MKT401_Distribution MKT401_Distribution .ppt
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The document discusses the roles and importance of marketing channels and supply chain management, outlining how companies use distribution channels to improve efficiency and provide value. It covers the selection, motivation, and evaluation of channel members, as well as logistics and integrated supply chain strategies. Key concepts include channel conflict, types of distribution systems, and logistics management functions that enhance customer service and reduce costs.
MKT401_Distribution MKT401_Distribution .ppt
- 1. Marketing Channels and Supply Chain Management Prepared By M. Fahim Arif Fahad Shafqat Submitted to Syed Akhter Mehmood Principles of Marketing MKT401 College of Business Management
- 2. 12 - 2 Road Map 1. Know why companies use distribution channels and understand the functions that these channels perform. 2. Learn how channel members interact and how they organize to perform the work of the channel. 3. Know the major channel alternatives that are open to a company. 4. Comprehend how companies select, motivate, and evaluate channel members. 5. Understand the nature and importance of marketing logistics and integrated supply chain management.
- 3. 12 - 3 Road Map 1. Know why companies use distribution channels and understand the functions that these channels perform. 2. Learn how channel members interact and how they organize to perform the work of the channel. 3. Know the major channel alternatives that are open to a company. 4. Comprehend how companies select, motivate, and evaluate channel members. 5. Understand the nature and importance of marketing logistics and integrated supply chain management.
- 4. 12 - 4 Key Terms • Value Delivery Network – The network made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system. • Marketing or Distribution channel – 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. 12 - 5 Nature & Importance of Marketing Channels • Channel choices affect other decisions in the marketing mix – Pricing, marketing communications • A strong distribution system can be a competitive advantage • Channel decisions involve long- term commitments to other firms
- 6. Strong Distribution as a Competitive Threat FedEx improved its distribution by acquiring Kinko’s in 2004 Marketing in Action 12 - 6
- 7. Nature & Importance of Marketing Channels • How Channel Members Add Value • The use of intermediaries results from their greater efficiency in making goods available to target markets. • Match product assortment demand with supply. • Offers the firm more than it can achieve on its own through the intermediaries: Contacts Experience Specialization Scale of operation 12 - 7
- 8. 12 - 8 • Bridge, time, place, and possession gaps that separate products from users.
- 9. 12 - 9 Key Functions Performed by Channel Members • Information • Promotion • Contact • Matching • Negotiation • Physical Distribution • Financing • Risk taking
- 10. 12 - 10 Nature & Importance of Marketing Channels • Number of Channel Levels – The number of intermediary levels indicates the length of a marketing channel. • Direct Channels • Indirect Channels – Producers lose more control and face greater channel complexity as additional channel levels are added.
- 11. Customer and Business Marketing Channels 12 - 11
- 12. 12 - 12 Channel Members are Channel Members are Connected Via a Connected Via a Variety of Flows Variety of Flows • Physical Flow • Payment Flow • Information Flow • Promotion Flow • Flow of Ownership
- 13. 12 - 13 Road Map 1. Know why companies use distribution channels and understand the functions that these channels perform. 2. Learn how channel members interact and how they organize to perform the work of the channel. 3. Know the major channel alternatives that are open to a company. 4. Comprehend how companies select, motivate, and evaluate channel members. 5. Understand the nature and importance of marketing logistics and integrated supply chain management.
- 14. 12 - 14 Channel Behavior and Organization • Channel Conflict – Occurs when channel members disagree on roles, activities, or rewards. – Types of Conflict: • Horizontal conflict: occurs among firms at the same channel level • Vertical conflict: occurs among firms at different channel levels • Some conflict can be healthy competition.
- 15. 12 - 15 Channel Behavior and Organization • Conventional Distribution Channels – Consist of one or more independent channel members – Lack leadership and power – Often result in poor performance • Vertical Marketing Systems A distribution channel structure in which producers, wholesalers, and retailers act as a unified system
- 16. Conventional vs. Vertical Marketing Channel 12 - 16
- 17. 12 - 17 Channel Behavior and Organization • Corporate VMS • Contractual VMS • Administered VMS • Corporation owns production and distribution • Coordination and conflict through regular organizational channels Vertical Marketing Systems
- 18. 12 - 18 Channel Behavior and Organization • Corporate VMS • Contractual VMS • Administered VMS • Individual firms who join through contracts • Franchise organizations – Manufacturer-sponsored retailer franchise system – Manufacturer- sponsored wholesaler franchise system – Service-firm-sponsored retailer franchise system Vertical Marketing Systems
- 19. 12 - 19 Channel Behavior and Organization • Corporate VMS • Contractual VMS • Administered VMS • Leadership through the size and power of dominant channel members • Leadership could be manufacturer or retailer Vertical Marketing Systems
- 20. 12 - 20 Franchise Organization • Manufacturer-Sponsored Retailer Franchise System – Ford and its independent franchised dealers • Manufacturer-Sponsored Wholesaler Franchise System – Coca-Cola’s licensed bottlers • Service-Firm Sponsored Retailer Franchise System – McDonald’s, Avis, and Holiday Inn
- 21. 12 - 21 Channel Behavior and Organization • Horizontal Marketing Systems – Companies at the same level work together with channel members • Multichannel Distribution Systems – Also called hybrid marketing channels – Occurs when a firm uses two or more marketing channels • Changing Channel Organization – Disintermediation
- 23. Reebok uses a multi- channel distribution system which includes a direct channel. Marketing in Action Multichannel Distribution System 12 - 23
- 24. 12 - 24 Changing Channel Organization • Disintermediation means that more and more, product and service producers are bypassing intermediaries and going directly to final buyers, or that radically new types of channel intermediaries are emerging to displace traditional ones.
- 25. 12 - 25 Road Map 1. Know why companies use distribution channels and understand the functions that these channels perform. 2. Learn how channel members interact and how they organize to perform the work of the channel. 3. Know the major channel alternatives that are open to a company. 4. Comprehend how companies select, motivate, and evaluate channel members. 5. Understand the nature and importance of marketing logistics and integrated supply chain management.
- 26. 12 - 26 Channel Design Decisions • Step 1: Analyzing Consumer Needs – Cost and feasibility of meeting needs must be considered • Step 2: Setting Channel Objectives – Set channel objectives in terms of targeted level of customer service – Many factors influence channel objectives Video Snippet Hasbro targets consumers through channels
- 27. 12 - 27 Channel Design Decisions • Step 3: Identifying Major Alternatives – Types of intermediaries • Company sales force, manufacturer’s agency, industrial distributors – Number of marketing intermediaries • Intensive, selective, and exclusive distribution – Responsibilities of channel members
- 28. 12 - 28 Channel Design Decisions • Step 4: Evaluating Major Alternatives – Economic criteria – Control issues – Adaptive criteria
- 29. 12 - 29 Channel Design Decisions • Designing International Distribution Channels – Global marketers usually adapt their channel strategies to structures that exist within foreign countries – Key challenges: • May be complex or hard to penetrate • May be scattered, inefficient, or totally lacking
- 30. 12 - 30 Road Map 1. Know why companies use distribution channels and understand the functions that these channels perform. 2. Learn how channel members interact and how they organize to perform the work of the channel. 3. Know the major channel alternatives that are open to a company. 4. Comprehend how companies select, motivate, and evaluate channel members. 5. Understand the nature and importance of marketing logistics and integrated supply chain management.
- 31. 12 - 31 Channel Management Decisions • Selecting channel members • Managing and motivating channel members • Evaluating channel members • Which characteristics are important? – Years in business – Lines carried – Growth and profit record – Cooperativeness and reputation – Type of customer – Location Decisions Decisions
- 32. 12 - 32 Channel Management Decisions • Selecting channel members • Managing and motivating channel members • Evaluating channel members • Partner relationship management (PRM) for long-term partnerships • Software available to coordinate members Decisions Decisions
- 33. 12 - 33 Channel Management Decisions • Selecting channel members • Managing and motivating channel members • Evaluating channel members • Check channel performance of: – Sales – Inventory – Customer delivery – Promotion and training – Customer service Decisions Decisions
- 34. 12 - 34 • Exclusive distribution – Only certain outlets are allowed to carry a firm’s products • Exclusive dealing – Exclusive territorial agreements – Tying agreements Public Policy and Distribution Decisions
- 35. 12 - 35 Road Map 1. Know why companies use distribution channels and understand the functions that these channels perform. 2. Learn how channel members interact and how they organize to perform the work of the channel. 3. Know the major channel alternatives that are open to a company. 4. Comprehend how companies select, motivate, and evaluate channel members. 5. Understand the nature and importance of marketing logistics and integrated supply chain management.
- 36. 12 - 36 • Marketing Logistics – Outbound distribution – Inbound distribution – Reverse distribution – Involves the entire supply chain management system Marketing Logistics and Supply Chain Management
- 37. Supply Chain Management 12 - 37
- 38. 12 - 38 • Why Greater Emphasis is Being Placed on Logistics: – Offers firms a competitive advantage – Can yield cost savings – Greater product variety requires improved logistics – Improvements in distribution efficiency are possible due to information technology Marketing Logistics and Supply Chain Management
- 39. 12 - 39 • Goals of the Logistics System – No system can both maximize customer service and minimize costs. – Firms must first weigh the benefits of higher service against the costs. – State goals in terms of a targeted level of customer service at the least cost. Marketing Logistics and Supply Chain Management
- 40. 12 - 40 • Major Logistics Functions – Warehousing – Inventory Management – Transportation – Logistics Information Management Marketing Logistics and Supply Chain Management
- 41. 12 - 41 Warehousing • How many, what types, and where? • Storage warehouses • Distribution centers • Automated warehouses
- 42. 12 - 42 Inventory Management • Must balance between too much and too little inventory. • Just-in-time logistics systems • RFID, AutoID, or Smart Tag technology
- 43. 12 - 43 Transportation • Trucks • Railroads • Water carriers • Pipelines • Air • Internet • Intermodal transportation
- 44. 12 - 44 Integrated Logistics Management • 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. • Involves: – Cross-functional teamwork inside the company – Building logistics partnerships – Third-party logistics
- 45. 12 - 45 • Integrated Logistics Management – Cross-functional teamwork inside the company is critical – Logistics partnerships are also built through shared projects – Outsourcing of logistics firms to third- party firms is becoming more common Marketing Logistics and Supply Chain Management
- 46. 12 - 46 Case Study Caterpillar • Dominates world’s markets for heavy construction and mining equipment. • Independent dealers are key to success • Dealer network is linked via computers • Caterpillar stresses dealer profitability, extraordinary dealer support, personal relationships, dealer performance and full, honest, and frequent communications 12 - 46
- 47. 12 - 47 Rest Stop 1. Know why companies use distribution channels and understand the functions that these channels perform. 2. Learn how channel members interact and how they organize to perform the work of the channel. 3. Know the major channel alternatives that are open to a company. 4. Comprehend how companies select, motivate, and evaluate channel members. 5. Understand the nature and importance of marketing logistics and integrated supply chain management.
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