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Lecture 8


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  • Ways to reach the Customer – the routes through the channels
  • As Geoff Lancaster says in his article, the art/science of Logistics Management arose through military activities, in terms of supplying materials to an army on the move. Some students studying Promotions Management may think that it is much easier than Distribution Management. Yes – it is more visible, we are exposed to companies’ promotional activities, and the employment positions in advertising, media etc sound exciting. But the money and the best jobs are in Distribution Management. And it is harder to grasp the concepts because they are less visible and less tangible. But they are going to become even more important in the future.
  • These four key factors are inter-related, and should not be viewed in isolation. Often compromises need to be reached – maybe the cost-containment aspects force us to compromise on lowering our standards of customer service.
  • The Demand of the Customer is at the centre of the picture – with expectations of the “Four Rights” – Price is the price we sell to the customer at, and Cost is the total cost to the customer (including all the other expenses they bear). Conditions and Time are important – Electrocomponents is not the cheapest supplier of electronic and technical products, but they guarantee next-day delivery anywhere in the UK.
  • The four Logistics activities of Purchasing, Inventory/Packaging/ Warehousing and Transportation work together in organizing the Resources in the left panel, to deliver the benefits in the right panel. Systemized Information is integral to the whole process.
  • EDI – in the retail sector the movement of information is key to the objectives of minimizing stock and maximizing product availability. The information on the barcode scanned at the checkout is in the distribution centre 30 seconds later. JIT is about freshness of product, minimizing stock levels, reducing waste.
  • Where are we going to locate our Distribution Centre? How will we arrange transport – our own or someone else’s? Factory Gate Pricing?
  • In Grocery Retail there are three types of Warehouse (and transport systems) – Ambient, Chilled and Frozen. In each of these warehouses, products are stored by the weight and unit dimensions of the pallet – the contents are irrelevant. Filling the warehouse to capacity – but still having room to accept deliveries – is the key to success.
  • Forecasting – what will the weather be like in three weeks’ time? What will customers’ response to our promotional offer be? Suppliers selected on Price, Quality, Ability to Deliver to Schedule, Complaint Level, Customer Demand.
  • Containment – what are they packed in? to ease handling, reduce cost and waste. Protection - to minimize damage and loss Apportionment – how many units in a pack? Unitization – how big is a unit? Communication – the Information System
  • Third Party Logistics (TPL) – companies such as Bibby, Exel Logistics, Wincanton. Operating transport, Warehouses, maybe supplier collection systems. Exel have a depot in China run on behalf of Toys’R’Us. Strategic Logistics Partnering – See interview with the Body Shop and their Logistics Contractor The Lane Group towards the end of “Crazy Ways for Crazy Days” – video in the Library (Tom Peters).
  • Transcript

    • 1. Managing Retailing, Wholesaling, and Logistics Marketing Management, European ed Lecture 8 Place
    • 2. Chapter Questions
      • What major types of marketing intermediaries occupy this sector?
      • What marketing decisions do these marketing intermediaries make?
      • What are the major trends with marketing intermediaries?
    • 3. Retailing “ Includes all the activities involved in selling goods or services directly to final consumers for personal, non-business use.”
    • 4. Company-to-Consumer Channels Telephone Mail Electronic Personal Selling Wholesaler/ Distributor Broker/Rep Retailer or Dealer Customer
    • 5. Major Retailer Types
      • Speciality store - Maplin
      • Department store – John Lewis
      • Supermarket - Sainsbury
      • Convenience store - Londis
      • Discount store - Aldi
      • Off-price retailer - TKMaxx
      • Superstore – Tesco Bar Hill
      • Catalogue showroom - Argos
    • 6. Levels of Retail Service Self-service - they even get you to scan the barcodes on your purchases! Self-selection Limited service Full service
    • 7. Retail Positioning Map Tesco Harrod’s Aldi Carphone Warehouse
    • 8. Indicators of Sales Effectiveness (KPIs)
      • Number of people passing by location
      • Percentage who enter store
      • Percentage of those who enter who also buy
      • Average amount spent per sale.
    • 9. Trends in Retailing
      • New retail forms and combinations- eg coffee bar in a bookshop
      • Growth of intertype competition
      • Competition between store-based and non-store-based retailing (eg the Internet)
      • Growth of giant retailers
      • Decline of middle market retailers – eg Woolworth, Debenhams, House of Fraser
      • Growing investment in technology, Lean Thinking
      • Global presence of major retailers
      • Ebay and other Internet providers.
    • 10. Nonstore Retailing Direct selling Buying service Automatic vending Direct marketing
    • 11. Characteristics of Franchises
      • The franchisor owns a trade or service mark and licenses it to franchisees in return for royalty payments
      • The franchisee pays for the right to be part of the system
      • The franchisor provides its franchisees with a system for doing business
    • 12. Retailers’ Marketing Decisions Target market Product assortment Procurement Prices Services
    • 13. Retailers’ Marketing Decisions (cont.) Store atmosphere Store activities Communications Locations Selfridge’s store in Birmingham
    • 14. Retailers’ Marketing Decisions (cont.) Selfridge’s store in Birmingham General business districts Regional shopping centres Community shopping centers Retail Parks Community shopping centres Retail Parks Location within a larger store.
    • 15. Wholesaling Functions
      • Selling and promoting
      • Buying and assortment building
      • Bulk breaking
      • Warehousing
      • Transportation
      • Financing
      • Risk bearing
      • Market information
      • Management services and counseling
    • 16. Major Wholesaler Types Merchant Full-service Limited-service Brokers and agents Manufacturers Specialized Nisa-Today’s warehouse - Scunthorpe
    • 17. Logistics
      • “ That part of the supply chain process that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers’ requirements”
      Information, Control, Integration
    • 18. Market Logistics Planning
      • Deciding on the company’s value proposition* to its customers
      • Deciding on the best channel design and network strategy
      • Developing operational excellence
      • Implementing the solution
      *Value Proposition = Total Product Concept = The Marketing Mix = The USP
    • 19. Market Logistics
      • Sales forecasting
      • Distribution scheduling
      • Production plans
      • Finished-goods inventory decisions
      • Packaging
      • In-plant warehousing
      • Shipping-room processing
      • Outbound transportation
      • Field warehousing
      • Customer delivery and servicing
    • 20. Logistics Objectives
      • Attain market coverage
      • Deliver Customer Service
      • Ensure Adherence to Product Specifications
      • Cost-Containment
      LOGISTICS SYSTEM These four key factors are inter-related, and should not be viewed in isolation. Often compromises need to be reached – maybe the cost-containment aspects force us to compromise on lowering our standards of customer service.
    • 21. Market Logistics Decisions
      • How should orders be handled?
      • Where should stock be located?
      • How much stock should be held?
      • How should goods be shipped?
      Load-planning board – thanks to Rom Ltd
    • 22. Logistics and Channel Management The Aim of Logistics:
    • 23. Relational Logistics Model
    • 24. The Five Logistics Mediators – 1 - Inventory Management
      • Electronic Data Interchange (EDI)
      • Just-in-Time Manufacturing (JIT)
      • Quick-Response Logistics
      Inventory -- often called stock -- is a tangible asset capable of being mined, converted or created. It is one of the largest investments in any logistics system.
    • 25. The Five Logistics Mediators – 2 - Transportation
      • Product Decisions
      • Location decisions
      • Purchasing Decisions
      • Pricing Decisions
    • 26. The Five Logistics Mediators – 3 - Warehousing
      • Movement
      • Materials Handling
      • Storage
      • Information Transfer
    • 27. The Five Logistics Mediators – 4 - Purchasing
      • Forecasting Materials Demand
      • Selection of suppliers – “sourcing”
      • Minimizing transaction and product costs
      • Maximizing transaction and product quality
    • 28. The Five Logistics Mediators – 5 - Packaging
      • Containment
      • Protection
      • Apportionment
      • Unitization
      • Communication
    • 29. LOGISTICS TRENDS SAME TIME, SAME PLACE DISTRIBUTION Technology-driven reduction in waiting times between channel members. BOUNDARYLESS DISTRIBUTION Multiple market entry facilitated by coordinated logistics systems. THIRD-PARTY LOGISTICS Channel members are increasingly “outsourcing” logistics functions. STRATEGIC LOGISTICS PARTNERING Alliances between channel members will become a mainstay of competitive distribution advantage .
    • 30. Determining Optimal Order Quantity
    • 31. Transportation Factors
      • Speed
      • Frequency
      • Dependability
      • Capability
      • Availability
      • Traceability
      • Cost
    • 32. Sources Banks: see chart from Economist, 8nov08 Minerals and Mining: See USGS Insurance: see ABI website
    • 33. See website for links to each business segment
    • 34.  
    • 35. The Thiepval Memorial, the Memorial to the Missing of the Somme