Chapter 15


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  • TA 15-9 The Supply Chain   1 Supply chain management is a key to effective distribution in the 21 st century-company. This acetate illustrates to students how supply chains are structured and implemented in the market.   2.       Make note to students that cooperation at every level of the supply chain is essential for the system to work. Companies like Wal-Mart have come close to perfecting the implementation of this system, even though suppliers often feel a real sense of pressure.   3.      Ask if any students in class have experience working with a company that has an operational supply chain. We have found that several students (especially our evening students) offer rather effective synopses of how they work within a supply chain.
  • TA 15-1 Percent of B2B Commerce from Internet 1. This acetate forecasts the amount of B2B commerce that’s expected to be conducted on the Internet in the future. 2. The purpose of this acetate is to illustrate to students the tremendous growth of B2B commerce in the early years of the 21st century. You might point out to them that in 1997 B2B was a mere 0.2% of business transactions. It is forecasted to be 9.4% by 2003. This equates to an average annual growth rate of nearly 90%. The message, B2B is here to stay 3. See if students can explain what implications B2B will have on traditional methods of distribution.
  • TA 15-3 Is It Becoming a Wal-Mart World? 1. The retailer of the 1990s and the 21st century in the U.S. was clearly Wal-Mart. Wal-Mart has tried to work its magic globally and has expanded into different markets detailed in the acetate. As students will notice, Wal-Mart has even moved into the People’s Republic of China. 2. Ask students what problems Wal-Mart can expect to face in its global ventures. You could assign students to go on the Internet or to the library and find what significant problems Wal-Mart has experienced in such diverse markets as Brazil and Mexico. What opportunities have they enjoyed diversifying into global markets? 3. See if students can answer why companies like Wal-Mart, with close to 3,000 stores in the U.S., would take the risk of expanding into global markets. You might see if they recall form Chapter 3 the different forms of entry into global markets companies can consider (I.e., export, franchising, licensing, joint ventures, contract manufacturing, direct investment, etc.) and the degree of risk associated with each strategy.
  • TA 15-4 Identify a Retailer in Your Area 1. This is a good in-class exercise for students. The class should have little trouble identifying supermarkets, convenience stores, discount stores, or department stores that are dominant in their market area. Category killers, specialty stores, factory outlets, superstores, and catalog showrooms might prove a bit more difficult for them to identify. 2. It might be interesting to ask students again what effect the Internet and other forms of technology will have on retailing in the future. See if they have ideas of how some of the large retailers will take advantage of the Internet in expanding operations. 3. Also see if students have any ideas concerning different forms of retailing that may be prevalent and dominant in the future. It’s important that they understand that retailing is constantly evolving and opportunities consistently abound in this market.
  • TA 15-5 The Wheel of Retailing 1. This acetate illustrates the concept of the wheel of retailing. This application is discussed in the chapter and is rather interesting for students to peruse. 2. It helps to go through the information stage-by-stage of the life cycle implied in the wheel of retailing and point out to students how retailing, like products, goes through a specific life. Some analysts note that changes in technology and the focus on customer orientation have led to an acceleration of the wheel turning. See if students have any examples of where this phenomenon has occurred. 3. Ask students if they can think of any retailers in their market that have gone around the wheel. It is interesting to discuss some of the changes retailers such as K-Mart and J. C. Penney have tried to implement. They are good examples of the wheel at work.
  • TA 15-2 E-Business Expectations 1. This acetate illustrates how CEOs feel the Internet is expected to impact on company revenues today vs. in 5 years. 2. The way to read this is that Now approximately 35% of the CEOs say they receive “None” of their revenues from the Internet and 6% receive more than 20% of their revenues from the Internet. On the other hand, in five years only 8% will receive “None” of their revenues from the Internet and 20% will receive more than 20% of their revenues from the Internet. This is a significant shift in sources of revenue within a very short period of time. 3. It can be seen that while the CEOs recognize the majority of their income comes from traditional sources increased revenue will grow as e-business transactions through the Internet rise.
  • TA 15-6 Has The Internet Changed Your Shopping Habits. 1. This acetate provides additional information that suggests that the Web is cutting hours at the mall. 2. The survey was conducted with Americans who have Internet access who say they go to the store/mall less often because they shop online. As the acetate’s information highlights, we are rapidly approaching the point where one-half of all people who use the Internet more than 15 hours per week agree they spend less time in the mall. A logical questions students might ask is “are people staying at home to shop on the Internet or are they spending so much time online that they don’t have time to go to the mall? See how students respond to these facts and see how many of them agree that they spend more time online as opposed to frequenting the shopping malls. 3. It might be interesting to ask the class, “What are the future implications for marketing if consumers are spending more time online?” Is the store salesperson of the future going to be a robot with an Internet connection?
  • TA 15-7 What Online Shoppers Bought Per Month in 2000 1. This acetate illustrates what buyers are purchasing in their virtual shopping experiences. 2. Ask students if they are surprised by this breakdown? Students will probably agree that it’s natural that online shoppers would buy more technology-oriented products such as computer hardware and software or toys and video games? Why do you suppose they are buying travel? See if students have a good answer for this and see how many of them have purchased travel online. They should be able to recognize both convenience and price options available here by purchasing online.
  • TA 15-8 What does it take to persuade consumers to buy online? 1. This acetate illustrates what assurances people who do not buy online would need to be persuaded to purchase products online. 2. It’s obvious that privacy/security of personal information (e.g., credit card number) and price are the drivers of success for a seller online. Therefore, in marketing their Internet sites, it’s imperative that this information be communicated to prospective customers. If consumer’s seem content about security and sense value, the seller will reap the rewards. 3. Do students feel it’s important to be able to return unwanted products to a brick-and-mortar store? What if there was no cost of shipping to the buyer? Would that make a difference?
  • Chapter 15

    1. 1. Chapter Fifteen Distributing Products Efficiently and Competitively: Supply Chain Management
    2. 2. Channel of Distribution <ul><li>Marketing Intermediaries </li></ul><ul><ul><li>Wholesaler </li></ul></ul><ul><ul><li>Retailer </li></ul></ul><ul><ul><li>Brokers </li></ul></ul><ul><li>Role of Intermediaries </li></ul><ul><ul><li>Create Efficiency </li></ul></ul><ul><ul><li>Value vs. Cost </li></ul></ul>
    3. 3. The Supply Chain (Figure 15.6)
    4. 4. Utility Form Time Place Possession Information Service OPEN 24 HRS
    5. 5. Wholesale Intermediaries <ul><li>Merchant Wholesalers </li></ul><ul><ul><li>Rack Jobbers </li></ul></ul><ul><ul><li>Cash-and-Carry </li></ul></ul><ul><ul><li>Drop Shippers </li></ul></ul><ul><li>Business to Business (B2B) </li></ul>XYZ Warehouse
    6. 6. Percent of B2B Commerce from Internet *Excludes Service Industries Source: Forrester Research Inc.
    7. 7. Retail Competition <ul><li>Price </li></ul><ul><li>Service </li></ul><ul><li>Location </li></ul><ul><li>Selection </li></ul><ul><li>Entertainment </li></ul>
    8. 8. Is it Becoming a Wal-Mart World? *There are 2,985 stores in the U.S. Source: Wal-Mart Annual Report 2000
    9. 9. Retail Store Distribution <ul><li>Intensive </li></ul><ul><li>Selective </li></ul><ul><li>Exclusive </li></ul>
    10. 10. Identify a Retailer in Your Area <ul><li>Supermarket </li></ul><ul><li>Convenience Store </li></ul><ul><li>Discount Store </li></ul><ul><li>Department Store </li></ul><ul><li>Category Killer </li></ul><ul><li>Specialty Store </li></ul><ul><li>Factory Outlet </li></ul><ul><li>Superstores </li></ul><ul><li>Catalog Showroom </li></ul>
    11. 11. The Wheel of Retailing Passage of Time 2. Retail Outlet 1. Retail Outlet Starts 3. Retail Outlet 4. New Outlet Enters <ul><li>Adds Service </li></ul><ul><li>Raises Prices </li></ul><ul><li>Better Location </li></ul><ul><li>Low Price </li></ul><ul><li>Limited Service </li></ul><ul><li>Out-of-way Location </li></ul><ul><li>Higher Prices </li></ul><ul><li>Higher Status </li></ul><ul><li>Low Price </li></ul><ul><li>Limited Service </li></ul>
    12. 12. Non-Store Distribution <ul><li>E-tailing </li></ul><ul><li>Telemarketing </li></ul><ul><li>Vending Machines, Kiosks, Carts </li></ul><ul><li>Internet </li></ul><ul><li>Direct Selling </li></ul><ul><li>Multilevel Marketing </li></ul><ul><li>Direct Marketing </li></ul>
    13. 13. E-Business Expectations Share of company revenues CEOs say come from e-business Now vs. In 5 years Source: USA Today
    14. 14. Has The Internet Changed Your Shopping Habits? Survey of Americans who have high* Internet use vs. those with low use * high use = 15+ hours per week Source: USA Today
    15. 15. What Online Shoppers Bought* Per Month in 2000 *In thousands of dollars Source: Forrester Research
    16. 16. What does it take to persuade consumers to buy online? * Survey of 1,944 Web users that had not made an online purchase Source: CIO Web Business , 10/1/1999
    17. 17. Channel Cooperation <ul><li>Corporate Distribution </li></ul><ul><li>Contractual Distribution </li></ul><ul><li>Administered Distribution </li></ul><ul><li>Supply Chain Management </li></ul>
    18. 18. Contractual Distribution <ul><li>Franchise Systems </li></ul><ul><li>Wholesaler-Sponsored Chains </li></ul><ul><li>Retail Cooperatives </li></ul>
    19. 19. Distribution/Storage Mode <ul><li>Railroad </li></ul><ul><li>Motor Vehicles </li></ul><ul><li>Water </li></ul><ul><li>Pipeline </li></ul><ul><li>Air </li></ul><ul><li>Intermodal </li></ul><ul><li>Storage </li></ul><ul><li>Materials Handling </li></ul>