Lecture 13- Designing and Managing Channels.pdf
- 1. Designing and Managing Value Networks and Channels 1 Prof. Aparna Kanchan
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- 3. 3 Channels and Marketing Decisions Push strategy Pull strategy
- 5. 5 Buyer Expectations for Channel Integration • Ability to order a product online and pick it up at a convenient retail location • Ability to return an online- ordered product to a nearby store • Right to receive discounts based on total online and offline purchases
- 6. Categories of Buyers Habitual shoppers High value deal seekers Variety-loving shoppers High-involvement shoppers 6
- 7. 7 Should the 4 P’s be replaced? • Solutions • Information • Value • Access
- 8. Value Networks • A set of connections between organizations and/or individuals interacting with each other to benefit the entire group • Each member relies on the other to foster growth and increase value • Marketers, have traditionally focused on the downstream side of the value network , adopting customer relationship management software and practices • Today, there is increasing focus in companies’ upstream activities 8
- 9. Channel Member Function • Gather information about potential and current customers, competitors , other actors and forces in marketing environment • Develop persuasive communications to stimulate purchasing • Negotiate and reach agreements on price and terms • Place orders with manufacturers • Acquire the funds to finance inventories at different levels in the marketing channel • Assume risk connected with carrying out the channel work • Provide for the successive storage and movement of physical products • Oversee actual transfer of ownership from one organization or person to another 15-9
- 13. Designing a Marketing Channel System 13 Analyze customer needs Evaluate major channel alternatives Identify major channel alternatives Establish channel objectives
- 14. 14 Analyze Customer Needs and Wants
- 15. 15 Channel Service Outputs Lot size Waiting/delivery time Spatial convenience Product variety Service backup
- 16. Establish Channel Objectives • Channel objective vary with product characteristics … – Bulky products – Non standard products – High Unit Value products – Eg: Apple Store 16
- 24. The Value – Adds V/S Costs of Different Channels 24
- 27. Selecting Channel Members • Producer should determine – No: of years in business – Other lines carried out – Growth and Profit record – Financial Strength – Cooperativeness – Service Reputation 27
- 28. Training and Motivating Channel Members • Coercive – Threatening intermediaries to terminate relationship if they fail to cooperate • Reward – Offering extra benefits on performing specific act or function • Legitimate – Request for behavior that is warranted under contract • Expert – Having a special knowledge that intermediaries value and doesn’t posses • Referent – The manufacturer is so highly respected that intermediaries are proud to be associated with it 28
- 30. Channel Integration and Systems Vertical marketing systems • Corporate VMS • Administered VMS • Contractual VMS Horizontal marketing systems Multichannel systems 30
- 31. What is aVertical MarketingSystem? A vertical marketing system is a form of cooperation between multiple levels of a distribution channel The members work together to promote efficiency and economies of scale in the way products are promoted to customers 31
- 32. Corporate Vertical System: An example would be Apple who designs and manufactures its own products and they are sold in the retailer shops of the company itself A corporate vertical marketing system involves the ownership of all levels of the production or distribution chain by a single company ™ 32
- 33. Administered Vertical System: An example of this type of system could include a large retailer such as Wal-Mart establishing standards for makers of smaller products An administered vertical marketing system is one in which one member of the production and distribution chain -- due to its sheer size -- is dominant and organizes the nature of the vertical marketing system 33
- 34. Contractual Vertical System: Franchising is a common form of a contractual vertical marketing system A contractual vertical marketing system involves a formal agreement between the various levels of the distribution or production channel to coordinate the overall process Arrangement where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications 34
- 36. Conflict, Cooperation and Competition 36 Vertical Channel Conflict Multichannel Conflict Horizontal Channel Conflict
- 37. Types of Conflict and Coordination 37
- 38. Causes of Channel Conflict 38
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- 40. E- Commerce 40
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- 47. M- Commerce 47
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- 49. MAR MARKETING LOGISTICS & SUPPLY CHAIN MANAGEMENT 49
- 50. Marketing Logistics and Supply Chain Management In today’s global marketplace, selling a product is sometimes easier than getting it to customers. Companies must decide on the best way to store, handle, and move their products and services so that they are available to customers in the right assortments, at the right time, and in the right place. Logistics effectiveness has a major impact on both customer satisfaction and company costs. 50
- 51. Nature and Importance of Marketing Logistics • Marketing logistics also called physical distribution involves planning, implementing, and controlling the physical flow of goods, services, and related 51
- 52. Nature and Importance of Marketing Logistics Companies today are placing greater emphasis on logistics for several reasons. First, companies can gain a powerful competitive advantage by using improved logistics to give customers better service or lower prices. Second, improved logistics can yield tremendous cost savings to both a company and its customers. Third, the explosion in product variety has created a need for improved logistics management. Finally, more than almost any other marketing function, logistics affects the environment and a firm’s environmental sustainability efforts. 52
- 53. Goals of the Logistics System Some companies state their logistics objective as providing maximum customer service at the least cost. Unfortunately, no logistics system can both maximize customer service and minimize distribution costs. The goal of marketing logistics should be to provide a targeted level of customer service at the least cost. A company must first research the importance of various distribution services to customers and then set desired service levels for each segment. 53
- 55. Warehousing A company must decide on how many and what types of warehouses it needs and where they will be located. Storage warehouses store goods for moderate to long periods. In contrast, distribution center are designed to move goods rather than just store them. They are large and highly automated warehouses designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible. 55
- 56. Transportation The choice of transportation carriers affects the pricing of products, delivery performance, and the condition of goods when they arrive—all of which will affect customer satisfaction. The company can choose five main transportation modes: Truck Rail Water Pipeline Air 56
- 57. Logistics Information Management Information can be shared and managed in many ways, but most sharing takes place through electronic data interchange (EDI), the digital exchange of data between organizations, which primarily is transmitted via the Internet. Many large retailers work closely with major suppliers to set up vendor- managed inventory (VMI) systems or continuous inventory replenishment systems. 57
- 58. Integrated Logistics Management Integrated logistics management is the logistics concept that emphasizes teamwork ─ both inside the company and among all the marketing channel organizations ─ to maximize the performance of the entire distribution system. 58
- 59. Cross-Functional Teamwork Inside the Company The goal of integrated supply chain management is to harmonize all of the company’s logistics decisions. Close working relationships among departments can be achieved in several ways. Some companies have created permanent logistics committees composed of managers responsible for different physical distribution activities. Companies can also create supply chain manager positions that link the logistics activities of functional areas. 59
- 60. Building Logistics Partnerships • The members of a marketing channel are linked closely in creating customer value and building customer relationships. • One company’s distribution system is another company’s supply system. The success of each channel member depends on the performance of the entire supply chain. • Many companies have created cross-functional, cross- company teams. • Other companies partner through shared projects. 60
- 61. Third-Party Logistics Third-party logistics (3PL) provider is an independent logistics provider that performs any or all of the functions required to get a client’s product to market. Companies use third-party logistics providers for several reasons. First, since getting the product to market is their main focus, using these providers makes the most sense, as they can often do it more efficiently and at lower cost. Second, outsourcing logistics frees a company to focus more intensely on its core business. Finally, integrated logistics companies understand increasingly complex logistics environments. 61
- 62. Wholesaling All the activities in selling goods or services to those who buy for resale or business use. 62
- 63. Major Wholesaler Types Merchant wholesaler Full-service wholesaler Limited-service wholesaler Brokers and agents Manufacturers’ and retailers’ branches and offices Specialized wholesalers 63
- 64. How Wholesalers Differ From Retailers Pay less attention to promotion, atmosphere, and location Transactions are usually larger and cover a larger trade area Different legal regulations and taxes 64
- 65. What Wholesalers do Selling and promoting Buying and assortment building Bulk breaking Warehousing Transportation Financing Risk bearing Market information Management services and counseling 65
- 66. Trends in Wholesaling Facing mounting pressures from: New sources of competition Demanding customers New technologies More direct-buying programs by large buyers Manufacturers Responses: Revisiting decisions Cutting costs 66
- 67. THANK- YOU 67