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Chapter 12
 

Chapter 12

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  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: The term channel is derived from the Latin word, canalis, which means canal. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: A marketing channel can be viewed as a large pipeline through which products, their ownership, communication, financing and payment, and accompanying risk flow to the consumer. An important aspect of marketing channels is the joint effort of all channel members to create a continuous and seamless supply chain. Marketing channels facilitate the physical flow of goods through the supply chain, representing “place” or distribution in the marketing mix. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: As products move through the supply chain, channel members facilitate the distribution process by providing: Specialization and division of labor: Breaking a complex task into smaller, simpler ones creates greater efficiency and lower production costs. Overcoming discrepancies of quantity, assortment, time, and space. Providing contact efficiency by cutting the number of transactions required to get products to consumers and making an assortment of goods available in one location. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Specialized expertise of channel members enhances the overall performance of the channel. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Marketing channels help overcome discrepancies of quantity, assortment, time, and space created by economies of scale in production. Discrepancy of Quantity: Efficient production for lower unit costs creates a much larger quantity produced than the end user wants to buy. Marketing channels store and distribute the product in appropriate amounts, and make the products available in quantities that consumers desire. Discrepancy of Assortment: Marketing channels assemble in one place many of the products necessary for a consumer’s needed assortment. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Temporal Discrepancy: Marketing channels overcome temporal discrepancies by maintaining inventories in anticipation of demand. This is particularly true of seasonal/holiday merchandise. Spatial Discrepancy: Marketing channels overcome spatial discrepancies by making products available in locations convenient to consumers. For example, if all the Hungry Jack pancake mix is produced in Boise, Idaho, then Pillsbury must use an intermediary to distribute the product to other regions of the United States. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Exhibit 12.1 demonstrates the purchase of a television set by four consumers. Without a retail intermediary like Circuit City, the individual television manufacturers would have to make four contacts to reach the four buyers. With Circuit City as an intermediary, each producer only has to make one contact, and the consumer buys from one retailer instead of five producers. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Intermediaries in a channel negotiate with one another, facilitate the change of ownership between buyers and sellers, and physically move products from the manufacturer to the final end user. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: The most prominent difference separating intermediaries is whether or not they take title to the product. Taking title means they own the merchandise and control the terms of the sale. Agents and brokers do not take title to goods. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Product characteristics, buyer considerations, and market conditions determine the type of intermediary the manufacturer should use. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: The three basic functions—transactional, logistical, and facilitating--performed by intermediaries are shown in Exhibit 12.2. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes : Logistics typically include transportation and storage of assets, as well as their sorting, accumulation, consolidation, and/or allocation for the purpose of meeting customer requirements. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Exhibit 12.3 illustrates the four ways manufacturers can route products to consumers. Direct channel is used to sell products directly to consumers. No intermediaries are used. Examples are telemarketing, catalog shopping, on-line shopping, and television shopping networks. At the other end of the spectrum, an agent/broker channel may be used in markets with small manufacturers/retailers that lack the resources to find each other. The agents or brokers bring the manufacturers and wholesalers together for negotiations, but they do not take title to merchandise. Most consumer products are sold through distribution channels similar to the retailer channel and the wholesaler channel. Discussion/Team Activity: Identify various products and discuss the channel for distribution utilized by each. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Usually a producer employs several different or alternative channels, which includes multiple channels, nontraditional channels, and strategic channel alliances. Multiple channels: Two or more channels selected is called multiple or dual distribution. Nontraditional channels: Nontraditional channels, including the Internet and mail-order channels, help differentiate a firm’s product from the competition. Strategic channel alliances: Producers use another manufacturer’s already-established channel. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: In today’s sophisticated marketplace, many companies are focusing on their supply chain and turning to supply chain management for competitive advantage. A company’s supply chain includes all of the companies involved in all of the upstream and downstream flows of products, services, finances, and information, from initial suppliers (the point of origin) to the ultimate customer (the point of consumption). Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: The goal of supply chain management is to coordinate and integrate the activities performed by supply chain members into a collection of seamless end-to-end processes which gives supply chain managers “total visibility” of the supply chain both inside and outside the firm. Visualizing the entire supply chain allows managers to maximize strengths and efficiencies at each level of the process to create a highly competitive, customer-driven supply system. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Exhibit 12.5 depicts a typical supply chain model that managers attempt to optimize for firm and customer benefit. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Supply chain managers are responsible for making strategic decisions such as coordinating the sourcing and procurement of raw materials, scheduling production, processing orders, managing inventory, transporting and storing supplies and finished goods, dealing with returns, and coordinating customer service activities. Coordinating relationships between the company and its external partners, such as vendors, carriers, and third-party companies, is also a critical function of supply chain management. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Specific benefits from effective implementation of supply chain procedures include an almost 20 percent increase in cash flow, a more than 50 percent increase in flexibility of supply chain activities, and a reduction of 5 to 10 percent in supply chain costs, among other potential benefits. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Before choosing a marketing channel, supply chain managers must analyze several factors, which often interact. These factors can be grouped as market factors, product factors, and producer factors. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes : In Arm’s Length relationships, both parties retain their independence and pursue only their own interests while attempting to benefit from the goods or services provided by the other. Arm’s Length is often used when a company has a sudden and/or unique need for a product or service and does not anticipate this need will arise again in the near future. Integrated relationship is a situation where one company (vertical integration) or several companies acting as one, perform all channel functions. Integrated relationships are characterized by formal arrangements that explicitly define the relationships to the involved channel members. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Cooperative relationships, which exist between Arm’s Length and integrated relationships in terms of their connectedness, take many different forms Cooperative relationships include non-equity agreements such as franchising and licensing, as well as equity-based joint ventures and strategic alliances. Cooperative relationships tend to be more flexible than integrated relationships, but are also structured with greater detail and depth than Arm’s Length relationships. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: The supply chain consists of several interrelated and integrated logistical components, as shown on this slide. Integrating and linking all of the components is the logistics information system. The supply chain team orchestrates the movement of goods, services, and information from the source to the consumer. The team cuts across organization boundaries and communicates/coordinates/cooperates extensively. The best supply chain teams move beyond the organization to include external participants, such as suppliers, transportation carriers, and third-party logistics suppliers. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: One of the most important links in the supply chain is that between the manufacturer and the supplier. Purchasing professionals are on the front lines planning purchasing strategies, developing specifications, selecting suppliers, and negotiating price and service levels. The goal of most activities is to reduce the costs of raw materials and supplies. Instead of tough negotiations to get the best possible price, purchasing helps establish and cooperative relationships with vendors. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management On Line: Wal-Mart Is EDI a requirement for Wal-Mart suppliers? Go to Wal-mart’s Web site and read the “Supplier Information” pages. Does selling to Wal-Mart seem worth the effort? Why or why not? Notes: The order is often the step that sets the supply chain in motion, especially in build-to-order environments such as Dell Computer. The order processing system processes the requirements of the customer and sends the information into the supply chain. As the order enters the system, management monitors the flow of goods and the flow of information. Order processing is becoming more automated through the use of electronic data interchange computer technology. This information can be read and processed by computers. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: The inventory control system helps balance having excess inventory and having too few products on hand. The goal of inventory management is to keep inventory levels as low as possible, while maintaining an adequate supply of goods to meet customer demand. Consider, for example, negative sales forecasts during recent Christmas buying seasons that caused retailers to cut back on orders. As a result, many companies lost sales due to inventory shortages on popular items. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Managing inventory from the supplier to the manufacturer is called materials requirement planning (MRP) or materials management. Managing finished goods inventory from manufacturer to end user is referred to as distribution resource planning (DRP). Both inventory systems use inputs such as sales forecasts and available inventory to determine what actions must be taken to replenish goods in the supply chain. Demand is collected at each level in the supply chain, and with the use of EDI, the information can be transmitted to meet the quick-response needs of competitive markets. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Although build-to-order processes may eliminate the need to warehouse many materials, manufacturers keep some safety stock on hand in the event of an emergency. Additionally, inventory may be stored for seasonally-demand products. Storage helps manufacturers manage supply and demand. A materials-handling system moves inventory into, within, and out of the warehouse, performing the functions shown on this slide. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Supply chain logisticians must decide which mode of transportation to use to move products from supplier to producer and from producer to buyer. These decisions are related to other logistics decisions. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Transportation accounts for between 5 to 10 percent of the price of goods. Supply chain managers choose a mode of transportation on the basis of the criteria shown on this slide. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Exhibit 12.8 compares the basic modes of transportation based on the six criteria. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Several technological trends are affecting the job of the supply chain manager: As global trade becomes a more decisive factor in success or failure for firms of all sizes, global supply chain management increases in importance. Advanced computer technology has boosted the efficiency of logistics with tools such as automatic ID systems, radio frequency technology, and supply chain software systems. Outsourcing of logistics functions is a rapidly growing segment in which a manufacturer or supplier turns over the entire function of supply chain management to an independent third party. Electronic distribution includes any kind of product or service that can be distributed electronically. For instance, computer software can be purchased and downloaded electronically. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: One of the major goals of technology is to bring up-to-date information to the supply chain manager’s desk. Systems, such as those shown above, are now in place that help track freight, monitor speed and location of carriers, and make routing decisions. Each package can be tracked from receipt to delivery. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Social relationships play an important role in building unity among channel members. An aspect of channel management is managing the social relationships among channel members to achieve synergy. The basic social dimensions are shown on this slide and defined on the following slides. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Inequitable channel relationships often lead to channel conflict. In a broad context, conflict may not be bad: if traditional members refuse to keep pace with the times, removing an outdated intermediary may reduce costs for the entire channel. Horizontal conflict – A channel conflict that occurs among channel members on the same level. Vertical conflict – A channel conflict that occurs between different levels in a marketing channel, most typically between the manufacturer and wholesaler or between the manufacturer and retailer. Channel partnering is vital if each member gains something from the other members. Cooperation speeds up inventory replenishment, improves customer service, and reduces the total costs of the marketing channel. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Conflicts arise because channel members have conflicting goals, or when channel members fail to fulfill expectations of other channel members. Further, different perceptions of reality can cause conflict among members. For instance, retailers may have a liberal return policy, whereas wholesalers and manufacturers feel that people try to get something for nothing. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: Exhibit 12.9 compares companies that approach the marketplace unilaterally and those that engage in channel cooperation and form partnerships. Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Notes: The fastest-growing part of our economy is the service sector. Customer service is a priority, with service distribution focused on three major areas: Minimizing wait times Managing service capacity. Improving service delivery Discussion/Team Activity: Does your bank deliver any of its services online? Visit its Web site to find out. Which online services would you be inclined to use? Are there any that you would definitely not use? Why not? Chapter 12 Marketing Channels and Supply Chain Management
  • Chapter 12 Marketing Channels Chapter 12 Marketing Channels and Supply Chain Management Chapter 12 Marketing Channels and Supply Chain Management

Chapter 12 Chapter 12 Presentation Transcript

  • Chapter 12: Marketing Channels and Supply Chain Management Prepared by David Ferrell, B-books, Ltd. Designed by Eric Brengle, B-books, Ltd. Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Marketing Channels Explain what a marketing channel is and why intermediaries are needed. LO 1 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Marketing Channels A set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer. Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Marketing Channel Functions Copyright 2012 by Cengage Learning Inc. All Rights Reserved Specialization and division of labor Overcoming discrepancies Providing contact efficiency
  • 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
    Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Overcoming Discrepancies Copyright 2012 by Cengage Learning Inc. All Rights Reserved Discrepancy of Quantity Discrepancy of Assortment The difference between the amount of product produced and the amount an end user wants to buy. The lack of all the items a customer needs to receive full satisfaction from a product or products.
  • Overcoming Discrepancies Copyright 2012 by Cengage Learning Inc. All Rights Reserved Temporal Discrepancy Spatial Discrepancy A situation that occurs when a product is produced but a customer is not ready to buy it. The difference between the location of a producer and the location of widely scattered markets.
  • Providing Contact Efficiency Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Review Learning Outcome Marketing Channels LO 1 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Providing Specialization and Division of Labor Overcoming Discrepancies Providing Contact Efficiency Marketing Channel Supply Chain
  • Channel Intermediaries Define the types of channel intermediaries and describe their functions and activities. LO 2 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Channel Intermediaries Copyright 2012 by Cengage Learning Inc. All Rights Reserved 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 from producer to end user by representing retailers, wholesalers, or manufacturers.
  • Channel Intermediaries Copyright 2012 by Cengage Learning Inc. All Rights Reserved Retailers Merchant Wholesalers Agents and Brokers Take Title to Goods Take Title to Goods Do NOT Take Title to Goods
  • Factors Suggesting Type of Wholesaling Intermediary to Use Copyright 2012 by Cengage Learning Inc. All Rights Reserved Product characteristics Buyer considerations Market characteristics
  • Channel Functions Performed by Intermediaries Copyright 2012 by Cengage Learning Inc. All Rights Reserved Contacting/Promotion Negotiating Risk Taking Researching Financing Physically distributing Storing Sorting Facilitating Functions Transactional Functions Logistical Functions
  • Logistics The efficient and cost-effective forward and reverse flow as well as storage of goods, services, and related information, into, through, and out of channel member companies. Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Review Learning Outcome Channel Intermediaries and Functions LO 2 Copyright 2012 by Cengage Learning Inc. All Rights Reserved CHANNEL INTERMEDIARIES Retailers Wholesalers Agents and Brokers CHANNEL FUNCTIONS Transactional Logistical Facilitating Perform
  • Channel Structures Describe the channel structures for consumer and business products and discuss alternative channel arrangements. LO 3 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Channels for Consumer Products Direct Channel - A distribution channel in which producers sell directly to consumers. Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Channels for Consumer Products Copyright 2012 by Cengage Learning Inc. All Rights Reserved Producer Producer Producer Producer Consumers Consumers Consumers Consumers Retailers Retailers Retailers Wholesalers Wholesalers Agents or Brokers Wholesaler Channel Retailer Channel Direct Channel Agent/Broker Channel
  • Alternative Channel Arrangements Copyright 2012 by Cengage Learning Inc. All Rights Reserved Multiple channels Strategic channel alliances Nontraditional channels
  • Review Learning Outcome Channel Structures LO 3 Copyright 2012 by Cengage Learning Inc. All Rights Reserved CONSUMER CHANNELS
    • Direct
    • Retail
    • Wholesaler
    • Agent/broker
    BUSINESS CHANNELS
    • Direct
    • Industrial
    • Agent/broker
    • Agent/broker industrial
    ALTERNATIVE CHANNELS
    • Multiple
    • Nontraditional
    • Strategic alliances
  • Supply Chains and Supply Chain Management Define the terms supply chain and supply chain management , and discuss the benefits of supply chain management LO 4 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Supply Chains The connected chain of all the business entities, both internal and external to the company, that perform or support the logistics functions. Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Supply Chains Supply Chain Management- 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. Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Supply Chains Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Supply Chain Managers
    • Supply chain managers are responsible for
    • Making strategic decisions
    • Management of information through supply chain
    • Coordinating relationships between company and external partners
    Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Benefits of Supply Chain Management
    • Supply chain oriented companies commonly report:
      • Lower inventory, transportation, warehousing, and packaging costs
      • Greater supply chain flexibility
      • Improved customer service
      • Higher revenues
      • Increased profitability
    Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Review Learning Outcome Supply Chain Management LO 4 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Making Channel Strategy Decisions Discuss the issues that influence channel strategy. LO 5 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Channel Strategy Decisions Copyright 2012 by Cengage Learning Inc. All Rights Reserved Factors Affecting Channel Choice Producer Factors Product Factors Market Factors Exclusive Distribution Selective Distribution Intensive Distribution Level of Distribution Intensity
  • Levels of Distribution Intensity Copyright 2012 by Cengage Learning Inc. All Rights Reserved Intensive A form of distribution aimed at having a product available in every outlet Selective A form of distribution achieved by screening dealers to eliminate all but a few in any single area Exclusive A form of distribution that established one or a few dealers within a given area
  • Review Learning Outcome Issues Influencing Channel Strategy LO 5 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Types of Channel Relationships Describe the different channel relationship types and their unique costs and benefits. LO 6 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Types of Channel Relationships Copyright 2012 by Cengage Learning Inc. All Rights Reserved Cooperative Integrated Arm’s Length
  • Arm’s Length and Integrated Relationships Arm’s Length Relationship- A relationship between companies that is loose, characterized by low Relational investment and trust, and usually taking the form of a series of discrete transactions with no/low expectation of future interaction or service. Integrated Relationship- A relationship between companies that is tightly connected, with linked processes across and between firm boundaries, and high levels of trust and inter-firm commitment. Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Cooperative Relationships A relationship between companies that takes the form of informal partnership with moderate levels of trust and information sharing as needed to further each company’s goals. Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Review Learning Outcome Types of Channel Relationships LO 6 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • The Logistics Function in the Supply Chain Describe the logistical components of the supply chain. LO 7 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Logistical Components of the Supply Chain Copyright 2012 by Cengage Learning Inc. All Rights Reserved Production Scheduling Supply Chain Team Sourcing & Procurement Order Processing Inventory Control Warehouse & Materials Handling Transportation Logistics Information System
  • Sourcing and Procurement
    • Plan purchasing strategies
    • Develop specifications
    • Select suppliers
    • Negotiate price and service levels
    • Reduce costs
    The Role of Purchasing: Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Order Processing Electronic Data Interchange- Information technology that Replaces paper documents that accompany business transactions With electronic transmission Of the information. Copyright 2012 by Cengage Learning Inc. All Rights Reserved http://www.walmartstores.com Online
  • Inventory Control Inventory Control System- A method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer’s or a customer’s demand. Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Inventory Control Materials Requirement Planning (MRP) - An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer. Distribution Resource Planning (DRP) - An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer. Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Materials Handling Functions Copyright 2012 by Cengage Learning Inc. All Rights Reserved Receive goods into warehouse Dispatch the goods to temporary storage Recall, select, or pick the goods for shipment Identify, sort, and label goods
  • Transportation Copyright 2012 by Cengage Learning Inc. All Rights Reserved Airways Water Pipelines Motor Carriers Railroads
  • Transportation Mode Choice
    • Cost
    • Transit time
    • Reliability
    • Capability
    • Accessibility
    • Traceability
    Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Criteria for Ranking Modes of Transportation Copyright 2012 by Cengage Learning Inc. All Rights Reserved Relative Cost Transit Time Reliability Capability Accessibility Traceability Highest Lowest Air Water Pipe Rail Truck Water Rail Pipe Truck Air Pipe Truck Rail Air Water Water Truck Rail Truck Air Pipe Rail Air Water Pipe Air Truck Rail Water Pipe
  • Review Learning Outcome The Logistics Function in the Supply Chain LO 7 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Trends in Supply Chain Management Discuss new technology and emerging trends in supply chain management. LO 8 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Trends in Supply Chain Management Globalization of supply chain management Copyright 2012 by Cengage Learning Inc. All Rights Reserved Electronic distribution Outsourcing of logistics functions Advanced computer technology
  • Advanced Computer Technology
    • Automatic identification systems
      • Bar coding
      • Radio frequency technology
    • Communications technology
    • Supply chain software systems
    Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Outsourcing Logistics Functions
    • Reduce inventories
    • Locate stock at fewer plants and distribution centers
    • Provide same or better levels of service
    Outsourcing Benefits Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Review Learning Outcome Emerging Trends in Supply Chain Management LO 8 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Managing Channel Relationships Explain channel leadership, conflicts, and partnering. LO 9 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Managing Channel Relationships Copyright 2012 by Cengage Learning Inc. All Rights Reserved Partnering Conflict Leadership Control Power
  • Channel Power, Control, and Leadership Copyright 2012 by Cengage Learning Inc. All Rights Reserved Channel Power The capacity of a particular marketing channel member 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 (channel captain) A member of a marketing channel that exercises authority/power over the activities of other members
  • Channel Conflict and Partnering Channel Conflict – A clash of goals and methods between distribution channel members. Channel Partnering (Channel Cooperation) – The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage. Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Channel Conflict
    • 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
    Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Channel Partnering Copyright 2012 by Cengage Learning Inc. All Rights Reserved Supplier / Manufacturer Relationships Short-term Adversarial Independent Price important Long-term Cooperative Dependent Value-added services Number of Suppliers Many Few Transaction-Based Partnership-Based Information Sharing Minimal High Investment Required Minimal High
  • Review Learning Outcome Channel Leadership, Conflict, and Partnering LO 9 Copyright 2012 by Cengage Learning Inc. All Rights Reserved Channel Relationship Synergy Channel Conflict Horizontal Vertical Channel Power, Control, Leadership Channel Partnering
  • Channels and Distribution Decisions for Services Identify the special problems and opportunities associated with distribution in service organizations LO 11 Copyright 2012 by Cengage Learning Inc. All Rights Reserved
  • Channels and Distribution Decisions for Services Copyright 2012 by Cengage Learning Inc. All Rights Reserved Minimizing wait times Managing service capacity Improving service delivery
  • Review Learning Outcome Channels and Distribution Decisions for Services LO 11 Copyright 2012 by Cengage Learning Inc. All Rights Reserved