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1. MARKETING MANAGEMENT
Developing PLACE Strategies
D.V. Madhusudan Rao
Dept. MBA,
School of Graduate Studies,
Jigjiga University
ETHIOPIA
1
2. Chapter Questions
⢠What is a marketing channel system and value
network?
⢠What work do marketing channels perform?
⢠How should channels be designed?
⢠What decisions do companies face in managing their
channels?
⢠How should companies integrate channels and
manage channel conflict?
⢠What are the key issues with e-commerce?
⢠How will be the Future? Is it M-Commerce or âŚ.?
1/3/2013 2
3. What is a Marketing Channel?
A marketing channel system is the particular
set of interdependent organizations involved
in the process of making a product or service
available for use or consumption.
1/3/2013
3
4. Channels and Marketing Decisions
⢠A Push strategy uses the manufacturerâs sales
force, trade promotion money, and other means to
induce intermediaries to carry, promote, and sell the
product to end users
Application: It is appropriate for low-brand loyalty
products, impulse items, brand choice is made in stores
products and products benefits are well understood.
⢠A Pull strategy uses advertising, promotion, and other
forms of communication to persuade consumers to
demand the product from intermediaries
Application: It is appropriate for high brand loyalty and
high involvement products, consumers are able
perceive differences between brands and when they
choose the brand before they go to the store.
1/3/2013 4
5. Buyer Expectations for Channel Integration
⢠Ability to order a product
online and pick it up at a
convenient retail location
⢠Ability to return an online-
ordered product to a
nearby store
⢠Right to receive discounts
based on total online and
offline purchases
1/3/2013
5
7. Categories of Buyers
⢠Habitual shoppersâpurchase from the same places in the
same manner over time
⢠High value deal seekersâknow their needs and âchannel
surfâ a great deal before buying at the lowest possible price
⢠Variety-loving shoppersâgather information in many
channels, regardless of price
⢠High-involvement shoppersâgather information in all
channels, make their purchases in a low-cost channel, but
takes advantage of customer support from a high-touch
channel
1/3/2013 7
11. Types of Shoppers
⢠Service/quality customersâcare most about
the variety and performance of products in
stores as well as the service provided
⢠Price/value customersâmost concerned
about spending their money wisely
⢠Affinity customersâsought stores that suited
people like themselves or the members of
groups they aspired to join
1/3/2013
12. Channel Member Functions
⢠Gather information
⢠Develop and disseminate persuasive
communications
⢠Reach agreements on price and terms
⢠Acquire funds to finance inventories
⢠Assume risks
⢠Provide for storage
⢠Provide for buyersâ payment of their bills
⢠Oversee actual transfer of ownership
1/3/2013 12
13. Designing a Marketing Channel System
Analyze customer needs
Establish channel objectives
Identify major channel alternatives
Evaluate major channel alternatives
1/3/2013
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14. Channel Service Outputs
⢠Lot sizeânumber of units the channel permits a typical
customer to purchase on one occasion
⢠Waiting/delivery timeâaverage time customers of that
channel wait for receipt of the goods
⢠Spatial convenienceâdegree to which the marketing channel
makes it easy for customers to purchase the product
⢠Product varietyâassortment breadth provided by the
marketing channel
⢠Service backupâadd-on services (credit, delivery, installation,
repairs) provided by the channel
1/3/2013 14
15. Channel objectives
⢠State in terms of targeted service output levels
⢠Minimize total cost and still provide desired levels of
service output
⢠Channel Objectives vary with product characteristics
â Perishable productsâmore direct marketing
â Bulky productsâminimize shipping distance
â Nonstandard productsâsold directly by sales
representatives
â Products requiring installation or maintenance
serviceâsold and maintained by company or
franchised dealers
1/3/2013 15
17. No. of Intermediaries: Strategies
Market
Intensive Exposure
Strategies
Selective
Selective
= number of
Exclusive outlets
1/3/2013 17
18. Exclusive Distribution
Exclusive: Limiting the distribution to only one intermediary in the
territory
⢠LEICA was officially appointed Jebsen & Jebsen Marketing as the
exclusive distributor for Singapore, Malaysia, Thailand, Indonesia
and Brunei
⢠A main factor in choosing J&J was its expertise in âhigh-quality
technical products on the consumer market.â
Source: Smartinvestor, Singapore Ed. June 2000
Advantages: Maximize control over service level/output
⢠Enhance productâs image & allow higher markups
⢠Promotes dealers loyalty, better forecasting, better inventory and
merchandising control
⢠Restricts resellers from carrying competing brands
Disadvantages: Betting on one dealer in each market
⢠Only suitable for high price, high margin, and low volume products
18
19. Intensive Distribution
Intensive: Distribute from as many outlets as
possible to provide location convenience
Ex: Newspapers, Most fast moving consumer goods
you see in the newsstand
⢠Photo processing shops
Advantages: Increased sales, wider customer
recognition, and impulse buying
Disadvantages: Characteristically low price and
low-margin products that require a fast turnover
â Difficult to control large number of retailers
19
20. Selective Distribution
Selective: Appoint several but not all are retailers
Daewoo has 2 distributors in Singapore
⢠âStarsauto, part of a larger Indonesian group, represents Daewooâs
traditional line of sedans.
⢠Homegrown family-owned JTA Motors market Daewooâs offroad
vehicles like the Musso and Korando, and an upmarket model called
the Chairman. (Source: BT, Motoring, Feb4/1999)
Advantages: Better market coverage than exclusive distribution
â More control and less cost than intensive distribution
â Concentrate effort on few productive outlets
â Selected firms capable of carrying full product line and provide
the required service
Disadvantages: May not cover the market adequately
â Difficult to select dealers (retailers) that can match your
requirement and goals
20
21. Terms and Responsibilities of Channel Members
⢠Price policyâprice list and schedule of discounts and
allowances that intermediaries see as equitable and
sufficient
⢠Condition of sale âpayment terms and producer guarantees
⢠Distributorsâ territorial rightsâdistributorsâ territories and
the terms under with the producer will enfranchise other
distributors
⢠Mutual services and responsibilities (e.g., McDonaldâs
provide franchisees with a building, promotion
support, recordkeeping system, training, and general
administrative and technical assistance; franchisees are
expected to satisfy company standards for the physical
facilities, cooperate with new promotion programs, furnish
requested information, and buy supplies from specified
vendors) 1/3/2013 21
23. Break-Even Chart for the Choice Between A Company
Sales Force and Manufacturerâs Sales Agency
1/3/2013
23
24. Channel-Management Decisions
Selecting channel members
Training channel members
Motivating channel members
Evaluating channel members
Modifying channel members
1/3/2013 24
25. Channel Power
⢠Coercive--threat
⢠Rewardâextra benefit
⢠Legitimate--contract
⢠Expert--knowledge
⢠Referentâproud to be
associated
1/3/2013
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26. Channel Integration and Systems
Type of channels
Characteristics 1. Vertical marketing systems (VMS)
Traditional
Administered Contractual Corporate
Little or Some to Fairly good
Amount of cooperation none Complete
good to good
Economic One
None power and Contracts company
Control maintained by leadership ownership
Typical âinde- General
Examples McDonaldâs Florsheim
pendentsâ Electric
2. Horizontal (symbiotic) marketing systems: Two or more unrelated companies putting
together resources to exploit a marketing opportunity . Yugoka in Japan
3. Multichannel systems
1/3/2013 26
28. What is Channel Conflict?
⢠Channel conflict occurs when one memberâs
actions prevent another channel from
achieving its goal.
⢠Types of channel conflict
â Vertical
â Horizontal
â Multichannel
1/3/2013 28
29. Causes of Channel Conflict
⢠Goal incompatibilityâmanufacturer want rapid penetration
with low prices but dealers want high margins and pursue
short-run profitability
⢠Unclear roles and rightsâcompanyâs sales force competing
with dealers
⢠Differences in perceptionâmanufacturers optimistic about
short-term economic outlook and want dealers to carry higher
inventory than dealers want to carry because they are
pessimistic
⢠Intermediariesâ dependence on manufacturerâdealers
affected by manufacturerâs product and pricing decisions
1/3/2013 29
30. Managing Channel Conflict
⢠Adoption of superordinate goals â
jointly seeking goals
⢠Exchange of employees
⢠Joint membership in trade associations
⢠Cooptation--efforts by one organization
to win the support of the leaders of
another organization by including them
in advisory councils, boards of directors,
etc
⢠Diplomacy--each side sends a person or
group to meet with its counterpart to
resolve a conflict
⢠Mediation--resorting to a neutral third
party to conciliate two parties interest
⢠Arbitration--two parties agree to
present arguments to one or more
arbitrators and accept the arbitration
decision
⢠Legal recourse
1/3/2013
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31. e-Commerce Marketing Practices
E-business describes the use of
electronic means and platforms
to conduct a companyâs
business.
E-commerce means, the
company site offers to transact
selling of products and services
online. E-purchasing, E-mktg
⢠Pure-click (only Web)
⢠Brick-and-click (Firm + Web)
⢠Brick-and-mortar (only firm)
31
32. E-Commerce: On-line Distribution
The success depends on the characteristics of
the consumers in the market in terms of their
disposition to e-commerce and surfing habits
Eg. South Korea has the most dynamic Internet
surfers in Asia. They spend the least timeâ28
secondsâon a web page before moving on
Australian surfers were the âstickiestâ, clocking
one minute per page
(Source: March 2001 figures from Nielsen/NetRatings Globel Index)
1/3/2013 32
33. The FUTURE:M-Commerce
Cell phones , PDAs, Smart phones
UMTS
Mobile commerce is going to be the next revenue
stream once the killer mobile-application is rolled
out
The penetration of mobile data services is low in
ASPAC (1%) compared to the Western Europe
(23%), Japan (21%) and the US (7%)
(Source: ARC Group, 2000)
Japanâs NTT DoCoMo's recently launched i-Mode,
a data communications service rather like Wap,
and signed up several million customers
(Source: Intelligent Enterprise Asia, July 2001)
1/3/2013 33
35. 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?
36. What is Retailing?
Retailing includes all the activities involved in
selling goods or services directly to final
consumers for personal, non-business use.
36
37. Planning a Retailerâs Strategy
Convenience
Product Selection
Fairness in Dealings
Key Features
Affecting
Helpful Information
Consumersâ
Retail Choice
Prices
Social Image
Shopping Atmosphere
38. Types Of Retailers
Store Type Length and Breadth of Product
Assortment
Specialty Stores Narrow Product Line, Deep Assortment
Wide Variety of Product Lines i.e.
Department Stores Clothing, Home Furnishings, & Household
Items
Wide Variety of Food, Laundry, & Household
Supermarkets Products
Limited Line of High-Turnover Convenience
Convenience Stores Goods
Broad Product Line, Low Margin, High
Discount Stores Volume
Inexpensive, Overruns, Irregulars, and
Off-Price Retailer Leftover Goods
Large Assortment of Routinely Purchased
Superstores Food & Nonfood Products, Plus Services
Broad Selection, Fast Turnover, Discount
Catalog Showroom Prices
1/3/2013 38
39. Wheel of Retailing
Mid Price
Mid Status
Mid Margin
Low Price
Low Status
Low Margin High Price
High Status
High Margin
1/3/2013 39
41. Levels of Retail Service
⢠Self serviceâmany customers will to locate-
compare-select process to save money
⢠Self selectionâcustomers find their own goods,
although they can ask for assistance
⢠Limited serviceâretailers carry more shopping
goods and services such as credit and
merchandise-return privileges
⢠Full serviceâsalespeople are ready to assist in
every phase of the locate-compare-select process
42. Non-store Retailing
⢠Direct selling âmultilevel selling and network marketing
selling door-to-door, or at home sales parties
⢠Direct marketing âdirect mail, catalog marketing,
telemarketing, television direct-response marketing,
electronic shopping
⢠Automatic vending âvariety of merchandise, impulse
goods, hosiery, cosmetics, hot food, etc.
⢠Buying service âstoreless retailer servicing a specific
clienteleâusually employees of a large organizationâ
who are entitled to buy from a list of retailers that have
agreed to give discounts in return for membership
43. Major Types of Corporate Retail Organizations
⢠Corporate chain store âtwo or more outlets owned and
controlled, employing central buying and merchandising, and selling similar
lines of merchandise (GAP)
⢠Voluntary chain âwholesaler-sponsored group of independent retailers
engaged in bulk buying and common merchandising (Independent Grocers
Alliance)
⢠Retailer cooperative âindependent retailers using a central buying
organization and joint promotion efforts (ACE Hardware)
⢠Consumer cooperative âretail firm owned by its customers. Members
contribute money to open their own store, vote on its policies, elect a group
to manage it, and receive dividends
⢠Franchise organization âcontractual association between a franchisor and
franchisees (McDonaldâs)
⢠Merchandising conglomerate âcorporation that combines several diversified
retailing lines and forms under central ownership, with some integration of
distribution and management (Allied Domeq PLC with Dunkinâ Donuts and
Baskin-Robbins, plus a number of British retailers and a wine and spirits group
44. Conventional Retailers â Try to Avoid Price Competition
Expanded Specialty Ritz Camera,
assortment shops & Coach, Gap,
& service dept. stores Macyâs
Expanded Supermarkets, Safeway, IKEA,
assortment disc. houses, Home
&/or reduced mass merch.,
margins & super-, club- Depot, Costco
Single- & service Stores, +
Conventional
limited-
Offerings
line stores C-stores, 7-11, Pepsi
Added conv., vending, door-
higher margins, vending,
reduced to-door, phone,
mail, some Avon, Landsâ
assortment e-tail End, QVC
Expanded eBay, Amazon,
assortment,
reduced Internet
margins, more Zappos, Netfli
information x, Dell
45. Retailer Size and Profits
ď§ Large retail stores do most of the business
â Only about 11% of stores sell over $5 million annually but
they account for almost 70% of retail sales
â Yet, some small retailers control "their" market
ď§ Larger stores enjoy economies of scale
ď§ Corporate chain stores also enjoy economies of
scale
â Account for about half of all retail sales (and much higher
in some product categories)
â Continuing to grow
ď§ Independent retailers form chains
â Cooperative chains are retailer sponsored
â Voluntary chains are wholesaler sponsored
46. Retailing and the Internet
ď§ Growing fast, but still in very early stages
ď§ Convenience not defined by location of product
assortment
ď§ More information of some types but not others
â More technical detail
â Less touch and feel
ď§ Generally requires more advance planning
â Delivery takes time and adds costs
ď§ Competitive effects impact other retailers
ď§ New types of specialists and intermediaries will
continue to develop
47. Mass-Merchandising Concept
ď§ Retailers should offer low prices to get faster
turnover and greater sales volumeâby appealing to
larger markets
ď§ Started with supermarkets in 1930s
ď§ Really caught on with mass-merchandisers
â large stores
â self-service oriented
â Examples: Wal-Mart, Target
ď§ Competition among mass-merchandisers has
heated up
ď§ Limited-line mass-merchandisers (âcategory killersâ)
grew rapidly, but growth has subsided
48. Examples of Scrambled Merchandising
ď§ Videotapes and DVDs at grocery stores
ď§ Microwave popcorn at video rental stores
ď§ Computer software at bookstores
ď§ Clothing and fashion accessories at a
motorcycle dealership
ď§ One-hour prints from digital pictures at
drugstores
51. What is a Franchising System?
A franchising system is a system of individual
franchisees, a tightly knit group of enterprises
whose systematic operations are planned,
directed, and controlled by the operationâs
franchisor.
52. Franchise Operations
ď§ The franchiser develops a good marketing
strategy and the retail franchise holders carry
out the strategy in their own units.
ď§ Strong legal contracts govern the
relationship.
ď§ Franchisers have been successful with
newcomers.
â especially popular with service operations
ď§ Franchise sales account for about half of all
retail sales.
53. 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
56. New Retail Environment
⢠New retail forms and combinations
⢠Growth of intertype competition
⢠Competition between store-based and non-
store-based retailing
⢠Growth of giant retailers
⢠Decline of middle market retailers
⢠Growing investment in technology
⢠Global profile of major retailers
57. New Retail Forms and Combinations
⢠Combination retailersâsome supermarkets includes bank
branches; bookstore feature coffee shops, etc.
⢠Pop-ups âlt retailers promote brands, reach seasonal
shoppers for a few weeks in busy areas and create buzz (JC
Penney unveiled designer Chris Maddenâs home, bath, and
kitchen line in a 2,500-square-foot Rockefeller Center space
for one month only.
⢠Showcase storesâSome stores not only sell other
companiesâ brands but get the vendors of the brands to
take responsibility for stock, staff, and even the selling
space. The vendors then hand over a percentage of the
sales to the storeâs owner
58. Some Trends in Retailing
ď§ Growth of Internet merchants and online
retailing
ď§ Electronic retailing (kiosks, TV, etc.)
ď§ In-home shopping (catalogs, etc.)
ď§ More price competition
ď§ Vertical integration
ď§ More chains and franchises
â chains becoming larger, more powerful
ď§ More and better information (for example,
scanner data)
59. Retailersâ Marketing Decisions
⢠Target marketâprofile of
customer
⢠Product assortmentâbreadth
and depth
⢠Procurementâmerchandise
sources
⢠Pricesâdecided in relation to the
target market
⢠Servicesâpre-purchase, post-
purchase, ancillary (click next
slide)
60. Retailersâ Marketing Decisions (cont.)
⢠Store atmosphere (click next slide)
⢠Store activitiesâbrick-and-mortar
and e-commerce
⢠Communicationsâadvertisement,
special sale, money-saving
coupons, etc.
⢠Location decision (click next slide)
61. Store Atmosphere
⢠Walls
⢠Lighting
⢠Signage
⢠Product placement
⢠Floors
⢠Surface space
⢠Music
62. Retail Category Management
Define the category
Figure out its role
Assess performance
Set goals
Choose the audience
Figure out tactics
Implement the plan
62
63. Retailer Services Mix
⢠Pre-purchase services âaccepting telephone and
mail orders, advertising, window and interior
display, fitting rooms, shopping hours, fashion
shows, and trade-ins
⢠Post-purchase services âshipping and delivery,
gift wrapping, adjustments and returns,
alterations and tailoring, installations
⢠Ancillary services âgeneral information, check
cashing, parking, restaurants, repairs, interior
decorating, credit, rest rooms, and baby-
attendant service
64. Location Decision
⢠General business districtsâdowntown
⢠Regional shopping centersâlarge suburban
malls containing 40 to 200 stores, typically
featuring one or two nationally known anchor
store, such as JC Penney or Lord & Taylor
⢠Community shopping centersâsmaller malls
with one anchor store and between 20 and
40 smaller stores
⢠Strip malls stripsâcluster of stores, usually
housed in one long building, serving a
neighborhoodâs needs for groceries,
hardware, laundry, shoe repair, and dry
cleaning
â Location within a larger storeâcertain well-
known retailersâMcDonaldâs, Starbucks,
Nathanâs, Dunkinâ Donutsâlocate new,
smaller units as concession space within
larger stores or operations, such as airports,
schools, or department stores
16-64
65. Tips for Increasing Sales in Retail Space
⢠Keep shoppers in the store
⢠Donât make them hunt
⢠Make merchandise available to the reach and
touch
⢠Note that men do not ask questions
⢠Remember women need space
⢠Make checkout easy
66. Location decision-Indicators of Sales Effectiveness
Number of people passing by
% who enter store
% of those who buy
Average amount
spent per sale
66
67. Private Label Brands
⢠Private labels (reseller, store, house, or distributor
brand) is a brand that retailers and wholesalers
develop are ubiquitous
⢠Consumer accepts private labels
⢠Private-label buyers come from all socioeconomic
strata
⢠Private labels are not a recessionary phenomenon
⢠Consumer loyalty shifts from manufacturers to
retailers
69. Marketing Debate
Does it matter where your
products/ services are Sold?
(Channel Image Vs. Brand Image)
1/3/2013 69
70. Wal-Mart has for the first time moved into the
number one position on Fortune magazineâs
âFortune 500â list, passing up such companies
as GM and Exxon. How has their target market
identification helped put them into this
position? What can
Wal-Martâs chief rivals,
K-Mart and Target, do
to try to close the gap?
18-70
71. Marketing Discussion
Think of your favourite retailers.
How have they integrated their channel system?
How would you like their channels to be
integrated?
Do you use multiple channels from they? Why?
1/3/2013 71
72. Why are Wholesalers Used?
Management Selling and
Services & Advice Promoting
Market Buying and
Information Wholesaler Assortment Building
Functions
Risk Bearing Bulk Breaking
Financing Warehousing
Transporting
1/3/2013 72
73. Wholesaling Functions
⢠Selling and promotingâsales ⢠Transportationâprovide quicker
delivery to buyers because they are
force help manufacturers
closer to the buyers
reach many small business
⢠Financingâgrant credit, and
customers at a relatively low
finance suppliers by ordering early
cost and paying bills on time
⢠Buying and assortment ⢠Risk bearingâabsorb some risk by
buildingâselect items and taking title and bearing cost of
build the assortment their theft, damage, spoilage, and
customers need obsolescence
⢠Bulk breakingâbuy large ⢠Market informationâsupply
carload lots and breaking the competitor activities, new products,
price developments, etc
bulk into smaller units
⢠Management services and
⢠Warehousingâhold counselingâtraining sales clerks,
inventories, and reduce helping with store layouts and
inventory costs and risks to displays, etc.
suppliers and customers
75. Manufacturerâs Sales Branches
ď§ Separate business that producers set up away
from their factories to handle wholesaling
functions.
ď§ Represent only about 4.3 percent of all
wholesalers
ď§ Handle 28.4 percent of total wholesale sales
â Sales high because they are placed in best
markets
ď§ True operating costs may be difficult to
determine
78. Major Wholesaler Types
Merchant
Full-service
Limited-service
Brokers and agents
Manufacturers
Specialized
78
79. Merchant Wholesalers
ď§ Take title to (own) the products they sell
ď§ About 88.3% of wholesalers are merchant
wholesalers
ď§ Handle about 61.2% of total wholesale sales
ď§ Two basic types:
â Full-service wholesalers
â Limited-function wholesalers
80. Full-Service Merchant Wholesalers
ď§ Provide all of the wholesaling functions
ď§ Three major types:
â General merchandise wholesalers
â Single-line (or general-line) wholesalers
â Specialty wholesalers
81. Some Limited-Function Merchant Wholesalers
ď§ Cash and carry wholesalersâoperates like
service customers except must pay cash
ď§ Drop-shippersâtake title to products they
sell but do not stock or deliver them
ď§ Truck wholesalersâtypically deliver
perishable items
ď§ Rack jobbersâusually display products on
their own racks
ď§ Catalog wholesalersâsell out of catalogs
82. Agent Middlemen Are Strong on Selling
Manufacturerâs
Brokers
Agents
Types of
Agent
Middlemen
Auction
Companies Selling Agents
83. Manufacturersâ Agents
ď§ Sell similar products for several
noncompeting producers
ď§ Work on a commission basis
ď§ Basically are independent, aggressive sales
reps
ď§ Especially helpful to small producers and
producers whose customers are very spread
out
84. Brokers
ď§ Main purpose is to bring buyers and sellers
together
ď§ Usually have a temporary relationship with
buyer and seller while the deal is negotiated
ď§ Earn a commissionâfrom either the buyer or
sellerâdepending on who hired them
ď§ Especially common with seasonal products
and products sold infrequently
85. Agent Middlemen
ď§ Wholesalers who do not own the products
they sell
ď§ Main purpose is to help with buying and
selling
ď§ Usually operate at relatively low cost
ď§ Usually provide fewer functions than
merchant wholesalers
ď§ Often specialize not only by product-type,
but also by customer type
86. Trends in Wholesaling
ď§ Fewer, but larger, wholesalers
ď§ Use of computers to control inventory, order
processing
ď§ Closer relationships with customers
ď§ More selective in picking customers
87. Market Logistics Planning
⢠Deciding on the companyâs value proposition
to its customers
⢠Deciding on the best channel design and
network strategy
⢠Developing operational excellence
⢠Implementing the solution
88. What are Integrated Logistics Systems?
An integrated logistics system (ILS)
includes materials management, material
flow systems, and physical
distribution, aided by information
technology.
89. Market Logistics
⢠Sales forecasting ⢠In-plant warehousing
⢠Distribution scheduling ⢠Shipping-room
⢠Production plans processing
⢠Finished-goods ⢠Outbound
inventory decisions transportation
⢠Packaging ⢠Field warehousing
⢠Customer delivery and
servicing
90. Logistics Systems
Costs Order Processing
Minimize Costs of Submitted
Attaining Logistics Processed
Objectives Shipped
Logistics
Functions
Transportation Warehousing
Water, Truck, Storage
Rail, Distribution
Pipeline & Air
Inventory
When to order
How much to order
Just-in-time
1/3/2013 90
91. Goals of the Logistics System
⢠Provide a Targeted Level of Customer Service at
the Least Cost.
⢠Maximize Profits, Not Sales.
Higher Distribution Costs/
Higher Customer Service Levels
Lower Distribution Costs/
Lower Customer Service Levels
1/3/2013 91
92. Market Logistics Decisions
⢠How should orders be
handled?
⢠Where should stock be
located?
⢠How much stock should
be held?
⢠How should goods be
shipped?
92
95. Transportation Modes
Rail Piggyback
Nationâs largest carrier, cost-effective
for shipping bulk products
Truck Fishyback
Flexible in routing & time schedules, efficient
for short-hauls of high value goods
Water Trainship
Low cost for shipping bulky, low-value
goods, slowest form
Pipeline
Ship petroleum, natural gas, and chemicals
from sources to markets
Air Airtruck
High cost, ideal when speed is needed or to
ship high-value, low-bulk items
1/3/2013 95
97. Market Logistics
â Organizational Lessons
⢠Companies should appoint a senior vice president
of logistics to be the single point of contact for all
logistical elements
⢠The senior vice president of logistics should hold
periodic meetings with sales and operations people
to review inventory, etc.
⢠New software and systems are the key to achieving
competitively superior logistics performance in the f
97
99. Marketing Discussion
Think of your favourite stores.
What do they do that encourages your loyalty?
What do you like about the in-store experience?
What further improvements could they make?
1/3/2013 99
100. Reference
⢠Kotler, Kelly, Koshy and Jha (2009) Marketing Management: A South
Asian Perspective, 14th ed. Pearson Prentice Hall, pp.400-53
Editor's Notes
Five flows are illustrated in Figure 15.1 for the marketing of forklift trucks. If these flows were superimposed in one diagram, we would see the tremendous complexity of even simple marketing channels.