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8/7/2019 module 8 ppt. II
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Distribution Channels
and
Logistics Management
PRINCIPLES OF
MARKETING
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Distribution Channels
A set of interdependent organizations(intermediaries) involved in the
process of making a product or serviceavailable for use or consumption.
Channel decisionsaffect other marketing decisionsinvolve long-term commitments
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Role of Intermediaries
Greater efficiency in making goodsavailable to target markets.
Intermediaries provideContactsExperienceSpecializationScale of operation
Match supply and demand.
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Channel Functions
Information
Promotion
Contact
Matching
Negotiation
Physical Distribution
Financing
Risk taking
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Channel Levels
Manufacturer
Wholesaler
Retailer
Consumer
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Conflict
The channel will be most effective when:each member is assigned tasks it can do best.all members cooperate to attain overall channel
goals and satisfy the target market.
Focus on individual goals leads to conflictHorizontal ConflictHorizontal Conflict occurs among firms at the same
level of the channel.Vertical ConflictVertical Conflict occurs between different levels of
the same channel.
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Systems
Corporate
common ownership at different channel levelsContractualcontractual agreement among channel members
Administered
leadership assumed by dominant membersleadership assumed by dominant members
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Horizontal MarketingHorizontal MarketingSystemSystem
Horizontal MarketingHorizontal MarketingSystemSystem
Hybrid MarketingHybrid MarketingSystemSystem
Hybrid MarketingHybrid MarketingSystemSystem
Two or more
companies at onechannel level jointogether to increasecoverage
Example: Banks in
Grocery Stores
A single firm sets up
two or moremarketing channelsto increase coverage
Example:Retailers,Catalogs, and Sales
Force
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Channel Design DecisionsChannel Design Decisions
Analyzing Consumer Service NeedsAnalyzing Consumer Service Needs
Setting Channel Objectives & ConstraintsSetting Channel Objectives & Constraints
ExclusiveDistributionExclusive
DistributionSelective
DistributionSelective
DistributionIntensive
DistributionIntensive
Distribution
Identifying Major AlternativesIdentifying Major Alternatives
Evaluating the Major AlternativesEvaluating the Major Alternatives
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Decisions
SelectingSelecting
MotivatingMotivating
EvaluatingEvaluating
FEE
DBA
CK
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Logistics
Involves entire supply chainIncreasing importance of logisticseffective logistics is becoming a key to winning
and keeping customers.logistics is a major cost element for mostcompanies.the explosion in product variety has created a
need for improved logistics management.information technology has created opportunities
for major gains in distribution efficiency.
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Provide a Targeted Level of Customer Service atthe Least Cost.
Maximize Profits, Not Sales.
Higher Distribution Costs/ HigherCustomer Service Levels
Lower Distribution Costs/ LowerCustomer Service Levels
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Logistics FunctionsLogistics Functions
Order Processing
Warehousing
Inventory Management
Transportation
Design system to minimize costs of attainingobjectives
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Transportation ModesTransportation Modes
RailNations largest carrier, cost-effectivefor shipping bulk products, piggyback
Rail
Nations largest carrier, cost-effectivefor shipping bulk products, piggyback
TruckFlexible in routing & time schedules, efficient
for short-hauls of high value goods
TruckFlexible in routing & time schedules, efficient
for short-hauls of high value goods
WaterLow cost for shipping bulky, low-value
goods, slowest form
WaterLow cost for shipping bulky, low-value
goods, slowest form
PipelineShip petroleum, natural gas, and chemicalsfrom sources to markets
PipelineShip petroleum, natural gas, and chemicals
from sources to markets
AirHigh cost, ideal when speed is needed or to
ship high-value, low-bulk items
AirHigh cost, ideal when speed is needed or to
ship high-value, low-bulk items
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Concept Recognizes that Providing Better Customer
Service and Trimming Distribution Costs RequiresTeamworkTeamwork, Both Inside the Company and Among Allthe Marketing Channel Organizations.
Cross-Functional Teamwork insidethe Company
Cross-Functional Teamwork insidethe Company
Building Channel PartnershipsBuilding Channel Partnerships
Third-Party LogisticsThird-Party Logistics