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8/8/2019 Marketing Channels and Supply Chain Management 1223718284734584 8
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Marketing Channels andSupply Chain Management
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Principles of Marketing
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Supply Chains and
the Value Delivery Network
Supply Chain Partners
Upstream partners include raw materialsuppliers, components, parts, information,finances, and expertise to create a productor service
Downstream partners include the marketingchannels or distribution channels that looktoward the customer
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Supply Chains and
the Value Delivery Network
Supply Chain Views
Supply chain make and sell view includes the firmsraw materials, productive inputs, and factorycapacity
Demand chain sense and respond view suggeststhat planning starts with the needs of the targetcustomer and the firm responds to these needs byorganizing a chain of resources and activities withthe goal of creating customer value
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The Nature and Importance of
Marketing Channels
How Channel Members Add Value
Information refers to the gathering and distributingresearch and intelligence information about actorsand forces in the marketing environment needed forplanning and aiding exchange
Promotion refers to the development and spreadingpersuasive communications about an offer
Contacts refers to finding and communicating withprospective buyers
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The Nature and Importance of
Marketing Channels
How Channel Members Add Value
Matching refers to shaping and fitting theoffer to the buyers needs, includingactivities such as manufacturing, grading,assembling, and packaging
Negotiation refers to reaching an agreementon price and other terms of the offer so thatownership or possession can be transferred
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The Nature and Importance of
Marketing Channels
How Channel Members Add Value
Physical distribution refers to transporting andstoring goods
Financing refers to acquiring and using funds to coverthe costs or carrying out the channel work
Risk taking refers to assuming the risks of carryingout the channel work
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The Nature and Importance of
Marketing Channels
NumberofChannel Members
Channel level refers to each layer of marketingintermediaries that performs some work in bringingthe product and its ownership closer to the finalbuyer
Direct marketing channel has no intermediarylevels; the company sells directly to consumers
Indirect marketing channels contain one or moreintermediaries
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Channel Behavior and Organization
Channel Behavior
Channel conflict refers to disagreement overgoals, roles, and rewards by channelmembers
Horizontal conflict Vertical conflict
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Channel Behavior and Organization
Channel Behavior
Horizontal conflict is conflict amongmembers at the same channel level
Vertical conflict is conflict between differentlevels of the same channel
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Channel Behavior and Organization
Conventional Distribution Systems
Conventional distribution systems consistof one or more independent producers,wholesalers, and retailers. Each seeks to
maximize its own profits and there is littlecontrol over the other members and noformal means for assigning roles andresolving conflict.
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Channel Behavior and Organization
Multichannel Distribution Systems
Hybrid Marketing Channels
Hybrid marketing channels exist when asingle firm sets up two or more marketing
channels to reach one or more customersegments
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Channel Behavior and Organization
Multichannel Distribution Systems
Hybrid Marketing Channels
Advantages Increased sales and market coverage
New opportunities to tailor products and servicesto specific needs of diverse customer segments
Challenges Hard to control
Create channel conflict
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Channel Behavior and Organization
Changing Channel Organization
Disintermediation occurs when product orservice producers cut out intermediaries andgo directly to final buyers, or when radicallynew types of channel intermediaries displacetraditional ones
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Channel Design Decisions
Identifying Major Alternatives
Types of intermediaries refers to channelmembers available to carry out channelwork. Examples include:
Company sales force Manufacturers agency
Industrial distributors
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Channel Design Decisions
Identifying Major Alternatives
Number of marketing intermediaries to use ateach level
Strategies:
Intensive distribution Exclusive distribution
Selective distribution
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Channel Design Decisions
Identifying Major Alternatives
Intensive distribution is a strategy used byproducers of convenience products andcommon raw materials in which they stocktheir products in as many outlets as possible
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Channel Design Decisions
Exclusive distribution is a strategy in whichthe producer gives only a limited number ofdealers the exclusive right to distribute itsproducts in their territories
Luxury automobiles
High-end apparel
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Identifying Major Alternatives
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Channel Design Decisions
Identifying Major Alternatives
Selective distribution is a strategy when aproducer uses more than one but fewerthan all of the intermediaries willing to carrythe producers products
Televisions
Appliances
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Channel Design Decisions
DesigningInternational Distribution Channels
Channel systems can vary from country tocountry
Must be able to adapt channel strategies to theexisting structures within each country
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Channel Management Decisions
Channel management involves:
Selecting channel members
Managing channel members
Motivating channel members
Evaluating channel members
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Channel Management Decisions
Selecting Channel Members
Selecting channel members involves determiningthe characteristics that distinguish the betterones by evaluating channel members
Years in business Lines carried
Profit record
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Channel Management Decisions
Selecting Channel Members
Selecting intermediaries that are retail storesthat want exclusive or selective distribution
involves evaluating:
Stores customers Locations
Growth potential
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Public Policy and Distribution
Decisions
Exclusive distribution is when the seller
allows only certain outlets to carry itsproducts
Exclusive dealing is when the seller requiresthat the sellers not handle competitorsproducts
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Public Policy and Distribution
Decisions
Benefits of exclusive distribution include:
Seller obtains more loyal and dependabledealers
Dealers obtain a steady and stronger seller
support
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Public Policy and Distribution
Decisions
Exclusive territorial agreement refers to anagreement where the producer may agree not tosell to other dealers in a given area or the buyermay agree to sell only in its own territory
Tying agreements, while not necessarily illegal as
long as they do not substantially lessen competition,are agreements where there is a strong brand thatproducers sometimes sell to dealers only if thedealers will take some or all of the rest of the line
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Marketing Logistics and
Supply Chain Management
Nature and importance of logisticsmanagement in the supply chain
Goals of the logistics system
Major logistics functions
Need for integrated supply chainmanagement
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Marketing Logistics and
Supply Chain Management
Nature andImportance ofMarketing Logistics
Marketing logistics (physical distribution)involves planning, implementing, andcontrolling the physical flow of goods,services, and related information from pointsof origin to points of consumption to meetconsumer requirements at a profit
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Marketing Logistics and
Supply Chain Management
Nature andImportance ofMarketing Logistics
Marketing logistics involves:
Outbound distribution: Moving products from thefactory to resellers and consumers
Inbound distribution: Moving products and materials
from suppliers to the factory Reverse distribution: Moving broken, unwanted, or
excess products returned by consumers or resellers
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Marketing Logistics and
Supply Chain Management
Nature andImportance ofMarketing Logistics
Supply chain management is the process ofmanaging upstream and downstream value-added flows of materials, final goods, andrelated information among suppliers, thecompany, resellers, and final consumers
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Marketing Logistics and
Supply Chain Management
Major Logistics Functions
Warehousing is the storage function thatovercomes differences in need quantitiesand timing, ensuring that the products areavailable when customers are ready to buy
them Storage warehouses
Distribution centers
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Marketing Logistics and
Supply Chain Management
Major Logistics Functions
Storage warehouses are designed to storegoods, not move them
Distribution centers are designed to movegoods, not store them
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Marketing Logistics and
Supply Chain Management
Major Logistics Functions
Inventory management balances carryingtoo little and too much inventory
Just-in-time logistics systems
RFID
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Marketing Logistics and
Supply Chain Management
Major Logistics Functions
Just-in-time logistics systems allow producers andretailers to carry small amounts of inventories ofparts or merchandise
RFID (radio frequency identification devices) are smalltransmitter chips embedded in or placed onproducts or packages to provide greater inventorycontrol
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Marketing Logistics and
Supply Chain Management
Transportation affects the pricing of products,
delivery performance, and condition of the goodswhen they arrive
Truck
Rail
Water Pipeline
Air
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Major Logistics Functions
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Marketing Logistics and
Supply Chain Management
Integrated Logistics Management
Cross-functional teamwork inside thecompany refers to the inter-relationship ofdifferent departments within the company toachieve the goals of integrated supply chainmanagement
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Marketing Logistics and
Supply Chain Management
Integrated Logistics Management
Third-party logistics is the outsourcing of logisticsfunctions to third-party logistics providers (3PLs)
Provide logistics functions more efficiently
Provide logistics functions at lower cost
Allow the company to focus on its core business Are more knowledgeable of complex logistics
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