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  1. Place
    • --Marketers know that place may be the only one of
    • the Four P’s to offer an opportunity for competitive advantage
    • --Large part of the marketer’s ability to deliver
    • the value proposition rests on his ability to understand and develop effective distribution strategies
    • --Logistics management: process of actually moving
    • goods through the supply chain
  2. Value Chain
    • useful way to appreciate all the players that typically work together to create value
    • Series of activities involved in the design, production, marketing, delivery, and support of any product or service
  3. Supply Chain
    includes all the activities necessary to turn raw materials into a good or service and put it into the hands of the consumer or business customer
  4. The Value Chain and Supply Chain Management
    • Company receives materials it needs to
    • manufacture its products
    • Operations: activities transform the materials into final product form
    • Outbound logistics: activities ship the product out to customers
    • Marketing and sales: handle advertising, promotion, channel selection, and pricing
    • Service: enhance or maintain the value of the preposition
    • Value chain: each of the activities adds value to the product the customer eventually buys
  5. Links in the Supply Chain
    • Supply chain Management: the coordination of flows among the firms in a supply chain to maximize total profitability
    • Sharing of information about the goods- synchronizing their activities with one another
    • Communicate information about the goods they want to purchase, marketing campaigns, and logistics
    • Insourcing: a practice in which a company contracts with a specialist firm to handle all or part of its supply chain operations
    • Supply chain is broader – firms that supply the raw materials, component parts, and supplies necessary for a firm to produce a good or service plus the firms (channel distribution) that facilitate the movement of that product from the producer to the final consumer.
  6. Distribution is Important Because…You Can’t Sell What Isn’t There!
    • Direct channel: At a minimum a channel distribution consists of a producer – the individual or the firm that manufactures or produces a good or a service – and a consumer.
    • Indirect channels: include one or more channel intermediaries- firms or individuals such as wholesalers, agents, brokers, and retailers who in some way help move the product to the consumer or business user
  7. Functions of Distribution Channels
    • Channels that include one or more organizations or intermediaries often can accomplish certain distribution functions more effectively and efficiently
    • Small companies can succeed in complex global markets when they rely on distributors that know local customs and laws
    • Distribution channels provide a number of logistics or physical distribution functions that increase the efficiency of the flow of goods from producer to come consumer
  8. Break Bulk
    wholesalers and retailers purchase large quantities of goods from manufacturers but divide them into smaller lots in order to meet the needs of buyers
  9. Create Assortments
    provide a variety of products in one location that customers can conveniently buy many different items from one seller at one time (reduce # of transactions)
  10. Facility Functions
    • functions of channel intermediaries that make the purchase process easier for customers and manufactures
    • Assist the manufacture when they provide setup, repair, and maintenance service for the products they handle
  11. Provide two-way communication for manufacturers
    May supply the sales force, advertising, and other types of marketing communication necessary to inform consumers and persuade them that product will meet their needs
  12. Types of Distributions
    • Marketing manager must select a channel structure that creates a competitive advantage for the firm and its products based on the size and needs of the target market
    • Channel levels: the number of distinct categories of intermediaries that populate a channel of distribution
  13. Consumer Channel
    • Direct Channel
    • Indirect Channels
    • Business to Business Channels
    • Dual or Multiple Distribution Systems
  14. Direct Channel
    • May allow the producer to serve its customers better and at a lower price than is possible if it included a retailer
    • Control- when producer handles distribution, it maintains control pricing, service, and delivery
    • Producer works directly with customers so it gains insights into trends, customer needs and complaints, and the effectiveness of its marketing strategies
  15. Indirect Channel
    • Customers are familiar with certain retailers or other intermediaries
    • Intermediaries help by creating utility and transaction efficiencies.
    • Buy in large volume, an obtain inventory at a low price and then pass these savings onto shoppers
  16. Business to Business Channels
    Industrial distribution: buys products from a manufacturer and sells them to business customers
  17. Dual or Multiple Distribution Sytems
    pharmaceutical industry
  18. Hybrid Marketing Systems
    • A hybrid marketing system that uses a number of different channels and communication methods to serve a target market
    • Enhanced dealer network for distribution offer companies certain competitive advantages, including
    • Increased coverage of the market
    • Lower marketing costs
    • Greater potential for customization of service for local markets
  19. Distribution Channels and the Marketing Mix
    • Different pricing objectives and strategies than will those that sell to specialty stores
    • Distribution decisions can sometimes give a product a distinct position in its market
    • The nature of the product itself influences the retailers and intermediaries that we use
  20. Plan of a Channel Strategy
    • Step 1: Develop Distribution Objectives
    • Step 2: Evaluate Internal and External Environmental Influences
    • Step 3: Choose a Distribution Strategy
    • Step 4: Develop Distribution Tactics
  21. Step 1: Develop Distribution Objectives
    • Develop objectives that support the organization’s overall marketing goals
    • Overall objective is to make a firm’s product available when, where, and in the quantities customers want at a minimum cost
    • Make their product available where similar products are sold so that consumers can compare prices
  22. Step 2: Evaluate Internal and External Environmental Influences
    • Short channel – often-direct channels may be better for b2b for whom customers are geographically concentrated and require high level of technical know-how
    • Short channels with selective distribution also make more sense with perishable products
    • Longer channels with more intensive distribution are generally best for inexpensive, standardized consumer goods that are distributed broadly; require little technical expertise
    • Study competitors’ distribution strategies, marketers learn from their successes and failures
  23. Step 3: Choose a Distribution Strategy
    • Decisions about the number of levels in the distribution channel
    • Channel relationships – conversational system or a highly integrated system will work best
    • Distribution intensity or the number of intermediaries at each level of the channel
    • ConventionalV
    • Vertical
    • Horizontal Marketing System
  24. Conventional Marketing System
    • a multilevel distribution channel in which members work independently of one another (highly successful).
    • Members of channel work toward the same goals – to build demand, reduce costs, and improve customer satisfaction
    • In everyone’s best interest to treat other channel members fairly
  25. Vertical marketing system (VMS)
    • Formal cooperation among channel members at two or more different levels
    • A way to meet customer needs better by reducing costs incurred in channel activities
    • Can provide a level of cooperation and efficiency - maximizing the effectiveness of the channel while also maximizing efficiency and keeping costs low
    • Horizontal marketing system: two or more firms at the same channel level agree to work together to get their product to the customer
  26. Intensive, Exclusive, or Selective Distribution?
    Intensive Distribution
    Intensive distribution: aims to maximize market coverage by selling a product though a wholesalers or retailers that will stock and sell the product (availability is more important)
  27. Exclusive Distribution
    • Products that are high priced and have considerable service requirements, and when a limited number of buyers exist in any single geographic area
    • Enable to better recoup the costs associated with long selling processes
  28. Selective Distribution
    • Distribution using fewer outlets than intensive distribution but more than exclusive distribution
    • When demand is so large that exclusive distribution is inadequate, but selling costs, service requirements or other factors make exclusive distribution a poor fit
    • Shopping products such as household appliances
    • Freedom to choose only those wholesalers and retailers that have a good credit rating, provide good market coverage, serve customers well, and cooperate effectively
    • Results in higher profits
  29. Step 4: Develop Distribution Tactics
    • Select Channel Partners
    • Manage Channel
  30. Select Channel Partners
    • Firms agree to work together in a channel relationship; they become partners in what is normally a long term commitment
    • Consider competitors’ channel partners and display products near similar competitors’ product
    • Social responsibility may also be an important to determine selection of channel
  31. Manage the Channel
    • Channel leader: a firm at one level of distribution that takes a leadership role, establishing operating norms and processes based on its power relative to other channel members
    • A firm has economic power when it has the ability to control resources
    • A firm such as a franchiser has legitimate power if it has legal authority to call the shots
    • A producer firm has reward or coercive power if it engages in exclusive distribution and has the ability to give profitable products
    • Big retailers to dictate their needs to producers instead of producers controlling what producer is available to retailers
  32. Logistics Transportation
    • Transportation: the mode by which
    • products move among channel members
    • Decisions entail a compromise between minimizing
    • cost and providing the service customers want
    • read pg 516
Card Set:
2011-11-19 06:38:02
Chapter 15 Deliver Value Through Supply Chain Management Channels Distribution Logistics

Chap 15
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