone wants to work. The best approach is to determine what characteristics are necessary, and be able to distinguish the better intermediaries. Motivating Channel Members Once selected, intermediaries must be continuously motivated to do their best. They must not only sell through them but to and with them as well. Positive and negative measures are possible—positive is preferred. 1). Many companies are now developing partner relationship management systems to coordinate their whole-channel efforts. Evaluating Channel Members Finally, the producer must regularly check on the intermediary’s performance against set standards. Periodic re-qualification is advised. Be sensitive to the needs of dealers and they will be sensitive to the firm’s needs as well.

25. Public Policy and Distribution DecisionsLegal Basis – Clayton Act of 1914. Exclusive distribution Exclusive dealing Exclusive territorial agreements Tying agreements

26. Logistics and Supply Chain Management Planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet customer requirements at a profit. Includes: Outbound distribution Inbound distribution Reverse distribution

27. Supply Chain Management

28. Major Logistics Functions Warehousing Inventory management Transportation Logistics information management

29. Warehousing How many, what types, and where? Storage warehouses Distribution centers Automated warehouses

30. Inventory Management Must balance between too much and too little inventory. Just-in-time logistics systems RFID, AutoID, or Smart Tag technology Click Here to Find Out All About RFID

31. Logistics Technology

32. Transportation Trucks Railroads Water carriers Pipelines Air Internet Intermodal transportation

33. Intermodal Transportation

34. Intermodal Transportation

35. Intermodal Transportation

36. Integrated Logistics Management 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. Involves: Cross-functional teamwork inside the company Building logistics partnerships Third-party logistics

37. Third Party Logistics