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Marketing Management Text and Cases
                          Marketing Channels and Physical Distribution




      18   ...
Marketing Channels and Physical Distribution




“A marketing channel is a system of relationships existing among business...
Marketing Channels and Physical Distribution




Channel Functions
      Channel Members Create Utility
      Channel Me...
Marketing Channels and Physical Distribution




Types of Channels
Consumer Product Channels
      zero-level channel
  ...
Marketing Channels and Physical Distribution




Marketing
Channels for           Manufacturer   Manufacturer   Manufactur...
Marketing Channels and Physical Distribution




Industrial Product Channels
Marketing             Manufacturer    Manufac...
Marketing Channels and Physical Distribution




Factors Affecting Selection of Marketing
Channel System
This includes pro...
Marketing Channels and Physical Distribution




Channel Objectives
A company’s channel objectives aim at what the company...
Marketing Channels and Physical Distribution




Some major factors that affect objectives are discussed below:
      End...
Marketing Channels and Physical Distribution




Intensity of Market Coverage
A company must determine the distribution co...
Marketing Channels and Physical Distribution




Channel Terms and Conditions
The producer stipulates terms and condition ...
Marketing Channels and Physical Distribution




Evaluation of Channel Alternatives
In making a decision about channel alt...
Marketing Channels and Physical Distribution




Channel Selection and Training
After determining the most appropriate cha...
Marketing Channels and Physical Distribution




Performance Evaluation of Intermediaries
Producers must periodically eval...
Marketing Channels and Physical Distribution




Channel Modification
Evaluation of channel system in place may sometimes ...
Marketing Channels and Physical Distribution




Vertical, Horizontal, and Multichannel
Marketing Systems
With the passage...
Marketing Channels and Physical Distribution




Vertical Marketing System (VMS)
Vertical marketing system refers to an ar...
Marketing Channels and Physical Distribution




Horizontal Marketing Systems
Horizontal marketing system occurs when two ...
Marketing Channels and Physical Distribution




Multichannel Marketing System
Some companies use several marketing channe...
Marketing Channels and Physical Distribution




Channel Conflicts and Cooperation
“Channel conflict is a situation in whi...
Marketing Channels and Physical Distribution




Types of Conflict
In any distribution channel arrangement there can possi...
Marketing Channels and Physical Distribution




Causes of Conflict
Major causes of conflict include:
   Goal incompatibi...
Marketing Channels and Physical Distribution




Intensity of Conflict
This refers to how serious is the conflict.




18-...
Marketing Channels and Physical Distribution




Managing the Channel Conflict
Several approaches for effective conflict m...
Marketing Channels and Physical Distribution




Physical Distribution
The term physical distribution is more appropriate ...
Marketing Channels and Physical Distribution




Order Processing
The receipt of order and transmission of sales order inf...
Marketing Channels and Physical Distribution




Managing Inventory
Inventory managing involves building and maintaining e...
Marketing Channels and Physical Distribution




Warehousing
Warehousing is an important physical distribution function an...
Marketing Channels and Physical Distribution




Transportation
There are five main transportation modes for moving goods ...
Marketing Channels and Physical Distribution




Typical Means
of Transporting
Various
Products


Railways          Roadwa...
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Chapter 18 marketing channels and physical distribution marketing management Slide 1 Chapter 18 marketing channels and physical distribution marketing management Slide 2 Chapter 18 marketing channels and physical distribution marketing management Slide 3 Chapter 18 marketing channels and physical distribution marketing management Slide 4 Chapter 18 marketing channels and physical distribution marketing management Slide 5 Chapter 18 marketing channels and physical distribution marketing management Slide 6 Chapter 18 marketing channels and physical distribution marketing management Slide 7 Chapter 18 marketing channels and physical distribution marketing management Slide 8 Chapter 18 marketing channels and physical distribution marketing management Slide 9 Chapter 18 marketing channels and physical distribution marketing management Slide 10 Chapter 18 marketing channels and physical distribution marketing management Slide 11 Chapter 18 marketing channels and physical distribution marketing management Slide 12 Chapter 18 marketing channels and physical distribution marketing management Slide 13 Chapter 18 marketing channels and physical distribution marketing management Slide 14 Chapter 18 marketing channels and physical distribution marketing management Slide 15 Chapter 18 marketing channels and physical distribution marketing management Slide 16 Chapter 18 marketing channels and physical distribution marketing management Slide 17 Chapter 18 marketing channels and physical distribution marketing management Slide 18 Chapter 18 marketing channels and physical distribution marketing management Slide 19 Chapter 18 marketing channels and physical distribution marketing management Slide 20 Chapter 18 marketing channels and physical distribution marketing management Slide 21 Chapter 18 marketing channels and physical distribution marketing management Slide 22 Chapter 18 marketing channels and physical distribution marketing management Slide 23 Chapter 18 marketing channels and physical distribution marketing management Slide 24 Chapter 18 marketing channels and physical distribution marketing management Slide 25 Chapter 18 marketing channels and physical distribution marketing management Slide 26 Chapter 18 marketing channels and physical distribution marketing management Slide 27 Chapter 18 marketing channels and physical distribution marketing management Slide 28 Chapter 18 marketing channels and physical distribution marketing management Slide 29 Chapter 18 marketing channels and physical distribution marketing management Slide 30
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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 18-1 18-1 Dr S.l Gupta
  2. 2. Marketing Channels and Physical Distribution “A marketing channel is a system of relationships existing among businesses that participate in the process of buying and selling products and services.” 18-2 Dr S.l Gupta
  3. 3. Marketing Channels and Physical Distribution Channel Functions  Channel Members Create Utility  Channel Members Facilitate Exchange Efficiencies  Channel Members May Reduce Discrepancies and Separations  Other Functions 18-3 Dr S.l Gupta
  4. 4. Marketing Channels and Physical Distribution Types of Channels Consumer Product Channels  zero-level channel  One-level channel  Two-level channel  Three-level channel  strategic channel alliance 18-4 Dr S.l Gupta
  5. 5. Marketing Channels and Physical Distribution Marketing Channels for Manufacturer Manufacturer Manufacturer Manufacturer Consumer Products Agents Wholesalers Wholesalers Retailers Retailers Retailers Consumers Consumers Consumers Consumers A B C D 18-5 Dr S.l Gupta
  6. 6. Marketing Channels and Physical Distribution Industrial Product Channels Marketing Manufacturer Manufacturer Manufacturer Manufacturer Channels for Industrial Products Agent Agent Industrial Industrial Distributors Distributors Industrial Industrial Industrial Industrial Buyers Buyers Buyers Buyers P Q R S 18-6 Dr S.l Gupta
  7. 7. Marketing Channels and Physical Distribution Factors Affecting Selection of Marketing Channel System This 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 Distribution Channel Objectives A company’s channel objectives aim at what the company seeks to accomplish 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 Distribution Some major factors that affect objectives are discussed below:  End Customer  Product Characteristics  Company Factors  Competition  Product Life Cycle Stages 18-9 Dr S.l Gupta
  10. 10. Marketing Channels and Physical Distribution Intensity of Market Coverage A company must determine the distribution coverage intensity a product should get, what number and kinds of channel in which the product will be sold. Three major coverage strategies include intensive, selective, and exclusive distribution. Intensive Distribution: A company uses all available distribution outlets for making its product available to consumers. Selective Distribution: Companies use selective distribution, which means using more than a few and less than all available outlets in a market area to distribute products. Exclusive Distribution: This type of distribution means using one or very limited few outlets. 18-10 Dr S.l Gupta
  11. 11. Marketing Channels and Physical Distribution Channel Terms and Conditions The producer stipulates terms and condition and responsibilities of channel partners to develop better mutual understanding and usually include price policy 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 Distribution Evaluation of Channel Alternatives In making a decision about channel alternatives, producers’ evaluation criteria 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 Distribution Channel Selection and Training After determining the most appropriate channel alternative, the producer selects the most qualified parties and arranges for their training. 18-13 Dr S.l Gupta
  14. 14. Marketing Channels and Physical Distribution Performance Evaluation of Intermediaries Producers must periodically evaluate performance of dealers against laid down and agreed upon parameters. The evaluation criteria differ across industries and from one company to another in the same industry. 18-14 Dr S.l Gupta
  15. 15. Marketing Channels and Physical Distribution Channel Modification Evaluation of channel system in place may sometimes make it necessary for the firm to modify it as a result of changes in buyer behaviour, market conditions, 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 Distribution Vertical, Horizontal, and Multichannel Marketing Systems With the passage of time and changes in business environment and strategies, marketing channel systems evolve and new wholesaling and retailing institutions appear. 18-16 Dr S.l Gupta
  17. 17. Marketing Channels and Physical Distribution Vertical Marketing System (VMS) Vertical marketing system refers to an arrangement in which the whole channel 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 Distribution Horizontal Marketing Systems Horizontal marketing system occurs when two or more related or unrelated companies working at the same level come together to exploit marketing opportunities. 18-18 Dr S.l Gupta
  19. 19. Marketing Channels and Physical Distribution Multichannel Marketing System Some companies use several marketing channels simultaneously to reach diverse target markets. This system is also called hybrid channels or multichannel. 18-19 Dr S.l Gupta
  20. 20. Marketing Channels and Physical Distribution Channel Conflicts and Cooperation “Channel conflict is a situation in which one channel member perceives another channel member(s) to be engaged in behaviour that prevents or impedes it from achieving its goals. The amount of conflict is, to a large extent, a function of goal incompatibility, domain descensus, and differing perceptions of reality.” 18-20 Dr S.l Gupta
  21. 21. Marketing Channels and Physical Distribution Types of Conflict In any distribution channel arrangement there can possibly develop three kinds of conflicts:  Vertical channel conflict  Horizontal channel conflict  Multichannel conflict 18-21 Dr S.l Gupta
  22. 22. Marketing Channels and Physical Distribution Causes of Conflict Major 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 Distribution Intensity of Conflict This refers to how serious is the conflict. 18-23 Dr S.l Gupta
  24. 24. Marketing Channels and Physical Distribution Managing the Channel Conflict Several approaches for effective conflict management:  Regular Communication  Forming Dealer Councils  Co-option  Arbitration and Mediation 18-24 Dr S.l Gupta
  25. 25. Marketing Channels and Physical Distribution Physical Distribution The term physical distribution is more appropriate to outgoing (outbound logistics) or forward movement of products, services, and information from a firm’s manufacturing facility to customers, and involves defined network of transportation links, warehousing and storage, and finally delivery at the destination in a cost effective manner within the desired time. 18-25 Dr S.l Gupta
  26. 26. Marketing Channels and Physical Distribution Order Processing The receipt of order and transmission of sales order information is an important function of physical distribution. 18-26 Dr S.l Gupta
  27. 27. Marketing Channels and Physical Distribution Managing Inventory Inventory managing involves building and maintaining enough product assortments to meet the customer demand. Following formula can be used to calculate when to reorder: Reorder Point = (Order Lead Time × Usage Rate) + Buffer Stock 18-27 Dr S.l Gupta
  28. 28. Marketing Channels and Physical Distribution Warehousing Warehousing is an important physical distribution function and refers to the design 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 Distribution Transportation There 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 Distribution Typical Means of Transporting Various Products Railways Roadways Waterways Airways Pipelines Coal Paper goods Petroleum Overnight mail Oil Lumber Clothing Iron ore Flowers Natural gas Chemicals Computers Chemicals Emergency Chemicals Autos Livestock Grain parts Processed Steel Cement Bauxite Instruments coal Grain Scooters Perishable food Water 18-30 Dr S.l Gupta
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