Marketing An Introduction Marketing Channels and Supply Chain

Marketing: An Introduction Marketing Channels and Supply Chain Management • Chapter Eleven • Lecture Slides –Express Version • Course • Professor • Date ©Copyright 2004, Pearson Education Canada Inc.

Marketing: An Introduction Looking Ahead • After studying this chapter you should be able to: • Explain why companies use distribution channels and discuss the functions these channels perform • Discuss how channel members interact and how they organize to perform the work of the channel • Identify the major channel alternatives open to a company • Explain how companies select, motivate, and evaluate channel members • Discuss the nature and importance of marketing logistics and integrated supply chain management 2 ©Copyright 2004, Pearson Education Canada Inc.

Marketing: An Introduction The Concept of Contactual Efficiency Mfg Mfg Cus Cus W/S Dist Cus 3 Cus Cus ©Copyright 2004, Pearson Education Canada Inc. Figure 11 -1

Marketing: An Introduction Distribution Channel Functions • Why use marketing intermediaries? – Contacts, experience, specialization, and scale of operations • Objective: – Provide place, time, and possession utility demanded by customers • Functions performed: – – – – 4 Information Promotion Contact Matching Negotiation Physical distribution Financing Risk taking ©Copyright 2004, Pearson Education Canada Inc.

Marketing: An Introduction Consumer Marketing Channels Consumer Manufacturer Wholesaler 5 Jobber Retailer Consumer ©Copyright 2004, Pearson Education Canada Inc. Figure 11 -2

Marketing: An Introduction Business Marketing Channels Industrial Consumer Manufacturer Industrial distributor Manufacturer Mfg Sales Representative Or Sales Branch 6 Industrial Consumer Industrial distributor ©Copyright 2004, Pearson Education Canada Inc. Industrial Consumer Figure 11 -2

Marketing: An Introduction Channel Behaviour • Channel conflict: – Disagreement between channel members over goals and roles, who should do what and for what rewards • Horizontal conflict: – Conflict between firms on the same level • Vertical conflict: – Conflict between firms on different levels • Disintermediation: – Displacement of a traditional member from the marketing channel – Selling direct via the Internet 7 ©Copyright 2004, Pearson Education Canada Inc.

Marketing: An Introduction Types of Marketing Systems • Conventional distribution channel: – Channel members are independently owned – Pursue their own corporate objectives – Conflict may occur when goals differ • Vertical marketing system: – – Channel members act as a unified system May have common ownership May contract for this arrangement May be forced into arrangement by power differential between members – Franchise systems are the most popular • Horizontal marketing systems – Two or more companies on the same level join together for mutual gain – Airline alliances 8 ©Copyright 2004, Pearson Education Canada Inc.

Marketing: An Introduction Hybrid Marketing Channel Producer Sales force Business segment 1 9 Catalogue telephone Internet Distributors Dealers Retailers Business segment 2 Consumer segment 2 ©Copyright 2004, Pearson Education Canada Inc. Consumer segment 1 Figure 11 -4

Marketing: An Introduction Channel Design Decisions • Analyzing consumer service needs • Setting channel objectives and constraints • Identifying major alternatives – Types of intermediaries • Company sales force • Manufacturer’s agency • Industrial distributors – Number of intermediaries • Intensive distribution • Selective distribution • Exclusive distribution – Responsibilities of channel members • Evaluating the major alternatives • International distribution channels 10 ©Copyright 2004, Pearson Education Canada Inc.

Marketing: An Introduction Channel Management Decisions • Selection – Select those who best fit the channel objectives – Degree of selectivity will vary with intensity used • Motivation – Maintain strong partnerships – Reward those intermediaries who perform well – Assist or replace weaker ones • Evaluating – Compare member performance against standards – Use market share, performance against objectives, or qualitative measurements 11 2004 Pearson Education Canada Inc.

Marketing: An Introduction Marketing Logistics • Marketing logistics – – • Supply chain management – • Managing value-added flows between suppliers, the company, resellers, and final users Goal of logistics: – 12 Physical distribution of the products Logistics is a cost of doing business, not a revenue generator Logistics has a direct impact on customer satisfaction Marketing logistics addresses outbound distribution and inbound Provide targeted level of customer service for the least cost 2004 Pearson Education Canada Inc.

Marketing: An Introduction Major Logistics Functions • • Order processing Warehousing Inventory management Transportation • Integrated supply chain management – – – 13 Cross-functional teamwork within the company Building channel partnerships Third-party logistics (3 PL) providers 2004 Pearson Education Canada Inc.

Marketing: An Introduction Looking Back • Why companies use intermediaries • How channel members interact • Major channel alternatives • Selecting, motivating, and evaluating channel members • Nature and importance of logistics 14 ©Copyright 2004, Pearson Education Canada Inc.