Describe the nature of marketing logistics network management.
Describe the nature of marketing channels, and explain why marketing intermediaries are used.
Explain the organisation and behaviour of marketing channels.
Discuss traditional and online store retailing, the marketing decisions, and the different ways of classifying stores: by amount of service provided, product lines, relative price levels and organisational approach.
Compare the different types of wholesalers, including full-service and limited-service merchant wholesalers, brokers and agents, and manufacturers’ sales branches.
Explain the wholesaler marketing decisions of target market and positioning, and marketing-mix, and describe trends in wholesaling.
Marketing Logistics Network Management
Within the system of producing and distributing Goods and Services products, the following terms are often used interchangeably to mean the same thing:
integrated logistics management
materials management and physical distribution
Marketing Logistics Network
A system of efficiently and effectively producing and getting goods and services to end-users of the product.
The tasks involved in planning, implementing and controlling the physical flow of materials and final goods from point-of-origin to point-of-use to meet buyer needs.
Managing the firm’s network of key players, including suppliers; purchasing agents; and intermediaries, who provide customer fulfillment by helping to get the products to the end-users in a timely manner.
Includes providers of input (raw materials; components; and capital equipment), and conversion operations, including marketing channel intermediaries and those involved in the physical movement of products.
Marketing Logistics Networks
The modern marketing organisation uses its logistics strength to coordinate functions within its network to better meet the expectations of the firm’s customers.
Information systems play a critical role in managing the marketing logistics networks.
Major gains in logistical efficiency have resulted from increased use of IT, such as point-of-sale terminals; uniform product codes; satellite tracking of transport; electronic data interchange (EDI); electronic funds transfer (EFT), and now the Internet.
The process of planning, implementing and controlling effective flow and storage of materials, in-process inventory, finished goods and related information from point-of-origin to point-of-consumption for the purpose of conforming to customer requirements.
Fast Moving Consumer Goods (FMCGs)
Also called shopping goods, these products are typically purchased each week for home consumption.
Services Marketing Logistics
Coordinating non-material activities needed to provide a service in a cost-effective way, with the required quality.
Marketing Logistics Decisions
When making logistics decisions, there is often the need for a trade-off between the five logistics variables that are involved when deciding on the service level the firm will offer to its customers.
Inventory carrying costs
Order processing and information costs
Conversion costs (allocating quantities)
A firm seeks to deliver an optimum level of service, but
needs to control its costs to achieve a satisfactory profit.
Figure 11.4 Marketing Logistics
Marketing channels may be used to market:
a river cruise
a manufactured product
a vocational training course
all of the above
The Nature and Importance of Marketing Channels
A marketing channel is a network of inter-dependent organisations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer, or the business user.
Advantages of using intermediaries:
Many suppliers lack the financial resources to carry out direct marketing. For some items, particularly ‘big-ticket’ purchases, customers want personal interaction .
Even producers who can afford to set up their own channels are often able to earn a greater financial return by investing their resources directly into the main business activity.
Through their contacts, experience, specialisation and scale of operation, intermediaries can usually offer a producer or supplier more than it can achieve on its own.
How Marketing Channels Add Value
Information - gathering and distributing
marketing research and intelligence.
Promotion - developing and spreading communications about the product offering.
Contact - finding and communicating with prospective buyers of the product.
Matching - carrying out the necessary tasks to ensure the offer meets the buyers’ needs.
Negotiation - reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred.
Physical distribution - transport/ store goods.
Financing - acquiring and using funds to cover the costs of the channel work.
Risk taking - taking on the risks of carrying out the channel work.
The length of a channel is indicated by the number of intermediary levels.
A ‘Direct’ channel has no intermediary levels. Producer sells directly to consumers
producers of services and experiences also face the problem of making their output available to target users.
Channel Behaviour and Organisation
A marketing channel consists of ‘dissimilar’ firms that have banded together for their common good.
Each member has some dependence on the others.
Success of individual channel members depends on overall channel success, firms should work together.
They should understand their roles, coordinate their goals and activities, and cooperate to attain overall channel objectives.
However, individual channel members don’t always take such a broad view (they are independent firms)
Although channel members are dependent on one another for overall success, they often act alone in their own short-term best interests. They often disagree on what should be done. Disagreements over goals and roles can generate channel conflict .
is conflict between firms at the same level of the channel.
is even more common, and refers to conflicts between different levels of the same channel.
Vertical Marketing Networks – (VMN)
Consists of suppliers; wholesalers; and retailers acting as a unified network . Either one channel member owns the others, has contracts with them, or wields so much power that they all cooperate. The vertical marketing network can be dominated by the producer, wholesaler or retailer.