Ch 12 Marketing Channels

Channel Management Decisions

Selecting channel members Managing channel members Motivating channel members Evaluating channel members

Each major alt. should be evaluated against

economic criteria, control and adaptive criteria

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.

Supply Chain

"make and sell" view includes the firm's raw materials, productive inputs and factory capacity.

How Channel Members Add Value

-from an economic view, intermediaries transform the assortment of products into assortments wanted by consumers. -channel members add value by bridging the major time, place and possession gaps that separate goods and services from those who would use them.

Channel Design Decisions

1. analyzing consumer needs 2. setting channel objectives 3. identifying major channel alternatives 4. evaluation

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.

Number of Channel Levels

Connected by types of flows: -physical flow of products -flow of ownership -payment flow -information flow -promotion flow

Analyzing Consumer Needs

Finding out what target consumers want from the channel, what segments to serve, best channels to use and minimizing the cost of meeting customer service requirements

Marketing decisions

How many what types where to locate warehouses distribution centers

Identifying Major Alternatives

Intensive distribution (Candy and toothpaste) Exclusive distribution (Lux cars and prestige clothing) Selective distribution (TV and home appliance)

Inventory Management

Just-in-time systems RFID- knowing exact product location Smart shelves - placing orders automatically.

Exclusive territorial agreements

are where producer or seller limit territory

Transportation

affects the pricing of products, delivery performance and condition of the goods when they arrive. truck, rail, water, pipeline, air and internet

Tying agreements

agreements where the dealer must take more or all of the line.

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

Marketing Channel

consists of firms that have partnered for their common good with each member playing a specialized role

Contractual vertical marketing system

consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies or sales impact that each could achieve alone. The most common form is the franchise organization

administered vertical marketing system

has a few dominant channel members without common ownership. Leadership comes from size and power

Integrated logistics

management is the recognition that providing customer service and trimming distribution costs requires teamwork internally and externally

Upstream Partners

include raw material suppliers, components, parts, info, finances and expertise to create a product or service.

Downstream Partners

include the marketing channels or distribution channels that look toward the customer

Corporate vertical marketing system

integrates successive stages of production and distribution under single ownership

Franchise Organization

links several stages in the production distribution process

Disintermediation

occurs when product or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displaces traditional ones.

Intermediaries

offer producers greater efficiency in making goods available to target markets. Through their contacts, experience, specialization and scale of operations, intermediaries usually offer the firm more than it can achieve on its own.

Marketing Logistics

physical distribution involves planning, implementing and controlling the physical flow of goods, services and related info from points of origin to points of consumption to meet consumer requirements at a profit

Vertical Marketing Systems (VMS)

provide channel leadership and consist of producers, wholesalers and retailers acting as a unified system and consist of: corporate, contractual and administered marketing systems

Channel Conflict

refers to disagreement over goals, roles and rewards by channel members. - horizontal conflict -vertical conflict

Setting Channel Objectives

targeted levels of customer service, balance consumer needs not only against the feasibility and cost of meeting these needs but also against customer price preferences.

Value Delivery Network

the firm's suppliers, distributors and ultimately customers who partner with each other to improve the performance of the entire system.

Logisitics information management

the management of the flow of information, including customer orders, billing, inventory levels and customer data. EDI (electronic data interchange) VMI (vendor- managed inventory)

Third-party logistics

the outsourcing of logistics functions to third-party logistics providers (3PL)

Supply chain management

the process of managing upstream and downstream value-added flows of materials, final goods and related info among suppliers, the company, resellers and final consumers.

Major logistics functions

warehousing inventory management transportation logistics info management

Multichannel Distribution Systems (Hybrid Marketing Channels)

when a single firm sets up two or more marketing channels to reach one or more customer segments

Exclusive distribution

when the seller allows only certain outlets to carry its products

Exclusive dealing

when the seller requires that the sellers not handle competitors products

Horizontal Marketing Systems

when two or more companies at one level join together to follow a new marketing opportunity. Companies combine financial, production or marketing resources to accomplish more than any one company could alone.