LEARNING OBJECTIVES1. Explain what a marketing channel is and why intermediaries are needed.2. Define the types of channel intermediaries and describe their functions and activities.
LEARNING OBJECTIVES(CONTINUED)3. Describe the channel structures for consumer and business-to-business products and discuss alternative channel arrangements.4. Define supply chain management and discuss its benefits.5. Discuss the issues that influence channel strategy.
LEARNING OBJECTIVES(CONTINUED)6. Explain channel leadership, conflict, and partnering.7. Describe the logistical components of the supply chain.8. Discuss the concept of balancing logistics service and cost.
LEARNING OBJECTIVES(CONTINUED)9. Discuss new technology and emerging trends in supply chain management.10. Discuss channels and distribution decisions in global markets.11. Identify the special problems and opportunities associated with distribution in service organizations.
1LEARNING OBJECTIVE Explain what a marketing channel is and why intermediaries are needed.
1MARKETING CHANNELS A set of interdependent organizations A set of interdependent organizationsMarketingMarketing that ease the transfer of ownership as that ease the transfer of ownership asChannel Channel products move from producer to products move from producer to business user or consumer. business user or consumer. The connected chain of all the business The connected chain of all the business Supply Supply entities, both internal and external to the entities, both internal and external to the Chain Chain company, that perform or support the company, that perform or support the logistics function. logistics function.
MARKETING CHANNEL 1FUNCTIONS Specialization and Specialization and Division of Labor Division of Labor Channels Channels Fulfill Fulfill Three Three Overcoming Overcoming Important Important Discrepancies Discrepancies Functions Functions Providing Contact Providing Contact Efficiency Efficiency
SPECIALIZATION AND DIVISION OF 1 LABOR Provides economies of scale Aids producers who lack resources to market directly Builds good relationships with customers
1OVERCOMING DISCREPANCIESDiscrepancyDiscrepancy The difference between the amount The difference between the amount of of of product produced and the of product produced and the Quantity Quantity amount an end user wants to buy. amount an end user wants to buy.Discrepancy The lack of all the items a The lack of all the items aDiscrepancy customer needs to receive full of customer needs to receive full of satisfaction from a product or satisfaction from a product orAssortmentAssortment products. products.
1OVERCOMING DISCREPANCIES A situation that occurs when a A situation that occurs when a Temporal Temporal product is produced but a product is produced but aDiscrepancyDiscrepancy customer is not ready to buy it. customer is not ready to buy it. The difference between the The difference between the Spatial Spatial location of a producer and the location of a producer and theDiscrepancyDiscrepancy location of widely location of widely scattered markets. scattered markets.
1CONTACT EFFICIENCY Zenith Zenith Sony Sony RCA RCA Toshiba Toshiba Zenith Zenith Sony Sony RCA RCA Toshiba Toshiba Circuit City Circuit City
2LEARNING OBJECTIVE Define the types of channel intermediaries and describe their functions and activities.
2CHANNEL INTERMEDIARIES A channel intermediary that A channel intermediary that Retailer Retailer sells mainly to customers. sells mainly to customers. An institution that buys goods An institution that buys goodsMerchant Merchant from manufacturers, takes title from manufacturers, takes titleWholesalerWholesaler to goods, stores them, to goods, stores them, and resells and ships them. and resells and ships them. Wholesaling intermediaries who Wholesaling intermediaries whoAgents andAgents and facilitate the sale of a product by facilitate the sale of a product by Brokers Brokers representing channel member. representing channel member.
2CHANNEL INTERMEDIARIES Retailers Retailers Take Title to Goods Take Title to Goods Merchant MerchantWholesalersWholesalers Take Title to Goods Take Title to Goods Agents Agents and and Do NOT Take Title to Goods Do NOT Take Title to Goods Brokers Brokers
CHANNEL FUNCTIONS 2PERFORMED BY INTERMEDIARIES Contacting/PromotionTransactionalTransactional Negotiating Functions Functions Risk Taking Physically distributing Logistical Logistical Storing Functions Functions Sorting Facilitating Researching Facilitating Function Function Financing
2LOGISTICS The process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption.
3LEARNING OBJECTIVE Describe the channel structures for consumer and business-to-business products and discuss alternative channel arrangements.
3DIRECT CHANNEL A distribution channel in which producers sell directly to consumers.
CHANNELS FOR CONSUMER 3 PRODUCTS Direct Retailer Wholesaler Agent/BrokerChannel Channel Channel ChannelProducer Producer Producer Producer Agents or Brokers Wholesalers Wholesalers Retailers Retailers RetailersConsumers Consumers Consumers Consumers
CHANNELS FOR BUSINESS-TO- 3 BUSINESS PRODUCTS Direct Industrial Agent/Broker Agent/Broker DirectChannel Distributor Channel Industrial Channel ChannelProducer Producer Producer Producer Producer Agents or Agents or Brokers Brokers Industrial Industrial Distributor DistributorIndustrial Industrial Industrial Industrial Government User User User User Buyer
ALTERNATIVE CHANNEL 3ARRANGEMENTS Multiple Channels Nontraditional Different Channels Channels May be Used Adaptive Channels Strategic Channel Alliances
4LEARNING OBJECTIVE Define supply chain management and discuss its benefits.
4SUPPLY CHAIN MANAGEMENT A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption.
4SUPPLY CHAIN MANAGEMENT Focus on Innovative Solutions Focus on Innovative Solutions Competitive with focus on Competitive with focus on Customer Satisfaction Customer Satisfaction Results Results Synchronized Flow of Synchronized Flow ofSupply ChainSupply ChainManagementManagement Customer Value Customer Value
ROLE OF SUPPLY CHAIN 4MANAGEMENT Communicator of Communicator of customer demand from customer demand from Role of point of sale to supplier point of sale to supplier Role of Supply Chain Supply Chain Management Management Physical flow process Physical flow process that engineers the that engineers the movement of goods movement of goods
SUPPLY CHAIN MANAGEMENT 4ACTIVITIES Determine channel strategy and Determine channel strategy and level of distribution intensity level of distribution intensity Manage relationships Manage relationships in the supply chain in the supply chain Manage the logistical components Manage the logistical components of the supply chain of the supply chain Balance the costs of the supply chain Balance the costs of the supply chain with the service level demanded by customer with the service level demanded by customer
BENEFITS OF 4SUPPLY CHAIN MANAGEMENT Reduced Costs Reduced Costs Improved Service Improved ServiceCommon BenefitsCommon Benefits of Supply Chain of Supply Chain Enhanced Revenues Enhanced Revenues Management Management
5LEARNING OBJECTIVE Discuss the issues that influence channel strategy.
5CHANNEL STRATEGY DECISIONS Issues that Influence Issues that Influence Channel Strategy Channel Strategy Factors Factors Levels of Levels of Affecting Affecting Distribution Distribution Channel Channel Intensity Intensity Choice Choice Market Factors Market Factors Intensive Distribution Intensive Distribution Product Factors Product Factors Selective Distribution Selective Distribution Producer Factors Producer Factors Exclusive Distribution Exclusive Distribution
5MARKET FACTORS Customer Profiles Customer Profiles Consumer or Industrial Consumer or Industrial Customer Customer Market Factors Size of Market Size of Market Market Factors That Affect That Affect Channel Channel Choices Choices Geographic Location
5PRODUCT FACTORS Product Complexity Product Complexity Product Price Product Price Product Life Cycle Product Life Cycle Product Factors Product Factors That Affect That Affect Channel Channel Choices Choices Product Delicacy Product Delicacy
5PRODUCER FACTORS Producer Resources Producer Resources Number of Product Lines Number of Product Lines Producer Factors Producer Factors That Affect That Affect Channel Desire for Channel Control Desire for Channel Control Channel Choices Choices
LEVELS OF DISTRIBUTION 5INTENSITY Number of Number ofIntensity Level Intensity Level Objective Objective Intermediaries Intermediaries Achieve mass market Achieve mass market Intensive Intensive selling. selling. Many Many Convenience goods. Convenience goods. Work with selected Work with selected intermediaries. intermediaries. Selective Several Several Selective Shopping and some Shopping and some specialty goods. specialty goods. Work with single Work with single intermediary. Specialty intermediary. Specialty Exclusive Exclusive goods and industrial One One goods and industrial equipment. equipment.
6LEARNING OBJECTIVE Explain channel leadership, conflict, and partnering.
MANAGING CHANNEL 6RELATIONSHIPS Channel Power Channel Power Channel Control Channel Control Social Social Dimensions Dimensions Channel Leadership Channel Leadership of Channels of Channels Channel Conflict Channel Conflict Channel Partnering Channel Partnering
CHANNEL POWER, 6CONTROL, AND LEADERSHIP A channel member’s capacity to A channel member’s capacity toChannelChannel control or influence the behavior control or influence the behavior Power Power of other channel members of other channel members A situation that occurs when one A situation that occurs when oneChannelChannel marketing channel member marketing channel memberControlControl intentionally affects another intentionally affects another member’s behavior. member’s behavior. A member of a marketing channel A member of a marketing channelChannelChannel that exercises authority/power over that exercises authority/power over Leader Leader the activities of other members. the activities of other members.
6CHANNEL CONFLICT A clash of goals and methods between distribution channel members. Horizontal Horizontal Occurs among channel members Occurs among channel members Conflict Conflict on the same level on the same level Vertical Vertical Occurs among channel members Occurs among channel members Conflict Conflict at different levels at different levels
6CHANNEL PARTNERING The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage.
TRANSACTION- VS. 6 PARTNERSHIP-BASED FIRMSTransaction-BasedTransaction-Based Partnership-Based Partnership-BasedShort-term relationshipsShort-term relationships Long-term relationships Long-term relationshipsMultiple suppliersMultiple suppliers Few suppliers Few suppliersAdversarial relationshipsAdversarial relationships Cooperative partnerships Cooperative partnershipsPrice dominatesPrice dominates Value-added services dominate Value-added services dominateMinimal supplier investmentMinimal supplier investment High supplier/buyer investment High supplier/buyer investmentMinimal information sharingMinimal information sharing Extensive information sharing Extensive information sharingFirms are independentFirms are independent Firms are interdependent Firms are interdependentMinimal functionalMinimal functional Extensive functional Extensive functionalarea interactionarea interaction area interaction area interaction
7LEARNING OBJECTIVE Describe the logistical components of the supply chain.
INTEGRATED LOGISTICALCOMPONENTS OF THE SUPPLY 7CHAIN Sourcing & Procurement Sourcing & Procurement Logistics Information System Logistics Information System Production Scheduling Production SchedulingSupplySupply Order Processing & Customer Service Order Processing & Customer ServiceChain Chain Team Team Inventory Control Inventory Control Warehouse & Materials Handling Warehouse & Materials Handling Transportation Transportation
7SOURCING AND PROCUREMENT Plan Plan Purchasing Strategies Purchasing Strategies Develop Develop Specifications Specifications Role of Role of Purchasing Purchasing Select Select Departments Departments Suppliers Suppliers Negotiate Negotiate Price Price Negotiate Negotiate Service Levels Service Levels
7 PRODUCTION SCHEDULING Traditional Focus Customer Focus Traditional Focus Customer FocusPush/PullPush/Pull Push Push Pull PullStrategyStrategyStart ofStart of Customer-Order Customer-Order Inventory-Based Inventory-BasedProductionProduction Based BasedManufacturingManufacturing Mass Production Mass Customization Mass Production Mass Customization
7JUST-IN-TIME MANUFACTURING A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials just when they are needed on the production line.
7BENEFITS OF JIT Reduces raw material inventories Shortens lead times Creates better supplier relationships Reduces production and storeroom costs Reduces paperwork
ELECTRONIC DATA 7INTERCHANGE Information technology that replaces paper documents that accompany business transactions.
7INVENTORY CONTROL SYSTEM A method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer’s or a customer’s demand.
WAREHOUSE AND 7MATERIALS-HANDLING Receive goods into warehouse Identify, sort and Functions label goods of Materials Dispatch the goods to Handling temporary storage Recall, select, or pick the goods for shipment
7TRANSPORTATION Cost Cost Transit Time Transit Time Reliability Reliability Criteria Criteria Capability Capability for forTransportationTransportation Accessibility Accessibility Mode Mode Choice Choice Traceability Traceability
CRITERIA FOR RANKING 7 MODES OF TRANSPORTATION Highest LowestRelative Truck Rail Pipe Water AirCostTransit Water Rail Pipe Truck AirTimeReliability Pipe Truck Rail Air WaterCapability Water Rail Truck Air PipeAccessibility Truck Rail Air Water PipeTraceability Air Truck Rail Water Pipe
8LEARNING OBJECTIVE Discuss the concept of balancing logistics service and cost.
8LOGISTICS SERVICE Interrelated activities performed by a member of the supply chain to ensure that the right product is in the right place at the right time.
8LOGISTICAL COMPETENCIES Deviselogistics service strategies as a means of competitive differentiation Integratemembers of supply chain to achieve operating excellence Respondquickly to changing logistical requirements Constantlymonitor all aspects of the supply chain
9LEARNING OBJECTIVE Discuss new technology and emerging trends in supply chain management.
TRENDS IN 9SUPPLY CHAIN MANAGEMENT Advanced Advanced Computer Technology Computer Technology Trends TrendsAffecting theAffecting the Logistics Outsourcing of Outsourcing of Logistics Logistics Functions Industry Logistics Functions Industry Electronic Electronic Distribution Distribution
10LEARNING OBJECTIVE Discuss channels and distribution decisions in global markets.
CHANNELS AND DISTRIBUTION 10 DECISIONS FOR GLOBAL MARKETS Channel structure differs Global Channel Global Channel Channel types differ Development Development “Gray” marketing channels Awareness of trade legalities Global Supply Global SupplyChain ManagementChain Management Transportation Infrastructure
11LEARNING OBJECTIVE Identify the special problems and opportunities associated with distribution in service organizations.
CHANNELS AND DISTRIBUTION 11 DECISIONS FOR SERVICES Minimizing wait times Minimizing wait times Managing service capacity Managing service capacity Areas of Focus Areas of Focus Improving delivery for Improving delivery for through new channelsService DistributionService Distribution through new channels
LEARNING OBJECTIVE Discuss the concept of customer service.
CUSTOMER SERVICE CONCEPT Customer service relates to the service.html#ixzz22kbl2fHZ 714655_concept-customer- eHow.com http://www.ehow.com/about_6 Service | Read more: The Concept of Customer relationship between a product or service provider and those people who use or buy its products or services.
Identifying Customers Most organizations will have more than one service.html#ixzz22kbl2fHZ 714655_concept-customer- eHow.com http://www.ehow.com/about_6 Service | Read more: The Concept of Customer type of customer. They will vary according to age, gender, personality and economic and social position. They will also differ according to such variables as their previous experience of dealing with the organization, the importance of the purchase to them, whether or not they are buying for themselves or their company and their existing level of knowledge about the products or services.
Defining Service Customer service behaviors include a huge range of factors including efficiency, speed of service.html#ixzz22kcUrBlt 714655_concept-customer- eHow.com http://www.ehow.com/about_6 Service | Read more: The Concept of Customer response, attention to detail, listening, reassurance, providing information and following up. Attitude is also important in terms of variables such as friendliness, respect, concern and authenticity. The type and levels of service provided will depend on the ways customers interact with the organization and its employees.
Type of Relationship “Customers” may be potential customers, one- time customers, repeat customers or ex- service.html#ixzz22kcsauVb 714655_concept-customer- eHow.com http://www.ehow.com/about_6 Service | Read more: The Concept of Customer customers. Each will have specific needs for the business to address appropriately in terms of service. Potential customers’ service needs may relate to raising awareness of features and benefits of the product or service and how and where it is available, as well as reassurance about organizational values and integrity.
Training Every organization—regardless of its size or nature of business—needs to have a clear service.html#ixzz22kdFRaEy 714655_concept-customer- eHow.com http://www.ehow.com/about_6 Service | Read more: The Concept of Customer framework for customer service, incorporating detailed policies, procedures and standards. Organizations should provide regular customer service training for all so they understand the role they play in overall customer service within the organization and the specific behaviors and attitudes expected of them. Refresh both service standards and procedures and training regularly to meet changing customer needs and competitor activities.
Getting Feedback Great customer service depends on looking at things from the customer’s perspective. service.html#ixzz22kdlebfH 714655_concept-customer- eHow.com http://www.ehow.com/about_6 Service | Read more: The Concept of Customer Mystery shopping and regular customer satisfaction surveys can be extremely helpful in pinpointing good and bad customer service, as can ongoing observation and supervision of customer service situations at a range of different levels. Getting employees to focus on and discuss customer service issues on a regular basis is a good way of helping them improve standards and take ownership at an individual and team level.