chapter 9 place.ppt
- 1. The Internet for Distribution E-MARKETING/6E CHAPTER
- 2. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-2 CHAPTER OBJECTIVES After reading Chapter 11, you will be able to: Describe the three major functions of a distribution channel. Explain how the internet is affecting distribution channel length. Discuss trends in supply chain management and power relationships among channel players. Outline the major models used by online channel members. Distinguish among e-commerce, m-commerce, social commerce, and F-commerce. Highlight how companies can use distribution channel metrics.
- 3. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-3 INTERMEDIARIES Wholesalers buy products from the manufacturer and resell them to retailers. Retailers buy products from manufacturers or wholesalers. Brokers facilitate transactions between buyers and sellers. Agents may represent either the buyer or seller. -Manufacturer’s agents represent the seller. - Purchasing agents represent the buyer.
- 4. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-4 E-BUSINESS MODEL
- 5. CONTENTS PONSORSHIP 9-5 • In this model firms create websites, attract traffic, and sell advertising. • All the major portals utilize this model: -Google -Yahoo! -MSN • Content sponsorship is often used in combination with other models to generate multiple revenue streams.
- 6. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-6 An infomediary is an online organization that aggregates and distributes information. Market research firms are examples of infomediaries. Some infomediaries compensate consumers for sharing demographic and psychographic information and receiving ads targeted to their interests. INFOMEDIARY
- 7. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-7 Three intermediary models are in common use on the Internet: Brokerage models - Online Exchange - Online Auction Agent models for sellers and buyers Online retailing INTERMEDIARY MODELS
- 8. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-8 The broker creates a market in which buyers and sellers negotiate and complete transactions. Online auctions are available in the B2B (uBid), B2C (Priceline), and C2C (ebay) markets. BROKERAGE MODELS
- 9. AGENT MODELS May represent sellers or buyers. Agent models that represent sellers include: - Selling agents - Manufacturer’s agents - Metamediaries - Virtual malls ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 10-9
- 10. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-10 ONLINE RETAILING Merchants set up storefronts online that can sell a greater assortment of products in smaller quantities than offline. -The “long tail” refers to the ability to increase revenue by selling small quantities of large numbers of products online. Shopping cart abandonment is one of online retailing’s biggest problems. Digital goods such as news, music, software, movies, etc. may be delivered over the Internet. The manufacturer sells directly to the customer in the direct distribution model.
- 11. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-11 WHAT DO U.S. C ONSUMERS B UY O NLINE ?
- 12. DISTRIBUTION CHANNEL LENGTH AND FUNCTIONS ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-12 Channel length refers to the number of intermediaries between the supplier and the consumer. Direct distribution channels have no intermediaries. Indirect channels have one or more intermediaries. Eliminating intermediaries can potentially reduce costs. - Disintermediation describes the process of eliminating traditional intermediaries.
- 13. FUNCTIONS OF A DISTRIBUTION CHANNEL 9-13 Channel functions can be characterized as follows: Transactional Logistical Facilitating
- 14. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-14 Transactional Functions include: Making contact with buyers. Marketing communication strategies. Matching products to buyer’s needs. Negotiating price. Processing transactions. TRANSACTIONAL FUNCTIONS
- 15. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-15 Logistical functions include physical distribution activities, such as: -Transportation - Inventory storage - Aggregation of products Logistical functions are often outsourced to third-party specialists such as UPS or FedEx. LOGISTICAL FUNCTIONS
- 16. FACILITATING FUNCTIONS MARKET RESEARCH Market research is a major function of the distribution channel The Internet affects the value of market research in five ways -Some information is free. -Managers and employees can conduct research from their desks. -Internet-based information tends to be timelier. more relevant and current. -Web-based information is in digital form. -E-marketers can receive detailed reports Because of the amount of consumer behavior information available. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-16
- 17. FACILITATING FUNCTIONS, CONT. FINANCING Financing is an important facilitating function in both consumer and business transactions Intermediaries want to make it easy for customers to pay in order to close the sale. Secure Electronic Transactions (SET) is required for customers to feel comfortable purchasing online Credit card companies have formed SET as vehicle for: -Legitimizes merchants and consumers. -Protects consumers’ credit card numbers. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-17
- 18. DISTRIBUTION SYSTEM The distribution channel is actually a system of unified organizations working together to build value as products proceed through the channel to the consumer There are 3 ways to define the scope of the channel as a system. 1-Distribution functions that are downstream from the manufacturer to the consumer. 2- The supply chain, upstream from the manufacturer, working backward to raw materials. 3- Consider the supply chain, manufacturer, and distribution channel as an integrated system called the value chain or integrated logistics. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-18
- 19. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 9-19 DISTRIBUTION CHANNEL METRICS B2B MARKET B2B metrics may include: Time from order to delivery. Order fill levels. Other activities that reflect functions performed by channel participants.
- 20. Any Questions? ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL 7-20