Chapter 10 Ver 2e1 Chapter 10 ©2000 South-Western College Publishing Marketing Channels and...

Chapter 10 Ver 2e 1

Chapter 10Chapter 10

©2000 South-Western College Publishing

Marketing Channels and Logistics Marketing Channels and Logistics DecisionsDecisions

Prepared byPrepared byDeborah BakerDeborah BakerTexas Christian UniversityTexas Christian University

Chapter 10 Ver 2e 2

Chapter 10 ObjectivesChapter 10 Objectives

1. Explain what a marketing channel is and why intermediaries are needed.

2. Define the types of channel intermediaries and describe their functions and activities.

3. Describe channel structures for consumer and business-to-business products and discuss alternative channel arrangements.

(continued)©2000 South-Western College Publishing

Chapter 10 Ver 2e 3


4. Discuss the issues that influence channel strategy.

5. Explain channel leadership, conflict, and partnering.

6. Discuss logistics and supply chain management and their evolution into distribution practice.

(continued)


Chapter 10 Ver 2e 4


7. Discuss the concept of balancing logistics service and cost.

8. Describe the integrated functions of the supply chain.

9. Discuss new technology and emerging trends in logistics.

(continued)©2000 South-Western College Publishing

Chapter 10 Ver 2e 5


10. Identify the special problems and opportunities associated with distribution in service organizations.

11. Discuss channel structure and logistics issues in global markets.


Chapter 10 Ver 2e 6

Marketing ChannelsMarketing Channels


Specialization andDivision of Labor

Specialization andDivision of Labor

ChannelsFulfillThree

ImportantFunctions

ChannelsFulfillThree

ImportantFunctions

OvercomingDiscrepanciesOvercoming

Discrepancies

Providing ContactEfficiency

Providing ContactEfficiency

Chapter 10 Ver 2e 7

Providing Contact EfficiencyProviding Contact Efficiency


ZenithZenith SonySony RCARCA ToshibaToshiba

ZenithZenith SonySony RCARCA ToshibaToshiba

Circuit CityCircuit CityCircuit CityCircuit City

Chapter 10 Ver 2e 8

RetailersRetailersRetailersRetailers

Merchant Merchant WholesalersWholesalersMerchant Merchant

WholesalersWholesalers


Types of Channel IntermediariesTypes of Channel Intermediaries

Agents Agents andand

BrokersBrokers

Agents Agents andand

BrokersBrokers

Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods

Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods

Do NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to Goods

Chapter 10 Ver 2e 9

Factors Suggesting Intermediary to UseFactors Suggesting Intermediary to Use

FactorFactorFactorFactor

Nature of ProductNature of Product

TechnicalityTechnicality

Gross MarginGross Margin

Ordering FrequencyOrdering Frequency

Order to Receipt TimeOrder to Receipt Time

Number of CustomersNumber of Customers

CustomersCustomers

Merchant Merchant WholesalersWholesalersMerchant Merchant

WholesalersWholesalers

StandardStandard

ComplexComplex

HighHigh

FrequentFrequent

Want shorter lead timeWant shorter lead time

ManyMany

DispersedDispersed

Agents/BrokersAgents/BrokersAgents/BrokersAgents/Brokers

Nonstandard, CustomNonstandard, Custom

SimpleSimple

LowLow

InfrequentInfrequent

Long lead time okayLong lead time okay

FewFew

ConcentratedConcentrated


Chapter 10 Ver 2e 10©2000 South-Western College Publishing

Channel Functions by IntermediariesChannel Functions by Intermediaries

Contacting/Promotion

Negotiating

Risk Taking

FacilitatingFunction

FacilitatingFunction

TransactionalFunctions

TransactionalFunctions

Logistical Functions

Logistical Functions

Researching

Financing

Physically distributing

Storing

Sorting

Chapter 10 Ver 2e 11

Channels for Consumer ProductsChannels for Consumer Products


Producer Producer Producer Producer

Consumers Consumers Consumers Consumers

Retailers Retailers Retailers

Wholesalers Wholesalers

Agents orBrokers

WholesalerWholesalerChannelChannel

RetailerRetailerChannelChannel

DirectDirectChannelChannel

Agent/BrokerAgent/BrokerChannelChannel


Channels for Business ProductsChannels for Business Products


Producer Producer Producer Producer

IndustrialUser

IndustrialUser

IndustrialUser

IndustrialUser

IndustrialDistributor

IndustrialDistributor

Agents orBrokers

Agents orBrokers

Agent/BrokerAgent/BrokerChannelChannel

IndustrialIndustrialDistributorDistributor


Producer

GovernmentBuyer


Agent/BrokerAgent/BrokerIndustrialIndustrialChannelChannel


DifferentDifferentChannelsChannels

May be Used May be Used

Multiple Channels


Alternative Channel ArrangementsAlternative Channel Arrangements

NontraditionalChannels

Adaptive Channels

Strategic ChannelAlliances


Channel Strategy DecisionsChannel Strategy Decisions

Issues that InfluenceChannel Strategy

Issues that InfluenceChannel Strategy

Producer FactorsProducer Factors

Product FactorsProduct Factors

Market FactorsMarket Factors

Factors Factors Affecting Affecting Channel Channel ChoiceChoice

Factors Factors Affecting Affecting Channel Channel ChoiceChoice

Exclusive DistributionExclusive Distribution

Selective DistributionSelective Distribution

Intensive DistributionIntensive Distribution

Levels ofLevels ofDistributionDistribution

IntensityIntensity

Levels ofLevels ofDistributionDistribution

IntensityIntensity


Market FactorsMarket FactorsThat Affect That Affect

ChannelChannelChoicesChoices

Market FactorsMarket FactorsThat Affect That Affect


Customer ProfilesCustomer Profiles

Geographic LocationGeographic Location

Size of MarketSize of Market

CompetitionCompetition

Market FactorsMarket Factors



Product FactorsProduct FactorsThat Affect That Affect


Product FactorsProduct FactorsThat Affect That Affect


Product Complexity Product Complexity

Product PriceProduct Price

Product Life CycleProduct Life Cycle

Product DelicacyProduct Delicacy

Product FactorsProduct Factors



Producer FactorsProducer FactorsThat Affect That Affect


Producer FactorsProducer FactorsThat Affect That Affect


Producer Resources Producer Resources

Number of Product LinesNumber of Product Lines

Desire for Channel ControlDesire for Channel Control

Producer FactorsProducer Factors



Levels of Distribution IntensityLevels of Distribution Intensity

Intensity LevelIntensity LevelIntensity LevelIntensity Level ObjectiveObjectiveObjectiveObjective Number of Number of IntermediariesIntermediaries

Number of Number of IntermediariesIntermediaries

IntensiveIntensive

SelectiveSelective

ExclusiveExclusive

• Achieve mass marketselling. • Convenience goods.

• Achieve mass marketselling. • Convenience goods.

• Work with selected • intermediaries. • Shopping and some • specialty goods.

• Work with selected • intermediaries. • Shopping and some • specialty goods.

• Work with singleintermediary.

• Specialty goods and industrial equipment.

• Work with singleintermediary.

• Specialty goods and industrial equipment.

ManyMany

SeveralSeveral

OneOne


Chapter 10 Ver 2e 19©2000 South-Western College PublishingChannel PartneringChannel Partnering

Channel ConflictChannel Conflict

Channel LeadershipChannel Leadership

Channel ControlChannel Control

Channel PowerChannel Power

RelationshipsPlay a Rolein Building

Unity AmongChannelMembers

RelationshipsPlay a Rolein Building

Unity AmongChannelMembers

Channel RelationshipsChannel Relationships


The Supply ChainThe Supply Chain


SuppliersSuppliersSuppliersSuppliers ManufacturingManufacturingFacilityFacility

ManufacturingManufacturingFacilityFacility

Sto

rag

eS

tora

ge

Sto

rag

eS

tora

ge

CompanyCompanyHQHQ

CompanyCompanyHQHQ WarehouseWarehouseWarehouseWarehouse

WholesalersWholesalers& Retailers& Retailers

WholesalersWholesalers& Retailers& Retailers

ConsumerConsumerConsumerConsumer


Supply Chain Management ActivitiesSupply Chain Management Activities Movement of information through supply chain

Movement and storage of raw materials to production site

Movement of raw materials, semimanufactured products, and finished products among plants, warehouses, and distribution centers

Production planning based on customer demand

Planning physical distribution of FG to channel and buyers

Strategic partnerships with supply chain members


Common BenefitsCommon Benefitsof Supply Chainof Supply Chain

ManagementManagement

Common BenefitsCommon Benefitsof Supply Chainof Supply Chain

ManagementManagement

Reduced Costs Reduced Costs

Improved ServiceImproved Service

Enhanced RevenuesEnhanced Revenues

Benefits of Supply Chain ManagementBenefits of Supply Chain Management



Integrated Functions of the Supply ChainIntegrated Functions of the Supply Chain

Sourcing & ProcurementSourcing & Procurement

Production SchedulingProduction Scheduling

Order Processing & Customer ServiceOrder Processing & Customer Service

Inventory Control SystemsInventory Control Systems

SupplySupplyChainChainTeamTeam

SupplySupplyChainChainTeamTeam

Warehouse & Materials ManagementWarehouse & Materials Management

TransportationTransportation

Lo

gis

tics

Info

rma

tio

n S

yste

mL

og

isti

cs In

form

ati

on

Sys

tem


TransportationTransportation


CostCost

Transit TimeTransit Time

ReliabilityReliability

CapabilityCapability

AccessibilityAccessibility

TraceabilityTraceability

Criteria for Choosing

Transportation

Criteria for Choosing

Transportation


Ranking Modes of TransportationRanking Modes of Transportation


Relative Cost

TransitTime

Reliability

Capability

Accessibility

Traceability

HighestHighest LowestLowest

Air WaterPipeRailTruck

Water Rail Pipe Truck Air

Pipe Truck Rail Air Water

Water

Truck

Rail Truck Air Pipe

Rail Air Water Pipe

Air Truck Rail Water Pipe


Electronic DistributionElectronic Distribution

Outsourcing ofLogistics Functions

Outsourcing ofLogistics Functions

Increased AutomationIncreased AutomationTrends Trends

Affecting the Affecting the Logistics Logistics IndustryIndustry

Trends Trends Affecting the Affecting the

Logistics Logistics IndustryIndustry

Trends in LogisticsTrends in Logistics


Areas of Focus Areas of Focus forfor

Service DistributionService Distribution

Areas of Focus Areas of Focus forfor

Service DistributionService Distribution

Minimizing wait times Minimizing wait times

Managing service capacityManaging service capacity

Improving delivery with new channels

Improving delivery with new channels

Distribution Decisions for ServicesDistribution Decisions for Services



Channel structure different

Channel types different

“Gray” marketing channels

Global Channel Global Channel DevelopmentDevelopment

Global Channel Global Channel DevelopmentDevelopment

Global SupplyGlobal SupplyChain ManagementChain Management

Global SupplyGlobal SupplyChain ManagementChain Management

Awareness of trade legalities

Transportation Infrastructure

Distribution Decisions for Global MarketsDistribution Decisions for Global Markets

Chapter 10 Ver 2e1 Chapter 10 ©2000 South-Western College Publishing Marketing Channels and...

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