Mankiw - Principles of Macroeconomics - Ch12 Ppt Basic

Slide 1: Lamb, Hair, McDaniel MKTG2008-2009 1 Marketing CHAPTER Channels and Supply Chain Management Designed by Prepared by Amy McGuire, B-books, Ltd. Deborah Baker, Texas Christian University Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1

Slide 2: Learning Outcomes LO1 Explain what a marketing channel is and why intermediaries are needed LO2 Define the types of channel intermediaries and describe their functions and activities LO3 Describe the channel structures for consumer and business products and discuss alternative channel arrangements Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 2

Slide 3: Learning Outcomes LO4 Define supply chain management and discuss its benefits LO5 Discuss the issues that influence channel strategy LO6 Explain channel leadership, conflict, and partnering LO7 Describe the logistical components of the supply chain Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 3

Slide 4: Learning Outcomes Discuss new technology and emerging LO 8 trends in supply chain management Discuss channels and distribution LO9 decisions in global markets Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 4

Slide 5: LO1 Marketing Channels Explain what a marketing channel is and why intermediaries are needed Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 5

Slide 6: Marketing Channels Marketing Channels A set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer. LO1 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 6

Slide 7: Marketing Channels Supply Chain The connected chain of all the business entities, both internal and external to the company, that perform or support the logistics function. LO1 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 7

Slide 8: Marketing Channel Functions Specialization and division of labor Overcoming discrepancies Providing contact efficiency LO1 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 8

Slide 9: 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 LO1 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 9

Slide 10: Overcoming Discrepancies The difference between the amount Discrepancy of product produced of and the amount an end user Quantity wants to buy. The lack of all the items a Discrepancy customer needs to receive full of satisfaction from a product or Assortment products. LO1 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 10

Slide 11: Overcoming Discrepancies A situation that occurs when a Temporal product is produced but a Discrepancy customer is not ready to buy it. The difference between the Spatial location of a producer and the Discrepancy location of widely scattered markets. LO1 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 11

Slide 13: LO1 REVIEW LEARNING OUTCOME Marketing Channels Marketing Channel Providing Specialization and Division of Labor Overcoming Discrepancies Providing Contact Efficiency Supply Chain Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 13

Slide 14: LO2 Channel Intermediaries Define the types of channel intermediaries and describe their functions and activities Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 14

Slide 15: Channel Intermediaries A channel intermediary that Retailer sells mainly to customers. An institution that buys goods Merchant from manufacturers, takes title Wholesaler to goods, stores them, and resells and ships them. Wholesaling intermediaries who Agents and facilitate the sale of a product by Brokers representing channel members. LO2 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 15

Slide 16: Channel Intermediaries Take Title to Goods Retailers Merchant Take Title to Goods Wholesalers Agents Do NOT Take Title to Goods and Brokers LO2 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 16

Slide 17: Factors Suggesting Type of Wholesaling Intermediary to Use Product characteristics Buyer considerations Market characteristics LO2 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 17

Slide 18: Factors Suggesting Type of Wholesaling Intermediary to Use Factor Merchant Agents/ Wholesalers Brokers Nature of product Standard Nonstandard, custom Technicality of product Complex Simple Product’s gross margin High Low Frequency of ordering Frequent Infrequent Time between order and receipt of Shorter lead time Longer lead time shipment Number of customers Many Few LO2 Concentration of customers Dispersed Concentrated Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 18

Slide 19: Channel Functions Performed by Intermediaries Contacting/Promotion Transactional Negotiating Functions Risk Taking Physically distributing Logistical Storing Functions Sorting Facilitating Researching LO2 Functions Financing Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 19

Slide 20: Logistics The process of strategically Logistics managing the efficient flow and storage of raw materials, in- process inventory, and finished goods from point of origin to point of consumption. LO2 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 20

Slide 21: LO2 REVIEW LEARNING OUTCOME Channel Intermediaries and Functions CHANNEL CHANNEL INTERMEDIARIES FUNCTIONS Perform Retailers Transactional Wholesalers Logistical Agents and Brokers Facilitating Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 21

Slide 22: LO3 Channel Structures Describe the channel structures for consumer and business products and discuss alternative channel arrangements Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 22

Slide 23: LO3 Channels for Consumer Products Direct Channel A distribution channel in which producers sell directly to consumers. Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 23

Slide 24: LO3 Channels for Consumer Products Direct Retailer Wholesaler Agent/Broker Channel Channel Channel Channel Producer Producer Producer Producer Agents or Brokers Wholesalers Wholesalers Retailers Retailers Retailers Consumers Consumers Consumers Consumers Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 24

Slide 25: LO3 Channels for Business Products Agent/Broker Direct Direct Industrial Agent/Broker Industrial Channel Channel Distributor Channel Channel Producer Producer Producer Producer Producer Agents or Agents or Brokers Brokers Industrial Industrial Distributor Distributor Industrial Govt. Industrial Industrial Industrial User Buyer User User User Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 25

Slide 26: Business-to-Business LO 3 Exchanges on the Internet Agents link buyers and sellers Companies drop the intermediary from the supply chain “Private exchanges” with select suppliers automate the supply chain http://www.sherwinwilliams.com Online Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 26

Slide 27: Alternative Channel LO 3 Arrangements Multiple channels Nontraditional channels Strategic channel alliances Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 27

Slide 28: LO3 REVIEW LEARNING OUTCOME Channel Structures CONSUMER BUSINESS ALTERNATIVE CHANNELS CHANNELS CHANNELS Direct Direct Multiple Retail Industrial Nontraditional Wholesaler Agent/broker Strategic Agent/broker Agent/broker alliances industrial Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 28

Slide 30: Supply Chain Management A management system that coordinates and integrates all of Supply Chain 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. LO4 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 30

Slide 31: Role of Supply Chain Management Communicator of customer demand from point of sale to supplier Physical flow process that engineers the movement of goods LO4 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 31

Slide 32: Responsibilities of Supply Chain Managers  Channel strategy decisions  Sourcing and procurement of raw materials  Production schedules  Order processing  Inventory management  Finished goods/supplies transportation and storage  Customer service coordination  Supply chain information flow management LO4  Partner relationships Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 32

Slide 34: Benefits of Supply Chain Management Means of differentiation Reduced costs Greater supply chain flexibility Improved customer service Higher revenues LO4 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 34

Slide 36: Making Channel Strategy LO 5 Decisions Discuss the issues that influence channel strategy Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 36

Slide 37: LO5 Channel Strategy Decisions Factors Level of Affecting Distribution Channel Intensity Choice Market Factors Intensive Distribution Product Factors Selective Distribution Producer Factors Exclusive Distribution Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 37

Slide 38: LO5 Market Factors Customer profiles Consumer or Industrial Customer Market Size of market Factors That Affect Channel Choices Geographic location Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 38

Slide 39: LO5 Product Factors Product Complexity Product Price Product Standardization Product Product Life Cycle Factors That Affect Channel Product Delicacy Choices Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 39

Slide 40: LO5 Product Factors Producer Resources Number of Product Lines Producer Factors That Affect Channel Desire for Channel Control Choices Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 40

Slide 41: LO5 Levels of Distribution Intensity A form of distribution aimed at Intensive having a product available in every outlet A form of distribution achieved Selective by screening dealers to eliminate all but a few in any single area A form of distribution that Exclusive established one or a few dealers within a given area Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 41

Slide 42: LO5 Levels of Distribution Intensity Intensity Number of Objective Level Intermediaries Achieve mass market Intensive selling. Many Convenience goods. Work with selected intermediaries. Selective Shopping and some Several specialty goods. Work with single intermediary. Specialty Exclusive goods and industrial One equipment. Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 42

Slide 46: Channel Power, Control, and Leadership Channel A channel member’s capacity to control or Power influence the behavior of other channel members A situation that occurs when one marketing Channel channel member intentionally affects another Control member’s behavior Channel A member of a marketing channel that exercises Leader authority/power over the activities of other members LO6 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 46

Slide 47: Channel Conflict and Partnering A clash of goals and methods Channel Conflict between distribution channel members The joint effort of all channel Channel members to create a supply chain Partnering that serves customers and creates a competitive advantage LO6 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 47

Slide 48: 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 LO6 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 48

Slide 49: Channel Partnering Transaction-Based Partnership-Based Short-term Long-term Supplier / Adversarial Cooperative Manufacturer Relationships Independent Dependent Price important Value-added services Number of Many Few Suppliers Information Minimal High Sharing Investment Minimal High Required LO6 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 49

Slide 50: LO6 REVIEW LEARNING OUTCOME Channel Leadership, Conflict, & Partnering Channel Power, Channel Control, Leadership Partnering Channel Relationship Synergy Channel Conflict Horizontal Vertical Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 50

Slide 52: Logistical Components of the Supply Chain Sourcing & Procurement Logistics Information System Production Scheduling Supply Order Processing Chain Team Inventory Control Warehouse & Materials Handling LO7 Transportation Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 52

Slide 53: Sourcing and Procurement The Role of Purchasing:  Plan purchasing strategies  Develop specifications  Select suppliers  Negotiate price and service levels LO7  Reduce costs Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 53

Slide 54: Production Scheduling Traditional Focus Customer Focus Push / Pull Push Pull Strategy Start of Inventory- Customer-Order Production Based Based Manufacturing Mass Production Mass Customization LO7 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 54

Slide 55: Just-in-Time Manufacturing JIT A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials just when they are needed on the production line. LO7 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 55

Slide 56: Benefits of JIT  Reduces raw material inventories  Shortens lead times  Creates better supplier relationships  Reduces production and storeroom costs  Reduces paperwork LO7 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 56

Slide 57: JIT Requirements Receive high-quality parts Meet supplier delivery commitments Have a crisis management plan LO7 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 57

Slide 58: Order Processing Electronic Data Information technology that Interchange replaces paper documents that accompany business transactions with electronic transmission of the information. http://www.walmartstores.com LO 7 Online Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 58

Slide 59: Order Processing Inventory Control A method of developing and System maintaining an adequate assortment of materials or products to meet a manufacturer’s or a customer’s demand. LO7 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 59

Slide 60: Order Processing Materials An inventory control system that manages Requirement the replenishment of raw materials, Planning supplies, and components from the (MRP) supplier to the manufacturer. Distribution Resource An inventory control system that manages the replenishment of goods from the Planning manufacturer to the final consumer. (DRP) LO7 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 60

Slide 61: Materials Handling Functions Receive goods into warehouse Identify, sort, and label goods Dispatch the goods to temporary storage Recall, select, or pick the LO7 goods for shipment Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 61

Slide 63: Transportation Mode Choice  Cost  Transit time  Reliability  Capability  Accessibility  Traceability LO7 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 63

Slide 64: Criteria for Ranking Modes of Transportation Highest Lowest Relative Air Truck Rail Pipe Water Cost Transit Water Rail Pipe Truck Air Time Reliability Pipe Truck Rail Air Water Capability Water Rail Truck Air Pipe Accessibility Truck Rail Air Water Pipe LO7 Traceability Air Truck Rail Water Pipe Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 64

Slide 65: Trends in Supply Chain LO 8 Management Discuss new technology and emerging trends in supply chain management Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 65

Slide 66: Trends in Supply Chain Management Advanced computer technology Outsourcing of logistics functions Electronic distribution LO8 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 66

Slide 67: Advanced Computer Technology  Automatic identification systems - Bar coding - Radio frequency technology  Communications technology  Supply chain software systems LO8 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 67

Slide 68: Outsourcing Logistics Functions Outsourcing Benefits  Reduce inventories  Locate stock at fewer plants and distribution centers  Provide same or better levels of service LO8 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 68

Slide 69: Channels and Distribution LO9 Decisions for Global Markets Discuss channels and distribution decisions in global markets Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 69

Slide 70: Channels and Distribution Decisions for Global Markets Channel structure and type differ Global Channel Development Gray marketing channels Awareness of trade legalities Global Supply Chain Management Transportation Issues LO9 Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 70

Slide 71: LO9 REVIEW LEARNING OUTCOME Global Market Channel & Distribution Decisions Distribute directly or through foreign partners Different channel structures than in domestic markets Illegitimate “gray” marketing channels Legal and infrastructure differences Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 71

Slide 72: Channels and Distribution Beyond the Book Decisions for Services Identify the special problems and opportunities associated with distribution in service organizations NOTE: Supplemental content – not in book. Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 72

Slide 73: Channels and Distribution Decisions Beyond the Book for Services Minimizing wait times Managing service capacity Improving service delivery NOTE: Supplemental content – not in book. Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 73

Slide 74: Beyond the Book Distribution in Service Organizations NOTE: Supplemental content – not in book. Chapter 12 Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 74

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