1. Principles of Marketing12
Principles of Marketing
Marketing Channels and Supply Chain Management

2. Supply Chains and the Value Delivery Network
Supply Chain Partners
Upstream partners include raw material suppliers, components, parts, information, finances, and expertise to create a product or service
Downstream partners include the marketing channels or distribution channels that look toward the customer
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3. Supply Chains and the Value Delivery Network
Supply Chain Views
Supply chain “make and sell” view includes the firm’s raw materials, productive inputs, and factory capacity
Demand chain “sense and respond” view suggests that planning starts with the needs of the target customer and the firm responds to these needs by organizing a chain of resources and activities with the goal of creating customer value
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4. The Nature and Importance of Marketing Channels
How Channel Members Add Value
Information refers to the gathering and distributing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange
Promotion refers to the development and spreading persuasive communications about an offer
Contacts refers to finding and communicating with prospective buyers
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5. The Nature and Importance of Marketing Channels
How Channel Members Add Value
Matching refers to shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing, grading, assembling, and packaging
Negotiation refers to reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred
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6. The Nature and Importance of Marketing Channels
How Channel Members Add Value
Physical distribution refers to transporting and storing goods
Financing refers to acquiring and using funds to cover the costs or carrying out the channel work
Risk taking refers to assuming the risks of carrying out the channel work
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7. The Nature and Importance of Marketing Channels
Number of Channel Members
Channel level refers to each layer of marketing intermediaries that performs some work in bringing the product and its ownership closer to the final buyer
Direct marketing channel has no intermediary levels; the company sells directly to consumers
Indirect marketing channels contain one or more intermediaries
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8. Channel Behavior and Organization
Channel conflict refers to disagreement over goals, roles, and rewards by channel members
Horizontal conflict
Vertical conflict
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9. Channel Behavior and Organization
Horizontal conflict is conflict among members at the same channel level
Vertical conflict is conflict between different levels of the same channel
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10. Channel Behavior and Organization
Conventional Distribution Systems
Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers. Each seeks to maximize its own profits and there is little control over the other members and no formal means for assigning roles and resolving conflict.
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11. Channel Behavior and Organization
Multichannel Distribution Systems
Hybrid Marketing Channels
Hybrid marketing channels exist when a single firm sets up two or more marketing channels to reach one or more customer segments
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12. Channel Behavior and Organization
Multichannel Distribution Systems
Hybrid Marketing Channels
Advantages
Increased sales and market coverage
New opportunities to tailor products and services to specific needs of diverse customer segments
Challenges
Hard to control
Create channel conflict
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13. Channel Behavior and Organization
Changing Channel Organization
Disintermediation occurs when product or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones
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14. Channel Design Decisions
Identifying Major Alternatives
Types of intermediaries refers to channel members available to carry out channel work. Examples include:
Company sales force
Manufacturer’s agency
Industrial distributors
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15. Channel Design Decisions
Identifying Major Alternatives
Number of marketing intermediaries to use at each level
Strategies:
Intensive distribution
Exclusive distribution
Selective distribution
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16. Channel Design Decisions
Identifying Major Alternatives
Intensive distribution is a strategy used by producers of convenience products and common raw materials in which they stock their products in as many outlets as possible
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17. Channel Design Decisions
Identifying Major Alternatives
Exclusive distribution is a strategy in which the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories
Luxury automobiles
High-end apparel
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18. Channel Design Decisions
Identifying Major Alternatives
Selective distribution is a strategy when a producer uses more than one but fewer than all of the intermediaries willing to carry the producer’s products
Televisions
Appliances
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19. Channel Design Decisions
Designing International Distribution Channels
Channel systems can vary from country to country
Must be able to adapt channel strategies to the existing structures within each country
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20. Channel Management Decisions
Channel management involves:
Selecting channel members
Managing channel members
Motivating channel members
Evaluating channel members
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21. Channel Management Decisions
Selecting Channel Members
Selecting channel members involves determining the characteristics that distinguish the better ones by evaluating channel members
Years in business
Lines carried
Profit record
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22. Channel Management Decisions
Selecting Channel Members
Selecting intermediaries that are retail stores that want exclusive or selective distribution involves evaluating:
Store’s customers
Locations
Growth potential
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23. Public Policy and Distribution Decisions
Exclusive distribution is when the seller allows only certain outlets to carry its products
Exclusive dealing is when the seller requires that the sellers not handle competitor’s products
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24. Public Policy and Distribution Decisions
Benefits of exclusive distribution include:
Seller obtains more loyal and dependable dealers
Dealers obtain a steady and stronger seller support
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25. Public Policy and Distribution Decisions
Exclusive territorial agreement refers to an agreement where the producer may agree not to sell to other dealers in a given area or the buyer may 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 that producers sometimes sell to dealers only if the dealers will take some or all of the rest of the line
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26. Marketing Logistics and Supply Chain Management
Nature and importance of logistics management in the supply chain
Goals of the logistics system
Major logistics functions
Need for integrated supply chain management
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27. Marketing Logistics and Supply Chain Management
Nature and Importance of Marketing Logistics
Marketing logistics (physical distribution) involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet consumer requirements at a profit
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28. Marketing Logistics and Supply Chain Management
Nature and Importance of Marketing Logistics
Marketing logistics involves:
Outbound distribution: Moving products from the factory 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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29. Marketing Logistics and Supply Chain Management
Nature and Importance of Marketing Logistics
Supply chain management is the process of managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
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30. Marketing Logistics and Supply Chain Management
Major Logistics Functions
Warehousing is the storage function that overcomes differences in need quantities and timing, ensuring that the products are available when customers are ready to buy them
Storage warehouses
Distribution centers
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31. Marketing Logistics and Supply Chain Management
Major Logistics Functions
Storage warehouses are designed to store goods, not move them
Distribution centers are designed to move goods, not store them
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32. Marketing Logistics and Supply Chain Management
Major Logistics Functions
Inventory management balances carrying too little and too much inventory
Just-in-time logistics systems
RFID
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33. Marketing Logistics and Supply Chain Management
Major Logistics Functions
Just-in-time logistics systems allow producers and retailers to carry small amounts of inventories of parts or merchandise
RFID (radio frequency identification devices) are small transmitter chips embedded in or placed on products or packages to provide greater inventory control
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34. Marketing Logistics and Supply Chain Management
Major Logistics Functions
Transportation affects the pricing of products, delivery performance, and condition of the goods when they arrive
Truck
Rail
Water
Pipeline
Air
Internet
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35. Marketing Logistics and Supply Chain Management
Integrated Logistics Management
Cross-functional teamwork inside the company refers to the inter-relationship of different departments within the company to achieve the goals of integrated supply chain management
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36. Marketing Logistics and Supply Chain Management
Integrated Logistics Management
Third-party logistics is the outsourcing of logistics functions 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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