Marketing Channels and Supply Chain Management 10 chapter Prepared by Deborah Baker Texas Christian University Chapter 10 Version 3e

chapter 10 Learning 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. 10 chapter Chapter 10 Version 3e

Learning Objectives (continued) 3. Describe the channel structures for consumer and business-to-business products and discuss alternative channel arrangements. 4. Define supply chain management and discuss its benefits. 5. Discuss the issues that influence channel strategy. 10 chapter Chapter 10 Version 3e

Learning Objectives (continued) 6. Explain channel leadership, conflict, and partnering. 7. Describe the logistical components of the supply chain. 8. Discuss the concept of balancing logistics service and cost. 10 chapter Chapter 10 Version 3e

Learning Objectives (continued) 9. Discuss new technology and emerging trends in supply chain management. 10. Discuss channels and distribution decisions in global markets. 11. Identify the special problems and opportunities associated with distribution in service organizations. 10 chapter Chapter 10 Version 3e

Explain what a marketing channel is and why intermediaries are needed. 1 Learning Objective Explain what a marketing channel is and why intermediaries are needed. Chapter 10 Version 3e

1 Marketing Channels Marketing Channel Supply Chain A set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer. The connected chain of all the business entities, both internal and external to the company, that perform or support the logistics function. Chapter 10 Version 3e

Marketing Channel Functions 1 Marketing Channel Functions Specialization and Division of Labor Channels Fulfill Three Important Functions Overcoming Discrepancies Providing Contact Efficiency Chapter 10 Version 3e

Specialization and Division of Labor 1 Provides economies of scale Aids producers who lack resources to market directly Builds good relationships with customers Chapter 10 Version 3e

Overcoming Discrepancies 1 Overcoming Discrepancies Discrepancy of Quantity Assortment The difference between the amount of product produced and the amount an end user wants to buy. The lack of all the items a customer needs to receive full satisfaction from a product or products. Chapter 10 Version 3e

Overcoming Discrepancies 1 Overcoming Discrepancies Temporal Discrepancy Spatial A situation that occurs when a product is produced but a customer is not ready to buy it. The difference between the location of a producer and the location of widely scattered markets. Chapter 10 Version 3e

1 Contact Efficiency Zenith Sony RCA Toshiba Zenith Sony RCA Toshiba Circuit City Chapter 10 Version 3e

2 Learning Objective Define the types of channel intermediaries and describe their functions and activities. Chapter 10 Version 3e

Channel Intermediaries 2 Channel Intermediaries Retailer Merchant Wholesaler Agents and Brokers A channel intermediary that sells mainly to customers. An institution that buys goods from manufacturers, takes title to goods, stores them, and resells and ships them. Wholesaling intermediaries who facilitate the sale of a product by representing channel member. Chapter 10 Version 3e

Channel Intermediaries 2 Channel Intermediaries Retailers Merchant Wholesalers Agents and Brokers Take Title to Goods Do NOT Take Title to Goods Chapter 10 Version 3e

Channel Functions Performed by Intermediaries 2 Contacting/Promotion Negotiating Risk Taking Facilitating Function Transactional Functions Logistical Functions Researching Financing Physically distributing Storing Sorting Chapter 10 Version 3e

2 Logistics The process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption. Chapter 10 Version 3e

3 Learning Objective Describe the channel structures for consumer and business-to-business products and discuss alternative channel arrangements. Chapter 10 Version 3e

A distribution channel in which producers sell directly to consumers. 3 Direct Channel A distribution channel in which producers sell directly to consumers. Chapter 10 Version 3e

Channels for Consumer Products 3 Channels for Consumer Products Producer Consumers Retailers Wholesalers Agents or Brokers Wholesaler Channel Retailer Direct Agent/Broker Chapter 10 Version 3e

Channels for Business-to-Business Products 3 Producer Industrial User Industrial Distributor Agents or Brokers Agent/Broker Channel Direct Government Buyer Industrial Channel Chapter 10 Version 3e

Alternative Channel Arrangements 3 Alternative Channel Arrangements Different Channels May be Used Multiple Channels Adaptive Channels Strategic Channel Alliances Nontraditional Channels Chapter 10 Version 3e

Define supply chain management and discuss its benefits. 4 Learning Objective Define supply chain management and discuss its benefits. Chapter 10 Version 3e

Supply Chain Management 4 Supply Chain Management A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption. Chapter 10 Version 3e

Supply Chain Management 4 Supply Chain Management Results of Supply Chain Management Focus on Innovative Solutions Competitive with focus on Customer Satisfaction Synchronized Flow Customer Value Chapter 10 Version 3e

Role of Supply Chain Management 4 Role of Supply Chain Management Physical flow process that engineers the movement of goods Communicator of customer demand from point of sale to supplier Role of Supply Chain Management Chapter 10 Version 3e

Supply Chain Management Activities 4 Manage relationships in the supply chain Manage the logistical components of the supply chain Determine channel strategy and level of distribution intensity Balance the costs of the supply chain with the service level demanded by customer Chapter 10 Version 3e

Benefits of Supply Chain Management 4 Common Benefits of Supply Chain Management Reduced Costs Improved Service Enhanced Revenues Chapter 10 Version 3e

Discuss the issues that influence channel strategy. 5 Learning Objective Discuss the issues that influence channel strategy. Chapter 10 Version 3e

Channel Strategy Decisions 5 Channel Strategy Decisions Issues that Influence Channel Strategy Producer Factors Product Factors Market Factors Factors Affecting Channel Choice Exclusive Distribution Selective Distribution Intensive Distribution Levels of Distribution Intensity Chapter 10 Version 3e

Market Factors That Affect 5 Market Factors Market Factors That Affect Channel Choices Customer Profiles Consumer or Industrial Customer Size of Market Geographic Location Chapter 10 Version 3e

Product Factors That Affect 5 Product Factors Product Factors That Affect Channel Choices Product Complexity Product Price Product Life Cycle Product Delicacy Chapter 10 Version 3e

5 Producer Factors Producer Resources Producer Factors That Affect Channel Choices Producer Resources Number of Product Lines Desire for Channel Control Chapter 10 Version 3e

Levels of Distribution Intensity 5 Levels of Distribution Intensity Intensity Level Objective Number of Intermediaries Intensive Selective Exclusive Achieve mass market selling. Convenience goods. Work with selected intermediaries. Shopping and some specialty goods. Work with single intermediary. Specialty goods and industrial equipment. Many Several One Chapter 10 Version 3e

Explain channel leadership, conflict, and partnering. 6 Learning Objective Explain channel leadership, conflict, and partnering. Chapter 10 Version 3e

Managing Channel Relationships 6 Managing Channel Relationships Channel Partnering Channel Conflict Channel Leadership Channel Control Channel Power Social Dimensions of Channels Chapter 10 Version 3e

Channel Power, Control, and Leadership 6 Channel Power Control Channel Leader A channel member’s capacity to control or influence the behavior of other channel members A situation that occurs when one marketing channel member intentionally affects another member’s behavior. A member of a marketing channel that exercises authority/power over the activities of other members. Chapter 10 Version 3e

A clash of goals and methods between distribution channel members. 6 Channel Conflict A clash of goals and methods between distribution channel members. Horizontal Conflict Occurs among channel members on the same level Vertical Occurs among channel members at different levels Chapter 10 Version 3e

6 Channel Partnering The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage. Chapter 10 Version 3e

Transaction- vs. Partnership-Based Firms 6 Transaction-Based Short-term relationships Multiple suppliers Adversarial relationships Price dominates Minimal supplier investment Minimal information sharing Firms are independent Minimal functional area interaction Partnership-Based Long-term relationships Few suppliers Cooperative partnerships Value-added services dominate High supplier/buyer investment Extensive information sharing Firms are interdependent Extensive functional area interaction Chapter 10 Version 3e

Describe the logistical components 7 Learning Objective Describe the logistical components of the supply chain. Chapter 10 Version 3e

Integrated Logistical Components of the Supply Chain 7 Sourcing & Procurement Production Scheduling Order Processing & Customer Service Inventory Control Supply Chain Team Warehouse & Materials Handling Transportation Logistics Information System Chapter 10 Version 3e

Sourcing and Procurement 7 Sourcing and Procurement Negotiate Service Levels Price Select Suppliers Develop Specifications Plan Purchasing Strategies Role of Purchasing Departments Chapter 10 Version 3e

Production Scheduling 7 Production Scheduling Push/Pull Strategy Traditional Focus Push Start of Production Manufacturing Inventory-Based Mass Production Customer Focus Pull Customer-Order Based Mass Customization Chapter 10 Version 3e

Just-in-Time Manufacturing 7 Just-in-Time Manufacturing A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials just when they are needed on the production line. JIT Chapter 10 Version 3e

7 Benefits of JIT Reduces raw material inventories Shortens lead times Creates better supplier relationships Reduces production and storeroom costs Reduces paperwork Chapter 10 Version 3e

Electronic Data Interchange 7 Electronic Data Interchange Information technology that replaces paper documents that accompany business transactions. EDI Chapter 10 Version 3e

Inventory Control System 7 Inventory Control System A method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer’s or a customer’s demand. Chapter 10 Version 3e

Warehouse and Materials-Handling 7 Functions of Materials Handling Receive goods into warehouse Dispatch the goods to temporary storage Recall, select, or pick the goods for shipment Identify, sort and label goods Chapter 10 Version 3e

7 Transportation Criteria for Transportation Mode Choice Cost Transit Time Reliability Capability Accessibility Traceability Criteria for Transportation Mode Choice Chapter 10 Version 3e

Criteria for Ranking Modes of Transportation 7 Relative Cost Transit Time Reliability Capability Accessibility Traceability Highest Lowest Air Water Pipe Rail Truck Chapter 10 Version 3e

balancing logistics service and cost. 8 Learning Objective Discuss the concept of balancing logistics service and cost. Chapter 10 Version 3e

8 Logistics Service Interrelated activities performed by a member of the supply chain to ensure that the right product is in the right place at the right time. Chapter 10 Version 3e

Logistical Competencies 8 Logistical Competencies Devise logistics service strategies as a means of competitive differentiation Integrate members of supply chain to achieve operating excellence Respond quickly to changing logistical requirements Constantly monitor all aspects of the supply chain Chapter 10 Version 3e

Discuss new technology supply chain management. 9 Learning Objective Discuss new technology and emerging trends in supply chain management. Chapter 10 Version 3e

Trends in Supply Chain Management 9 Trends Affecting the Logistics Industry Advanced Computer Technology Outsourcing of Logistics Functions Electronic Distribution Chapter 10 Version 3e

Discuss channels and distribution decisions in global markets. 10 Learning Objective Discuss channels and distribution decisions in global markets. Chapter 10 Version 3e

Channels and Distribution Decisions for Global Markets 10 Channel structure differs Channel types differ “Gray” marketing channels Global Channel Development Global Supply Chain Management Awareness of trade legalities Transportation Infrastructure Chapter 10 Version 3e

11 Learning Objective Identify the special problems and opportunities associated with distribution in service organizations. Chapter 10 Version 3e

Channels and Distribution Decisions for Services 11 Areas of Focus for Service Distribution Minimizing wait times Managing service capacity Improving delivery through new channels Chapter 10 Version 3e