Presentation on theme: "Objectives Know why companies use distribution channels and understand the functions that these channels perform. Learn how channel members interact and."— Presentation transcript:
0 Marketing Channels and Supply Chain Management Chapter 13
1 ObjectivesKnow why companies use distribution channels and understand the functions that these channels perform.Learn how channel members interact and how they organize to perform the work of the channel.Know the major channel alternatives that are open to a company.
2 ObjectivesComprehend how companies select, motivate, and evaluate channel members.Understand the nature and importance of marketing logistics and integrated supply chain management.
3 Case Study Caterpillar Dominates world’s markets for heavy construction and mining equipment.Independent dealers are key to successDealer network is linked via computersCaterpillar stresses dealer profitability, extraordinary dealer support, personal relationships, dealer performance and full, honest, and frequent communications
4 Definition Value Delivery Network The network made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system.
5 Nature & Importance of Marketing Channels Channel choices affect other decisions in the marketing mixPricing, Marketing communicationsA strong distribution system can be a competitive advantageChannel decisions involve long-term commitments to other firms
6 Nature & Importance of Marketing Channels How Channel Members Add ValueIntermediaries require fewer contacts to move the product to the final purchaser.Intermediaries help match product assortment demand with supply.Intermediaries help bridge major time, place, and possession gaps that separate products from those who would use them.
7 Nature & Importance of Marketing Channels Key Functions Performed by Channel MembersInformationPromotionContactMatchingNegotiationPhysical DistributionFinancingRisk taking
8 Nature & Importance of Marketing Channels Number of Channel LevelsThe number of intermediary levels indicates the length of a marketing channel.Direct ChannelsIndirect ChannelsProducers lose more control and face greater channel complexity as additional channel levels are added.
9 Nature & Importance of Marketing Channels Channel Members Are Connected Via A Variety of FlowsPhysical FlowPayment FlowInformation FlowPromotion FlowFlow of Ownership
10 Channel Behavior and Organization Channel ConflictOccurs when channel members disagree on roles, activities, or rewards.Types of Conflict:Horizontal conflict: occurs among firms at the same channel levelVertical conflict: occurs among firms at different channel levels
12 Channel Behavior and Organization Multichannel Distribution SystemsAlso called hybrid marketing channelsOccurs when a firm uses two or more marketing channelsHybrid marketing has many advantagesChanging Channel OrganizationDisintermediation
13 Channel Design Decisions Step 1: Analyzing Consumer NeedsCost and feasibility of meeting needs must be consideredStep 2: Setting Channel ObjectivesSet channel objectives in terms of targeted level of customer serviceMany factors influence channel objectives
14 Channel Design Decisions Step 3: Identifying Major AlternativesTypes of intermediariesCompany sales force, manufacturer’s agency, industrial distributorsNumber of marketing intermediariesIntensive, selective, and exclusive distributionResponsibilities of channel members
16 Channel Design Decisions Designing International Distribution ChannelsGlobal marketers usually adapt their channel strategies to structures that exist within foreign countriesKey challenges:May be complex or hard to penetrateMay be scattered, inefficient, or totally lacking
17 Channel Management Decisions Selecting Channel MembersIdentify characteristics that distinguish the best channel membersManaging and Motivating Channel MembersPartner relationship management (PRM) is keyEvaluating Channel MembersPerformance should be checked against standardsChannel members should be rewarded or replaced as dictated by performance
18 Public Policy and Distribution Decisions Exclusive distributionOnly certain outlets are allowed to carry a firm’s productsExclusive dealingExclusive territorial agreementsTying agreements
19 Marketing Logistics and Supply Chain Management Outbound distributionInbound distributionReverse distributionInvolves the entire supply chain management system
20 Marketing Logistics and Supply Chain Management Why Greater Emphasis is Being Placed on Logistics:Offers firms a competitive advantageCan yield cost savingsGreater product variety requires improved logisticsImprovements in distribution efficiency are possible due to information technology
21 Marketing Logistics and Supply Chain Management Goals of the Logistics SystemNo system can both maximize customer service and minimize costs.Firms must first weigh the benefits of higher service against the costs.State goals in terms of a targeted level of customer service at the least cost.
22 Marketing Logistics and Supply Chain Management Major Logistics FunctionsWarehousingInventory ManagementTransportationLogistics Information Management
23 Marketing Logistics and Supply Chain Management Transportation Carrier OptionsTruckRailWaterPipelineAirInternetIntermodal transportation is becoming more common
24 Marketing Logistics and Supply Chain Management Integrated Logistics ManagementCross-functional teamwork inside the company is criticalLogistics partnerships are also built through shared projectsOutsourcing of logistics firms to third-party firms is becoming more common