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Chap 12 e161

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    • 1. Chapter 12 Marketing Channels and Supply Chain Management
    • 2. Learning Goals
      • Know why companies use distribution channels and understand the functions that these channels perform.
      • Learn how channel members interact and how they organize to perform the work of the channel.
      • Know the major channel alternatives that are open to a company.
      • Comprehend how companies select, motivate, and evaluate channel members.
      • Understand the nature and importance of marketing logistics and integrated supply chain management.
    • 3. Case Study Caterpillar
      • Dominates world’s markets for heavy construction and mining equipment.
      • Independent dealers are key to success
      • Dealer network is linked via computers
      • Caterpillar stresses dealer profitability, extraordinary dealer support, personal relationships, dealer performance and full, honest, and frequent communications
      12 -
    • 4. Learning Goals
      • Know why companies use distribution channels and understand the functions that these channels perform.
      • Learn how channel members interact and how they organize to perform the work of the channel.
      • Know the major channel alternatives that are open to a company.
      • Comprehend how companies select, motivate, and evaluate channel members.
      • Understand the nature and importance of marketing logistics and integrated supply chain management.
    • 5. Definitions
      • Value Delivery Network
        • The network made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system.
      • Marketing channel
        • Set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.
    • 6.
      • This ad from Home Depot
      • communicates the company’s dedication to diversification in its value delivery network
      Marketing in Action 12 -
    • 7. Nature & Importance of Marketing Channels
      • Channel choices affect other decisions in the marketing mix
        • Pricing, marketing communications
      • A strong distribution system can be a competitive advantage
      • Channel decisions involve long-term commitments to other firms
    • 8. Strong Distribution as a Competitive Threat
      • FedEx improved its distribution by acquiring Kinko’s in 2004
      Marketing in Action 12 -
    • 9. Nature & Importance of Marketing Channels
      • How Channel Members Add Value
        • Fewer contacts.
        • Match product assortment demand with supply.
        • Bridge, time, place, and possession gaps that separate products from users.
      Figure 12.1 12 -
    • 10. Key Functions Performed by Channel Members
      • Information
      • Promotion
      • Contact
      • Matching
      • Negotiation
      • Physical Distribution
      • Financing
      • Risk taking
    • 11. Nature & Importance of Marketing Channels
      • Number of Channel Levels
        • The number of intermediary levels indicates the length of a marketing channel.
          • Direct Channels
          • Indirect Channels
        • Producers lose more control and face greater channel complexity as additional channel levels are added.
    • 12. Customer and Business Marketing Channels Figure 12.2 12 -
    • 13. Channel Members are Connected Via a Variety of Flows
      • Physical Flow
      • Payment Flow
      • Information Flow
      • Promotion Flow
      • Flow of Ownership
    • 14. Learning Goals
      • Know why companies use distribution channels and understand the functions that these channels perform.
      • Learn how channel members interact and how they organize to perform the work of the channel.
      • Know the major channel alternatives that are open to a company.
      • Comprehend how companies select, motivate, and evaluate channel members.
      • Understand the nature and importance of marketing logistics and integrated supply chain management.
    • 15. Channel Behavior and Organization
      • Channel Conflict
        • Occurs when channel members disagree on roles, activities, or rewards.
        • Types of Conflict:
          • Horizontal conflict: occurs among firms at the same channel level
          • Vertical conflict: occurs among firms at different channel levels
    • 16. Channel Behavior and Organization
      • Conventional Distribution Channels
        • Consist of one or more independent channel members
        • Lack leadership and power
        • Often result in poor performance
      • Vertical Marketing Systems
        • Consist of members acting as a unified system
        • Use contracts, ownership or power
    • 17. Conventional vs. Vertical Marketing Channel Figure 12.3 12 -
    • 18. Channel Behavior and Organization
      • Corporate VMS
      • Contractual VMS
      • Administered VMS
      • Corporation owns production and distribution
      • Coordination and conflict through regular organizational channels
      Vertical Marketing Systems
    • 19. Channel Behavior and Organization
      • Corporate VMS
      • Contractual VMS
      • Administered VMS
      • Individual firms who join through contracts
      • Franchise organizations
        • Manufacturer-sponsored retailer franchise system
        • Manufacturer-sponsored wholesaler franchise system
        • Service-firm-sponsored retailer franchise system
      Vertical Marketing Systems
    • 20. Channel Behavior and Organization
      • Corporate VMS
      • Contractual VMS
      • Administered VMS
      • Leadership through the size and power of dominant channel members
      • Leadership could be manufacturer or retailer
      Vertical Marketing Systems
    • 21. Channel Behavior and Organization
      • Horizontal Marketing Systems
        • Companies at the same level work together with channel members
      • Multichannel Distribution Systems
        • Also called hybrid marketing channels
        • Occurs when a firm uses two or more marketing channels
      • Changing Channel Organization
        • Disintermediation
    • 22. Multichannel Distribution System Figure 12.4 12 -
    • 23.
      • Reebok uses a multi- channel distribution system which includes a direct channel.
      Multichannel Distribution System Marketing in Action Click on screenshot for website 12 -
    • 24. Learning Goals
      • Know why companies use distribution channels and understand the functions that these channels perform.
      • Learn how channel members interact and how they organize to perform the work of the channel.
      • Know the major channel alternatives that are open to a company.
      • Comprehend how companies select, motivate, and evaluate channel members.
      • Understand the nature and importance of marketing logistics and integrated supply chain management.
    • 25. Channel Design Decisions
      • Step 1: Analyzing Consumer Needs
        • Cost and feasibility of meeting needs must be considered
      • Step 2: Setting Channel Objectives
        • Set channel objectives in terms of targeted level of customer service
        • Many factors influence channel objectives
      Video Snippet Hasbro targets consumers through channels
    • 26. Channel Design Decisions
      • Step 3: Identifying Major Alternatives
        • Types of intermediaries
          • Company sales force, manufacturer’s agency, industrial distributors
        • Number of marketing intermediaries
          • Intensive, selective, and exclusive distribution
        • Responsibilities of channel members
    • 27. Channel Design Decisions
      • Step 4: Evaluating Major Alternatives
        • Economic criteria
        • Control issues
        • Adaptive criteria
    • 28. Channel Design Decisions
      • Designing International Distribution Channels
        • Global marketers usually adapt their channel strategies to structures that exist within foreign countries
        • Key challenges:
          • May be complex or hard to penetrate
          • May be scattered, inefficient, or totally lacking
    • 29. Learning Goals
      • Know why companies use distribution channels and understand the functions that these channels perform.
      • Learn how channel members interact and how they organize to perform the work of the channel.
      • Know the major channel alternatives that are open to a company.
      • Comprehend how companies select, motivate, and evaluate channel members.
      • Understand the nature and importance of marketing logistics and integrated supply chain management.
    • 30. Channel Management Decisions
      • Selecting channel members
      • Managing and motivating channel members
      • Evaluating channel members
      • Which characteristics are important?
        • Years in business
        • Lines carried
        • Growth and profit record
        • Cooperativeness and reputation
        • Type of customer
        • Location
      Decisions
    • 31. Discussion Questions Selecting Channels
      • iRobot’s Roomba is a robotic vacuum which travels the floor and vacuums dirt. Its price is about $150.
      • What characteristics are import when choosing channel members?
      • What retailers would you choose?
      Marketing in Action Click on picture for website 12 -
    • 32. Channel Management Decisions
      • Selecting channel members
      • Managing and motivating channel members
      • Evaluating channel members
      • Partner relationship management (PRM) for long-term partnerships
      • Software available to coordinate members
      Decisions
    • 33. Channel Management Decisions
      • Selecting channel members
      • Managing and motivating channel members
      • Evaluating channel members
      • Check channel performance of:
        • Sales
        • Inventory
        • Customer delivery
        • Promotion and training
        • Customer service
      Decisions
    • 34.
      • Exclusive distribution
        • Only certain outlets are allowed to carry a firm’s products
      • Exclusive dealing
        • Exclusive territorial agreements
        • Tying agreements
      Public Policy and Distribution Decisions
    • 35. Learning Goals
      • Know why companies use distribution channels and understand the functions that these channels perform.
      • Learn how channel members interact and how they organize to perform the work of the channel.
      • Know the major channel alternatives that are open to a company.
      • Comprehend how companies select, motivate, and evaluate channel members.
      • Understand the nature and importance of marketing logistics and integrated supply chain management.
    • 36.
      • Marketing Logistics
        • Outbound distribution
        • Inbound distribution
        • Reverse distribution
        • Involves the entire supply chain management system
      Marketing Logistics and Supply Chain Management
    • 37. Supply Chain Management Figure 12.5 12 -
    • 38.
      • Why Greater Emphasis is Being Placed on Logistics:
        • Offers firms a competitive advantage
        • Can yield cost savings
        • Greater product variety requires improved logistics
        • Improvements in distribution efficiency are possible due to information technology
      Marketing Logistics and Supply Chain Management
    • 39.
      • Goals of the Logistics System
        • No system can both maximize customer service and minimize costs.
        • Firms must first weigh the benefits of higher service against the costs.
        • State goals in terms of a targeted level of customer service at the least cost.
      Marketing Logistics and Supply Chain Management
    • 40.
      • Major Logistics Functions
        • Warehousing
        • Inventory Management
        • Transportation
        • Logistics Information Management
      Marketing Logistics and Supply Chain Management
    • 41. Marketing Logistics and Supply Chain Management
      • Truck
      • Rail
      • Water
      • Pipeline
      • Air
      • Internet
      Transportation Carrier Options Intermodal transportation is becoming more common
    • 42.
      • Integrated Logistics Management
        • Cross-functional teamwork inside the company is critical
        • Logistics partnerships are also built through shared projects
        • Outsourcing of logistics firms to third-party firms is becoming more common
      Marketing Logistics and Supply Chain Management
    • 43. Learning Goals
      • Know why companies use distribution channels and understand the functions that these channels perform.
      • Learn how channel members interact and how they organize to perform the work of the channel.
      • Know the major channel alternatives that are open to a company.
      • Comprehend how companies select, motivate, and evaluate channel members.
      • Understand the nature and importance of marketing logistics and integrated supply chain management.