15-1 ch 15 - place: the final frontier supply chain: –all of the activities necessary to turn raw...
TRANSCRIPT
15-1
Ch 15 - Place: The Final Frontier
Supply chain: – All of the activities necessary to turn raw
materials into a good or service and put it in the hands of the consumer
• Distribution channels are a subset of the supply chain
• Logistics management deals with the process of actually moving goods through the supply chain
15-2
Links in the Supply Chain
Supply chain management: The management of flows among the firms in a supply chain to maximize total profitability– Includes physical movement of and sharing of
information about goods– Insourcing:
Firms contract with a specialist that handles all or part of the company’s supply chains
15-3
Figure 15.3Hewlett Packard’s Supply Chain
15-4
Links in the Supply Chain Channel of distribution:
The series of firms or individuals that facilitates the movement of a product from producer to final customer
Supply chain links– The supplier network provides raw materials and
parts to the manufacturer– Firm manufactures a product– Products are sent to distribution
channel for resale to buyers
15-5
Channel intermediariesFirms or individuals such as wholesalers, agents, brokers, and retailers that help move the product from the producer to the consumer or business user
15-6
Functions of Distribution Channels Channels:
– Provide time, place, and ownership utility– Provide logistics and/or physical distribution
functions– Create efficiencies by reducing the number of
transactions• Breaking bulk:
Purchasing large quantities of goods to sell one/few at a time to customers
• Creating assortments: Providing variety of products in one location
15-7
Figure 15.4Reducing Transactions via Intermediaries
15-8
Functions of Distribution Channels
– Transport and store goods– Perform facilitating functions to make
purchase process easier – Provide setup, repair, and maintenance
services for products carried– Provide communication and transaction
functionsYou can eliminate the intermediary, but not the function.
15-9
The Internet in the Distribution Channel
E-commerce has created radical changes in distribution strategies– Disintermediation:
Eliminating traditional intermediaries• MAY reduce manufacturer costs
– Knowledge management: Sharing knowledge with other supply chain members
– Online distribution piracy can be problematic
15-10
Channel Composition: Types of Wholesaling Intermediaries
Wholesaling intermediaries: Firms that handle the flow of products from the manufacturer to the retailer/business user– Independent intermediaries
• Merchant wholesalers • Merchandise (manufacturer’s) agents and brokers
– Manufacturer-owned intermediaries• Sales branches, offices, salespeople
15-11
Types of Distribution Channels
Marketers must consider the number of channel levels when designing a distribution system
Various channel structures exist– Consumer channels– Business-to-business channels – Dual distribution systems and Hybrid marketing
systems
15-12
Figure 15.5 Different Types of Dist’n. Channels
15-13
Figure 15.5, Part CDifferent Types of Channels of Distribution
15-1414
The Language of Channels
Direct channel: a producer and a customer Indirect channel: one or more intermediaries
– Firms/individuals such as wholesalers, agents, brokers, and retailers that help move product to consumer or business user
15-15
Distribution and the Marketing Mix
Distribution decisions interact with the marketing mix in a number of ways:– Place decisions influence pricing– Distribution decisions can help develop a position in
the market– Nature of the product influences choice of distribution
channels, especially retailers
15-16
Distribution and Ethical Issues
Distribution decisions can create ethical dilemmas– Slotting allowances– Size of channel intermediaries
15-17
Figure 15.6Steps in Distribution Planning
15-18
Planning a Channel Strategy
Step 1: – Develop distribution objectives that support the firm’s
overall marketing goals Step 2:
– Evaluate internal and external environmental influences to develop best channel structure
• Firm’s ability to handle distribution functions• Channel intermediaries available• How the competition distributes
its products
15-19
Planning a Channel Strategy
Step 3: Choose a distribution strategy – * # of channel levels:
• Direct vs. indirect vs. dual distribution • Issues: cost, control, coverage, conflict
– Types of intermediaries (covered earlier in the chapter) – Nature of channel relationships: conventional, vertical,
or horizontal system– Distribution Intensity (Penetration/coverage; see later
slide)
15-20
Channel relationships: Conventional, vertical, or horizontal system
• Conventional marketing system: Members work independently of one another
– Vertical marketing system (VMS):• Formal cooperation among channel members
– Many different types: Administered, Corporate, Contractual, Retailer cooperative, Franchise organizations
– Horizontal marketing system: • Two or more firms at the same channel level agree to
work together to get their product to the customer
15-21
Planning a Channel Strategy Step 3: Choose a distribution strategy
– Distribution intensity = f (type of good; conflict)
• Intensive distribution: Selling through all suitable wholesalers or retailers
• Exclusive distribution: Selling only through a single outlet in a region
• Selective distribution: Using fewer outlets than intensive but more than exclusive distribution
15-22
Planning a Channel Strategy Step 4: Develop distribution tactics
– Selecting channel partners (normally a long-term commitment)
– Managing the channel• Conflict • Communication • Coordination • Customer focus • Channel leader/captain:
– Dominant firm that controls the channel (via economic, legitimate, reward/coercive power)
15-2315-23
Legal and Ethical Issues
Exclusive dealing
contracts
Exclusive dealing
contracts
ExclusiveterritoriesExclusiveterritories
Tyingcontracts
Tyingcontracts
Unauthorizeddistribution-Ex. Costco
Unauthorizeddistribution-Ex. Costco
Legalconstraints-Collusion--Stone Container
Legalconstraints-Collusion--Stone Container
Gray marketsGray markets
© SoftKey Int’l, Inc.SoftKey Int’l, Inc.
15-2424
Logistics the process of designing, managing, and improving
the movement of products through the supply chain– Purchasing– Manufacturing– Storage– Warehousing– Transport
• Physical distribution– Inventory control
• EOQ • JIT • RFID
15-2515-25
Careers
Channel manager Supply chain manager/logistics Personal Selling Retailing Transportation companies