Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Chapter 18 marketing channels and physical distribution marketing management


Published on

Published in: Business, News & Politics
  • Login to see the comments

Chapter 18 marketing channels and physical distribution marketing management

  1. 1. Marketing Management Text and Cases Marketing Channels and Physical Distribution 18 Chapter Marketing Channels and Physical Distribution 18-118-1 Dr S.l Gupta
  2. 2. Marketing Channels and Physical Distribution“A marketing channel is a system of relationships existing among businessesthat participate in the process of buying and selling products and services.”18-2 Dr S.l Gupta
  3. 3. Marketing Channels and Physical DistributionChannel Functions Channel Members Create Utility Channel Members Facilitate Exchange Efficiencies Channel Members May Reduce Discrepancies and Separations Other Functions18-3 Dr S.l Gupta
  4. 4. Marketing Channels and Physical DistributionTypes of ChannelsConsumer Product Channels zero-level channel One-level channel Two-level channel Three-level channel strategic channel alliance18-4 Dr S.l Gupta
  5. 5. Marketing Channels and Physical DistributionMarketingChannels for Manufacturer Manufacturer Manufacturer ManufacturerConsumerProducts Agents Wholesalers Wholesalers Retailers Retailers Retailers Consumers Consumers Consumers Consumers A B C D18-5 Dr S.l Gupta
  6. 6. Marketing Channels and Physical DistributionIndustrial Product ChannelsMarketing Manufacturer Manufacturer Manufacturer ManufacturerChannels forIndustrialProducts Agent Agent Industrial Industrial Distributors Distributors Industrial Industrial Industrial Industrial Buyers Buyers Buyers Buyers P Q R S18-6 Dr S.l Gupta
  7. 7. Marketing Channels and Physical DistributionFactors Affecting Selection of MarketingChannel SystemThis includes product, company, customer, competition factors, PLC stages,objectives, and desired market coverage intensity and control etc.18-7 Dr S.l Gupta
  8. 8. Marketing Channels and Physical DistributionChannel ObjectivesA company’s channel objectives aim at what the company seeks toaccomplish through marketing channels.Some general objectives can be: Convenience to customers. Effective target market coverage. Cost-effective distribution.18-8 Dr S.l Gupta
  9. 9. Marketing Channels and Physical DistributionSome major factors that affect objectives are discussed below: End Customer Product Characteristics Company Factors Competition Product Life Cycle Stages18-9 Dr S.l Gupta
  10. 10. Marketing Channels and Physical DistributionIntensity of Market CoverageA company must determine the distribution coverage intensity a product shouldget, what number and kinds of channel in which the product will be sold. Threemajor coverage strategies include intensive, selective, and exclusive distribution.Intensive Distribution: A company uses all available distribution outlets formaking its product available to consumers.Selective Distribution: Companies use selective distribution, which meansusing more than a few and less than all available outlets in a market area todistribute products.Exclusive Distribution: This type of distribution means using one or very limitedfew outlets.18-10 Dr S.l Gupta
  11. 11. Marketing Channels and Physical DistributionChannel Terms and ConditionsThe producer stipulates terms and condition and responsibilities of channelpartners to develop better mutual understanding and usually include pricepolicy and trade margins, payment terms, and territorial demarcation,guarantee and returns policy, and mutual responsibilities etc.18-11 Dr S.l Gupta
  12. 12. Marketing Channels and Physical DistributionEvaluation of Channel AlternativesIn making a decision about channel alternatives, producers’ evaluationcriteria is generally based on some combination of the following factors: Product characteristics. Buyer behaviour and location. Severity of competition. Cost effectiveness and channel efficiency. Degree of desired control on intermediaries. Adaptability to dynamic market conditions.18-12 Dr S.l Gupta
  13. 13. Marketing Channels and Physical DistributionChannel Selection and TrainingAfter determining the most appropriate channel alternative, the producerselects the most qualified parties and arranges for their training.18-13 Dr S.l Gupta
  14. 14. Marketing Channels and Physical DistributionPerformance Evaluation of IntermediariesProducers must periodically evaluate performance of dealers against laiddown and agreed upon parameters. The evaluation criteria differ acrossindustries and from one company to another in the same industry.18-14 Dr S.l Gupta
  15. 15. Marketing Channels and Physical DistributionChannel ModificationEvaluation of channel system in place may sometimes make it necessaryfor the firm to modify it as a result of changes in buyer behaviour, marketconditions, availability of new and more effective and suitable alternatives,and later PLC stages.18-15 Dr S.l Gupta
  16. 16. Marketing Channels and Physical DistributionVertical, Horizontal, and MultichannelMarketing SystemsWith the passage of time and changes in business environment and strategies,marketing channel systems evolve and new wholesaling and retailinginstitutions appear.18-16 Dr S.l Gupta
  17. 17. Marketing Channels and Physical DistributionVertical Marketing System (VMS)Vertical marketing system refers to an arrangement in which the wholechannel focuses on the same target market at the end of the channel.There are three types of VMS – corporate administered, and contractual.18-17 Dr S.l Gupta
  18. 18. Marketing Channels and Physical DistributionHorizontal Marketing SystemsHorizontal marketing system occurs when two or more related or unrelatedcompanies working at the same level come together to exploit marketingopportunities.18-18 Dr S.l Gupta
  19. 19. Marketing Channels and Physical DistributionMultichannel Marketing SystemSome companies use several marketing channels simultaneously to reachdiverse target markets. This system is also called hybrid channels ormultichannel.18-19 Dr S.l Gupta
  20. 20. Marketing Channels and Physical DistributionChannel Conflicts and Cooperation“Channel conflict is a situation in which one channel member perceives anotherchannel member(s) to be engaged in behaviour that prevents or impedes it fromachieving its goals. The amount of conflict is, to a large extent, a function of goalincompatibility, domain descensus, and differing perceptions of reality.”18-20 Dr S.l Gupta
  21. 21. Marketing Channels and Physical DistributionTypes of ConflictIn any distribution channel arrangement there can possibly developthree kinds of conflicts: Vertical channel conflict Horizontal channel conflict Multichannel conflict18-21 Dr S.l Gupta
  22. 22. Marketing Channels and Physical DistributionCauses of ConflictMajor causes of conflict include: Goal incompatibility, Roles and rights ambiguity, and Differing perceptions.18-22 Dr S.l Gupta
  23. 23. Marketing Channels and Physical DistributionIntensity of ConflictThis refers to how serious is the conflict.18-23 Dr S.l Gupta
  24. 24. Marketing Channels and Physical DistributionManaging the Channel ConflictSeveral approaches for effective conflict management: Regular Communication Forming Dealer Councils Co-option Arbitration and Mediation18-24 Dr S.l Gupta
  25. 25. Marketing Channels and Physical DistributionPhysical DistributionThe term physical distribution is more appropriate to outgoing (outboundlogistics) or forward movement of products, services, and information from afirm’s manufacturing facility to customers, and involves defined network oftransportation links, warehousing and storage, and finally delivery at thedestination in a cost effective manner within the desired time.18-25 Dr S.l Gupta
  26. 26. Marketing Channels and Physical DistributionOrder ProcessingThe receipt of order and transmission of sales order information is animportant function of physical distribution.18-26 Dr S.l Gupta
  27. 27. Marketing Channels and Physical DistributionManaging InventoryInventory managing involves building and maintaining enough productassortments to meet the customer demand.Following formula can be used to calculate when to reorder:Reorder Point = (Order Lead Time × Usage Rate) + Buffer Stock18-27 Dr S.l Gupta
  28. 28. Marketing Channels and Physical DistributionWarehousingWarehousing is an important physical distribution function and refers to thedesign and operation of facilities for storing and moving goods.Some basic physical distribution functions of warehouses are given below: Receiving goods and assuming responsibility. Recording quantity of each item and marking with codes, tags, or physical property etc. Sorting goods to store in an appropriate area. Dispatching goods for storage. Holding products in properly protected condition until needed. Recalling and picking products ordered by customers from storage. Collecting for a single shipment, checking for completeness or explaining omissions.18-28 Dr S.l Gupta
  29. 29. Marketing Channels and Physical DistributionTransportationThere are five main transportation modes for moving goods that include: Railways, Roadways, Waterways, Airways, and Pipelines.18-29 Dr S.l Gupta
  30. 30. Marketing Channels and Physical DistributionTypical Meansof TransportingVariousProductsRailways Roadways Waterways Airways PipelinesCoal Paper goods Petroleum Overnight mail OilLumber Clothing Iron ore Flowers Natural gasChemicals Computers Chemicals Emergency ChemicalsAutos Livestock Grain parts ProcessedSteel Cement Bauxite Instruments coalGrain Scooters Perishable food Water18-30 Dr S.l Gupta