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    • 1. Chapter Eleven The Nature of The Supply Chain and Distribution
    • 2. Unlike real estate, location is becoming progressively less relevant. The three critical factors for the Internet age are logistics, logistics, logistics. - William B. Lipsin, CEO, Ironside Technologies
    • 3. Objectives
      • Explain general purpose of distribution & logistics
      • Show distribution system’s contributions
      • Examine tradeoff between customer satisfaction & costs in distribution
      • Understand a total cost approach to distribution
      • Understand pervasive nature of distribution
      • Introduce channel intermediaries and various distribution channels
      • Introduce vertical marketing systems
      • Overview distribution’s interaction with other aspects of the marketing mix
      • Examine channel relations
    • 4. Distribution’s Function
      • The major purpose of marketing is to satisfy human needs by delivering products of various types to buyers when and where they want them and at a reasonable cost.
      • The “when and where” is the function of Distribution
    • 5. Definitions Logistics Supply Chain Component parts & Raw material In-process inventory Finished goods
    • 6. Physical Distribution Activities
      • Inventory management
      • Order processing
      • Warehousing and storage
      • Materials handling
      • Protective packaging & containerization
      • Outbound transportation
    • 7. Physical Distribution Objectives Minimize Costs Maximize Customer Service
    • 8. Channel of Distribution
      • All intermediaries involved in the exchange process
      • Excludes pre-manufacturing (raw materials or component parts)
      • Facilitate movement of physical goods and title
      PRODUCER INTERMEDIARIES CONSUMER
    • 9. Physical Distribution Functions Transportation & storage Reducing transactions Breaking bulk Accumulating bulk Creating assortments
    • 10. Modes of Transportation Motor Rail Air Pipeline Water
    • 11. Modes of Transportation
      • Railroads
        • Medium cost and speed
        • Low reliability
        • Many damaged goods
        • Good Geographic flexibility
    • 12. Modes of Transportation
      • Motor carrier
        • Medium reliability
        • Good speed
        • Good flexibility
        • Above average damage
        • Now more competitive and unregulated
    • 13. Modes of Transportation
      • Air freight
        • Expensive
        • Very fast
        • Above average reliability
        • Average flexibility
        • Average reputation for undamaged goods
    • 14. Modes of Transportation
      • Water transportation
        • Low cost
        • Low reliability
        • Limited flexibility
        • Limited damage
    • 15. Modes of Transportation
      • Pipeline
        • Mostly gas and petroleum
        • Low cost
        • High reliability
        • Limited flexibility
      Texas Kansas
    • 16. Modes of Transportation
      • Intermodal transportation
        • Ship + Truck (fishyback)
        • Rail + Truck (piggyback)
        • Air + Truck (birdyback)
    • 17. Storage & Inventory COntrol Storage Breaking Bulk
    • 18. Total Cost: A Systems Approach Transportation Costs Shipping Costs Handling Costs
    • 19. Total Cost: A Systems Approach @$#*&!*&%
    • 20. Communication & Transaction Functions Personal Selling Advertising Sales Promotion Gather & Disseminate Information 1 9 24 1 37 2 3 57 Buying & Selling
    • 21. Facilitating Functions Extra Services Payment & Credit Services Risk Taking
    • 22. Typical Channels of Distribution ANUFACTURER ONSUMER HOLESALER ETAILER GENT
    • 23. Business-to-Business Channels Direct Wholesaler
    • 24. Vertical Marketing Systems
      • Corporate systems - total ownership
      • Administered - strong leadership
      • Contractual - legal relationships
    • 25. Planning the Channel of Distribution
      • Determining the structure
        • Marketing mix strategy
        • Organizational resources
        • External environmental factors
        • Market characteristics
        • Consumer preferences and behavior
        • The nature and availability of Intermediaries
        • Other environmental factors
    • 26. Intensive Distribution
      • Seeks to obtain maximum product exposure at the retail level
      Producer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer Retailer
    • 27. Selective Distribution Product is sold in a limited number of outlets Producer Retailer Retailer Retailer Retailer Retailer Retailer
    • 28. Exclusive Distribution Product is sold in only one outlet in a given area Producer Retailer
    • 29. Channel Relationships
      • Cooperation
      • Conflict
      • Power
        • Coercive
        • Expert
        • Legitimate
    • 30. Other Distribution Management Issues
      • Reverse distribution
      One Coca Cola Distributor One thousand retailers OK
      • Ethical, Political, & Legal
      Difficult Backward channel
    • 31. Review
      • Explain general purpose of distribution & logistics
      • Show distribution system’s contributions
      • Examine tradeoff between customer satisfaction & costs in distribution
      • Understand a total cost approach to distribution
      • Understand pervasive nature of distribution
      • Introduce channel intermediaries and various distribution channels
      • Introduce vertical marketing systems
      • Overview distribution’s interaction with other aspects of the marketing mix
      • Examine channel relations

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