MKTG

1. MKTG Lamb, Hair, McDaniel 2008-2009 12 Marketing Channels and Supply Chain Management CHAPTER Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University

2. Learning Outcomes Explain what a marketing channel is and why intermediaries are needed Define the types of channel intermediaries and describe their functions and activities Describe the channel structures for consumer and business products and discuss alternative channel arrangements LO1 LO2 LO3

3. Learning Outcomes Define supply chain management and discuss its benefits Discuss the issues that influence channel strategy Explain channel leadership, conflict, and partnering Describe the logistical components of the supply chain LO4 LO5 LO6 LO7

4. Learning Outcomes Discuss new technology and emerging trends in supply chain management Discuss channels and distribution decisions in global markets LO8 LO9

5. A set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer. Marketing Channels Marketing Channels LO1

6. The connected chain of all the business entities, both internal and external to the company, that perform or support the logistics function. Marketing Channels Supply Chain LO1

7. Specialization and division of labor Overcoming discrepancies Providing contact efficiency Marketing Channel Functions LO1

8. Specialization and Division of Labor • Creates greater efficiency • Provides lower costs • Achieves economies of scale • Aids producers who lack resources to market directly • Builds good relationships with customers LO1

9. Discrepancy of Quantity The difference between the amount of product produced and the amount an end user wants to buy. Discrepancy of Assortment The lack of all the items a customer needs to receive full satisfaction from a product or products. Overcoming Discrepancies LO1

10. Temporal Discrepancy A situation that occurs when a product is produced but a customer is not ready to buy it. Spatial Discrepancy The difference between the location of a producer and the location of widely scattered markets. Overcoming Discrepancies LO1

11. Providing Contact Efficiency LO1

12. MarketingChannel Providing Specialization and Division of Labor OvercomingDiscrepancies Providing ContactEfficiency SupplyChain REVIEW LEARNING OUTCOME LO1 Marketing Channels

13. Retailer A channel intermediary that sells mainly to customers. Merchant Wholesaler An institution that buys goods from manufacturers, takes title to goods, stores them, and resells and ships them. Agents and Brokers Wholesaling intermediaries who facilitate the sale of a product by representing channel members. Channel Intermediaries LO2

14. Retailers Take Title to Goods Merchant Wholesalers Take Title to Goods Agents and Brokers Do NOT Take Title to Goods Channel Intermediaries LO2

15. Product characteristics Buyer considerations Market characteristics Factors Suggesting Type of Wholesaling Intermediary to Use LO2

16. Factors Suggesting Type of Wholesaling Intermediary to Use LO2

17. Contacting/Promotion TransactionalFunctions Negotiating Risk Taking Physically distributing Logistical Functions Storing Sorting FacilitatingFunctions Researching Financing Channel Functions Performed by Intermediaries LO2

18. Logistics Logistics The process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption. LO2

19. CHANNELINTERMEDIARIES CHANNELFUNCTIONS Retailers Wholesalers Agents and Brokers Perform Transactional Logistical Facilitating REVIEW LEARNING OUTCOME LO2 Channel Intermediaries and Functions

20. Channels for Consumer Products A distribution channel in which producers sell directly to consumers. LO3 Direct Channel

21. Channels for Consumer Products Retailer Channel Wholesaler Channel Direct Channel Agent/Broker Channel Producer Producer Producer Producer Agents orBrokers Wholesalers Wholesalers Retailers Retailers Retailers Consumers Consumers Consumers Consumers LO3

22. Channels for Business Products Agent/Broker IndustrialChannel Direct Channel Direct Channel IndustrialDistributor Agent/Broker Channel Producer Producer Producer Producer Producer Agents or Brokers Agents or Brokers IndustrialDistributor IndustrialDistributor Govt.Buyer IndustrialUser IndustrialUser IndustrialUser IndustrialUser LO3

23. Business-to-Business Exchanges on the Internet Agents link buyers and sellers Companies drop the intermediary from the supply chain “Private exchanges” with select suppliers automate the supply chain http://www.sherwinwilliams.com Online LO3

24. Alternative Channel Arrangements Multiple channels Nontraditional channels Strategic channel alliances LO3

25. CONSUMERCHANNELS BUSINESSCHANNELS ALTERNATIVECHANNELS • Direct • Retail • Wholesaler • Agent/broker • Direct • Industrial • Agent/broker • Agent/brokerindustrial • Multiple • Nontraditional • Strategicalliances REVIEW LEARNING OUTCOME LO3 Channel Structures

26. A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value. Supply Chain Supply Chain Management LO4

27. Role of Supply Chain Management Communicator of customer demand from point of sale to supplier Physical flow process that engineers the movement of goods LO4

28. Responsibilities of Supply Chain Managers • Channel strategy decisions • Sourcing and procurement of raw materials • Production schedules • Order processing • Inventory management • Finished goods/supplies transportation and storage • Customer service coordination • Supply chain information flow management • Partner relationships LO4

29. The Supply Chain Process LO4

30. Means of differentiation Reduced costs Greater supply chain flexibility Improved customer service Higher revenues Benefits of Supply Chain Management LO4

31. REVIEW LEARNING OUTCOME LO4 Supply Chain Management

32. Channel Strategy Decisions Factors Affecting Channel Choice Level ofDistributionIntensity Market Factors Intensive Distribution Product Factors Selective Distribution Producer Factors Exclusive Distribution LO5

33. Market Factors Market FactorsThat Affect ChannelChoices Customer profiles Consumer or Industrial Customer Size of market Geographic location LO5

34. Product Factors Product Complexity Product FactorsThat Affect ChannelChoices Product Price Product Standardization Product Life Cycle Product Delicacy LO5

35. Product Factors Producer FactorsThat Affect ChannelChoices Producer Resources Number of Product Lines Desire for Channel Control LO5

36. Levels of Distribution Intensity Intensive Selective Exclusive A form of distribution aimed at having a product available in every outlet A form of distribution achieved by screening dealers to eliminate all but a few in any single area A form of distribution that established one or a few dealers within a given area LO5

37. Levels of Distribution Intensity Intensity Level Objective Number of Intermediaries Achieve mass marketselling. Convenience goods. Many Intensive Selective Work with selected intermediaries. Shopping and some specialty goods. Several Exclusive Work with singleintermediary. Specialty goods and industrial equipment. One LO5

38. REVIEW LEARNING OUTCOME LO5 Issues Influencing Channel Strategy

39. Power Control Leadership Conflict Partnering Social Dimensions of Channels LO6

40. Channel Power A channel member’s capacity to control or influence the behavior of other channel members Channel Control A situation that occurs when one marketing channel member intentionally affects another member’s behavior Channel Leader A member of a marketing channel that exercises authority/power over the activities of other members Channel Power, Control, and Leadership LO6

41. Channel Conflict A clash of goals and methods between distribution channel members Channel Partnering The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage Channel Conflict and Partnering LO6

42. Conflicts may occur if channel members: Have conflicting goals Fail to fulfill expectations of other channel members Have ideological differences Have different perceptions of reality Channel Conflict LO6

43. Transaction-Based Partnership-Based Short-term Adversarial Independent Price important Long-term Cooperative Dependent Value-added services Supplier / Manufacturer Relationships Number of Suppliers Information Sharing InvestmentRequired Many Minimal Minimal Few High High Channel Partnering LO6

44. Channel Power,Control, Leadership Channel Partnering ChannelRelationship Synergy Channel Conflict Horizontal Vertical REVIEW LEARNING OUTCOME LO6 Channel Leadership, Conflict, & Partnering

45. Sourcing & Procurement Production Scheduling SupplyChainTeam Order Processing Logistics Information System Inventory Control Warehouse & Materials Handling Transportation Logistical Components of the Supply Chain LO7

46. Plan purchasing strategies Develop specifications Select suppliers Negotiate price and service levels Reduce costs Sourcing and Procurement The Role of Purchasing: LO7

47. Traditional Focus Customer Focus Push / Pull Strategy Push Pull Start of Production Inventory-Based Customer-Order Based Manufacturing Mass Production Mass Customization Production Scheduling LO7

48. A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials just when they are needed on the production line. Just-in-Time Manufacturing JIT LO7

49. Reduces raw material inventories Shortens lead times Creates better supplier relationships Reduces production and storeroom costs Reduces paperwork Benefits of JIT LO7

50. Receive high-quality parts Meet supplier delivery commitments Have a crisis management plan JIT Requirements LO7