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Chapter 8 Distribution channels and logistics management

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Presentation on theme: "Chapter 8 Distribution channels and logistics management"— Presentation transcript:

1 Chapter 8 Distribution channels and logistics management

2 The learning objectives
The nature of distribution channels Channel behavior and organization Channel design decisions Channel management decision Physical distribution and logistics management

3 1.The nature of distribution channels
What is distribution? Why are marketing intermediaries used? The function of distribution channel Channel level

4 What is distribution channel?
A set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.

5 How a Distributor Reduces the Number of Channel Transactions
A. Number of contacts without a distributor M x C = 3 X 3 = 9 1 3 2 4 5 6 7 8 9 = Manufacturer = Customer

6 How a Distributor Reduces the Number of Channel Transactions
B. Number of contacts with a distributor M x C = = 6 Store 1 2 3 4 5 6 = Manufacturer = Distributor = Customer

7 Distribution Channel Functions
Information Transfer Communication Payments Negotiation Physical Distribution Ordering Risk Taking Financing

8 Consumer Marketing Channels
Manufacturer 0-level channel Consumer 1-level channel Manufacturer Retailer Consumer Mfg 2-level channel Wholesaler Retailer Consumer Mfg 3-level channel Wholesaler Jobber Retailer Consumer

9 Industrial Marketing Channels
Manufacturer Consumer Industrial distributors Manufacturer’s representative Manufacturer’s sales branch

10 Customers’ Desired Service Levels
Lot size Waiting time Spatial convenience Product variety Service backup

11 Why are marketing intermediaries used?

12 Distribution channel function
Information Promotion Contact Matching negotiation

13 Channel level

14 Channel behavior and organization
Channel conflict Vertical marketing system Horizontal marketing system Hybrid marketing systems

15 Common Ownership at Different
Corporate Common Ownership at Different Levels of the Channel Types of Vertical Marketing Systems Administered Leadership is Assumed by One or a Few Dominant Members Contractual Contractual Agreement Among Channel Members

16 Conventional Distribution Channel vs. Vertical Marketing Systems
Manufacturer Manufacturer Wholesaler Wholesaler Retailer Retailer Consumer Consumer

17 Channel conflict Horizontal conflict Vertical conflict

18 Vertical marketing systems
Conventional distribution VMS Corporate VMS Contractual VMS Administered VMS Franchise organization

19 Horizontal marketing system

20 Hybrid marketing channel

21 design decision
Analyzing consumer service needs Setting channel objectives and constraints Identifying major alternatives Evaluating the major alternatives

22 Identifying major alternative
Types of intermediaries Number of marketing intermediaries Responsibilities of channel members

23 Level of sales (dollars)
Break-Even Cost Chart Selling costs (dollars) Level of sales (dollars) Manufacturer’s sales agency Company sales force SB

24 Number of marketing intermediaries
Intensive distribution Exclusive distribution Selective distribution

25 3.Channel management Decision
Selecting channel members Motivating channel members Evaluating channel members

26 Selecting Training Motivating Evaluating
Channel Management Decisions FEEDBACK Training Motivating Evaluating

27 4.physical distribution and logistics management
Physical distribution(marketing logistics) major logistics function Integrated logistics management Third-party logistics

28 Major logistics function
Order processing Warehousing Inventory transportation

29 Integrated logistics management
Cross-functional teamwork inside the company Building channel partnerships

30 Third-party logistics
An independent logistics provider that performs any or all of the functions required to get their clients’ product to market.

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