Chapter 10 Ver 2e1 Chapter 10 ©2000 South-Western College Publishing Marketing Channels and Logistics Decisions Prepared by Deborah Baker Texas Christian University

Chapter 10 Ver 2e2 Chapter 10 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. 3.Describe channel structures for consumer and business-to-business products and discuss alternative channel arrangements. (continued) ©2000 South-Western College Publishing

Chapter 10 Ver 2e3 Chapter 10 Objectives 4.Discuss the issues that influence channel strategy. 5.Explain channel leadership, conflict, and partnering. 6.Discuss logistics and supply chain management and their evolution into distribution practice. (continued) ©2000 South-Western College Publishing

Chapter 10 Ver 2e4 Chapter 10 Objectives 7.Discuss the concept of balancing logistics service and cost. 8.Describe the integrated functions of the supply chain. 9.Discuss new technology and emerging trends in logistics. (continued) ©2000 South-Western College Publishing

Chapter 10 Ver 2e5 Chapter 10 Objectives 10.Identify the special problems and opportunities associated with distribution in service organizations. 11.Discuss channel structure and logistics issues in global markets. ©2000 South-Western College Publishing

Chapter 10 Ver 2e6 Marketing Channels ©2000 South-Western College Publishing Specialization and Division of Labor Specialization and Division of Labor Channels Fulfill Three Important Functions Channels Fulfill Three Important Functions Overcoming Discrepancies Overcoming Discrepancies Providing Contact Efficiency Providing Contact Efficiency

Chapter 10 Ver 2e7 Providing Contact Efficiency ©2000 South-Western College Publishing Zenith Sony RCA Toshiba Zenith Sony RCA Toshiba Circuit City

Chapter 10 Ver 2e8 RetailersRetailers MerchantWholesalersMerchantWholesalers ©2000 South-Western College Publishing Types of Channel Intermediaries AgentsandBrokersAgentsandBrokers Take Title to Goods Do NOT Take Title to Goods

Chapter 10 Ver 2e9 Factors Suggesting Intermediary to Use FactorFactor Nature of Product Technicality Gross Margin Ordering Frequency Order to Receipt Time Number of Customers Customers MerchantWholesalersMerchantWholesalers Standard Complex High Frequent Want shorter lead time Many Dispersed Agents/BrokersAgents/Brokers Nonstandard, Custom Simple Low Infrequent Long lead time okay Few Concentrated ©2000 South-Western College Publishing

Chapter 10 Ver 2e10 ©2000 South-Western College Publishing Channel Functions by Intermediaries Contacting/Promotion Negotiating Risk Taking Facilitating Function Transactional Functions Logistical Functions Logistical Functions Researching Financing Physically distributing Storing Sorting

Chapter 10 Ver 2e11 Channels for Consumer Products ©2000 South-Western College Publishing Producer Consumers Retailers Wholesalers Agents or BrokersWholesalerChannelRetailerChannelDirectChannelAgent/BrokerChannel

Chapter 10 Ver 2e12 Channels for Business Products ©2000 South-Western College Publishing Producer Industrial User Industrial Distributor Agents or Brokers Agents or BrokersAgent/BrokerChannel Industrial Distributor DirectChannel Producer Government Buyer DirectChannel Agent/Broker Industrial Channel

Chapter 10 Ver 2e13 Different Channels May be Used Multiple Channels ©2000 South-Western College Publishing Alternative Channel Arrangements Nontraditional Channels Adaptive Channels Strategic Channel Alliances

Chapter 10 Ver 2e14 ©2000 South-Western College Publishing Channel Strategy Decisions Issues that Influence Channel Strategy Producer Factors Product Factors Market Factors FactorsAffectingChannelChoiceFactorsAffectingChannelChoice Exclusive Distribution Selective Distribution Intensive Distribution Levels of Distribution Intensity

Chapter 10 Ver 2e15 Market Factors That Affect Channel Choices Market Factors That Affect Channel Choices Customer Profiles Geographic Location Size of Market Competition Market Factors ©2000 South-Western College Publishing

Chapter 10 Ver 2e16 Product Factors That Affect Channel Choices Product Factors That Affect Channel Choices Product Complexity Product Price Product Life Cycle Product Delicacy Product Factors ©2000 South-Western College Publishing

Chapter 10 Ver 2e17 Producer Factors That Affect Channel Choices Producer Factors That Affect Channel Choices Producer Resources Number of Product Lines Desire for Channel Control Producer Factors ©2000 South-Western College Publishing

Chapter 10 Ver 2e18 Levels of Distribution Intensity Intensity Level ObjectiveObjective Number of Intermediaries Intensive Selective Exclusive Achieve mass market selling. Convenience goods. Achieve mass market selling. Convenience goods. Work with selected intermediaries. Shopping and some specialty goods. Work with selected intermediaries. Shopping and some specialty goods. Work with single intermediary. Specialty goods and industrial equipment. Work with single intermediary. Specialty goods and industrial equipment. Many Several One ©2000 South-Western College Publishing

Chapter 10 Ver 2e19 ©2000 South-Western College Publishing Channel Partnering Channel Conflict Channel Leadership Channel Control Channel Power Relationships Play a Role in Building Unity Among Channel Members Relationships Play a Role in Building Unity Among Channel Members Channel Relationships

Chapter 10 Ver 2e20 The Supply Chain ©2000 South-Western College Publishing SuppliersSuppliers Manufacturing Facility StorageStorage Company HQ WarehouseWarehouse Wholesalers & Retailers Wholesalers ConsumerConsumer

Chapter 10 Ver 2e21 ©2000 South-Western College Publishing Supply Chain Management Activities  Movement of information through supply chain  Movement and storage of raw materials to production site  Movement of raw materials, semimanufactured products, and finished products among plants, warehouses, and distribution centers  Production planning based on customer demand  Planning physical distribution of FG to channel and buyers  Strategic partnerships with supply chain members

Chapter 10 Ver 2e22 Common Benefits of Supply Chain Management Management Reduced Costs Improved Service Enhanced Revenues Benefits of Supply Chain Management ©2000 South-Western College Publishing

Chapter 10 Ver 2e23 ©2000 South-Western College Publishing Integrated Functions of the Supply Chain Sourcing & Procurement Production Scheduling Order Processing & Customer Service Inventory Control Systems Supply Chain Team Warehouse & Materials Management Transportation Logistics Information System

Chapter 10 Ver 2e24 Transportation ©2000 South-Western College Publishing Cost Transit Time Reliability Capability Accessibility Traceability Criteria for Choosing Transportation Criteria for Choosing Transportation

Chapter 10 Ver 2e25 Ranking Modes of Transportation ©2000 South-Western College Publishing Relative Cost Transit Time Reliability Capability Accessibility Traceability HighestLowest Air WaterPipeRailTruck WaterRailPipeTruckAir PipeTruckRailAirWater Truck RailTruckAirPipe RailAirWaterPipe AirTruckRailWaterPipe

Chapter 10 Ver 2e26 ©2000 South-Western College Publishing Electronic Distribution Outsourcing of Logistics Functions Increased Automation Trends Affecting the LogisticsIndustryTrends LogisticsIndustry Trends in Logistics

Chapter 10 Ver 2e27 Areas of Focus for Service Distribution Areas of Focus for Service Distribution Minimizing wait times Managing service capacity Improving delivery with new channels Improving delivery with new channels Distribution Decisions for Services ©2000 South-Western College Publishing

Chapter 10 Ver 2e28 ©2000 South-Western College Publishing Channel structure different Channel types different “Gray” marketing channels Global Channel Development Development Global Supply Chain Management Awareness of trade legalities Transportation Infrastructure Distribution Decisions for Global Markets