BUSML 3150 quiz 4 - ch 10 / 11 PLACE

transportation (logistic function)

choice of carrier affects price of products, delivery performance and conditions of goods when they arrive (all affect customer satisfaction) time and cost big factors -truck, rail, water, pipeline, air --alt mode for digital products

Why Logistics is Critical

companies can gain a competitive advantage with logistics yield cost solutions by customers and company improvements in technology - opportunities for more gains in distribution efficiency better service, lower prices effects environment and firms sustainability efforts -green supply chains (transportation + warehousing + packaging + more) biggest supply chain contributors to environmental footprint

water carriers (transportation)

low cost for bulky/low value/non perishables (sand, grain, oil) slower mode affected by weather

supply chain term is limited because

make and sell view of business market planning starts with raw materials/productive inputs/factory capacity

cross functional teamwork inside company (logistics information management)

make decisions by various functions coordinate -> better overall logistics performance via permanent logistics committee --supply chain manager positions, system wide supply chain management software

Logistics Information Management (logistic function)

manage supply chains through information channel partners share info to make better joint logistics decisions info closely linked to channel performance (transactions, billing, etc) share info via electronic data interchange

supply chain management

managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers sometimes manufacturers have distribution centers. sometimes ship to retailer distribution center

adaptability criteria (evaluating major alternatives)

channels often involve long-term commitments, yet the company wants to keep the channel flexible so that it can adapt to environmental changes

evaluating channel members (marketing channel management)

check channel member performance against sales quotas, average inventory levels, customer delivery time, treatment of damaged and lost goods, cooperation in company promotion and training programs, and services to customer reward if well assist or replace if bad be sensitive to needs of channel partners

economic criteria (evaluating major alternatives)

a company compares the likely sales, costs, and profitability of different channel alternatives

value delivery network

a network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value

marketing channel/distribution channel

a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user these decisions directly effect every other marketing decision imaginative (apple -> iTunes, airbnb -> online) if pay too little attention to this, damaging results decisions involve long term commitments to other firms complex behavioral systems in which people and companies interact to accomplish individual company and channel goals

multichannel distribution system

a single firm sets up two or more marketing channels to reach one or more customer segments in past- one channel to single market/segment many companies distribute through many channels many advantages to companies facing large and complex markets --with each channel, company expands sales and market coverage and gains opportunities to tailor its products and services to specific needs of diverse customer segments harder to control, can generate conflict as more channels compete for customer sales

intensive distribution (number of intermediaries strategies)

a strategy in which they stock their products in as many outlets as possible -producers of convenience products and common materials -available when and where customers want

inventory management (logistic function)

affects customer satisfaction maintain balance between carrying too little inventory and too much --balance costs of carrying larger inventories against resulting sales and profit greatly reduce inventories costs through just in time logistics systems

identifying major alternatives (marketing channel design)

after identifying channel objectives, identify this. (types of intermediaries, number of intermediaries, and responsibilities of each channel member)

integrated logistics management (logistics information management)

better customer service and trimming distribution costs require teamwork in company and among all marketing channel organizations inside - company departments work closely together to maximize own logistics performance outside- company must integrate logistics system with those of suppliers and customers to maximize the performance of the entire distribution network

consumers want

broad assortment of products, small quantities

Channel members add value by bridging the major gaps of ________ that separate goods and services from those who would use them. A) time, need, and form B) place, possession, and form C) time, place, and possession D) place, time, and need E) place, need, and distribution

c) time place and session gaps

marketing channel design

calls for analyzing consumer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives

marketing channel management

calls for selecting, managing, and motivating individual channel members and evaluating their performance over time

just in time logistics systems

carry small inventory, new stock arrives when needed (rather than stored in inventory until used) requires accurate forecasting and fast/frequent/flexible delivery so new supplies available when needed substantial savings in inventory carrying and handling costs (rfid tech)

different length channel levels

channel 1 are direct marketing channels channels 2/3 are indirect marketing channels

reverse logistics

reusing, recycling, refurbishing, or disposing of broken, unwanted, or excess products returned by consumers or resellers

evaluating major alternatives (marketing channel design)

select channel alternative that best satisfies long run objectives evaluate each against economic , control and adaptability criteria

exclusive distribution (public policy and distribution decisions)

seller allows only certain outlets to carry its products

exclusive dealing (public policy and distribution decisions)

sellers require these dealers not handle competitors products often involves exclusive territorial agreements

pipelines (transportation)

specialized means of shipping gas/chemicals own carriers, ship own products

vertical marketing systems VMS

specify channel members roles and manage conflict for channel success provide channel leadership (unlike conventional distribution channels) -producers / wholesalers / retailers acting as unified system --one channel member owns others, has contacts with them or wields so much power that they must all cooperate --3 major types (each use different means for setting up leadership and power in channel)

customer-centered logistics

starts with the marketplace and works backward to the factory or even to sources of supply involves entirety of supply chain management

setting channel objectives (marketing channel design)

stated in terms of targeted levels of customer service choose segments and desired service level and right channels in each case minimize total channel cost of meeting customer service requirements also influenced by nature of company, its products, its intermediaries, its competitors and environment, and size and financial situation in some cases, compete in or near outlets that carry competition products some avoid channels used by competition environmental factors (economic and legal) affect objectives and design

storage warehouses (warehouse type)

store goods for moderate to long periods

warehousing (logistic function)

storing goods in anticipation of sale or transfer to another member of the channel of distribution

sustainable supply chain

sustainability regulations will require them large customers demand it (nike) and consumers do right thing to do good for efficiency (green up supply chains via greater efficiency -> greater efficiency = lower costs and higher profits socially responsible and profitable

Electronic Data Interchange (EDI) (logistics information management)

the digital exchange of data between organizations, which primarily is transmitted via the Internet.

length of channel =

# of intermediary levels

franchise organization (contractural VMS)

(most common type of contractual relationship) a channel member called a franchisor links several stages in the production-distribution process allows entrepreneurs with good business concepts to grow their business quickly and profitably

demand chain

"sense and respond" view suggests that planning starts with the needs of the target customer alternative to supply chain planning starts by identifying needs of target customers to which company responds by organizing a chain of resources/activities with a goal of creating customer value also limited bc step by step purchase-production-consumption view

channel behaviors

-each channel member depends on others -each channel member plays specialized role -should work together (but rarely do. individual channel members take broad view) cooperating to achieve overall channel goals sometimes means giving up individual company goals (often act in own short term interest)

channel key functions in marketing to complete transactions

-information (gather and distribute about consumers, producers, and other actors in marketing environment needed for planning) -promotion (developing and spreading persuasive communications about an offer) -contact (finding and engaging customers and prospective buyers) -matching (shaping offers to meet the buyer's needs, including activities such as manufacturing, grading, assembling and packaging) -negotiation (reaching an agreement on price and other terms so that ownership or possession can be transferred)

channel key functions in marketing to fulfill transactions

-physical distribution (transporting and storing goods) -financing (acquiring and using funds to cover the costs of the channel work) -risk taking (assuming the risks of carrying out the channel work) matter of who is gonna do these. assign functions to channel members that can add the most value for th4e cost

3 types of franchises

1. Manufacturer-sponsored retailer franchise system 2. Manufacturer-sponsored wholesaler franchise system 3. Service-firm-sponsored retailer franchise system

Logistics Management Activities

1. Transportation 2. Warehousing 3. Material handling 4. Packaging 5. Inventory management 6. Logistics information systems

channel marketing steps

1. review channel alternatives 2. determine best design 3. implement and manage chosen channel

Service-firm-sponsored retailer franchise system

Burger King and its nearly 12,100 franchisee-operated restaurants around the world

- effectiveness has major impact on customer satisfaction and company costs

logistics

Manufacturer-sponsored wholesaler franchise system

Coca-Cola licenses bottlers (wholesalers) in various world markets that buy Coca-Cola syrup concentrate and then bottle and sell the finished product to retailers locally

multimodal transportation(transportation)

Combining two or more modes of transportation Piggyback - rails and trucks fishyback - water and trucks trainship - rail and water and airtruck n- air and trucks advantages

Partnership Relationship Management (PRM)

Creating long-term relationships with partners (suppliers, other departments, etc.) systems to coordinate whole channel marketing effort use this and supply chain management (SCM) software to help recruit/train/organize/manage/motivate and evaluate relationships with channel partners

Manufacturer-sponsored retailer franchise system

Ford and its network of independent franchised dealers

warehouse decisions

How many What types Location Distribution centers or storage warehouses

third party logistics (logistics information management)

Outsourcing logistics activities to a provider. / contract help tighten up sluggish/overstuffed supply chains, slash inventories, get products to consumers quick and reliably why? -product to market main focus and these providers can do it more efficiently at lower costs -outsourcing frees company to focus on core business -integrated logistics companies understand complex logistic environments

selecting channel members (marketing channel management)

Producers vary in their ability to attract qualified marketing intermediaries. determine what characteristics distinguish the better ones. evaluate channel members years in business, other lines carried, location, growth and profit record, cooperativeness and reputation

public policy and distribution decisions

companies free to develop whatever channel arrangements suite them channel laws deal with companies keeping another company from desired channel and mutual rights/duties of channel members once they have formed relationships -exclusive distribution -exclusive dealing (both parties can benefit from exclusive agreements. seller gets loyal/dependable outlets, and dealer gets steady source of supply and stronger seller support)

building logistics partnerships (logistics information management)

companies must work with other channel partners to improve whole-channel distribution, not just company logistics -cross functional - cross company teams -shared project

control issues (evaluating major alternatives)

company prefers to keep as much control as possible

Types of Vertical Marketing Systems

corporate, contractual, administered

railroads (transportation)

cost effective for large amounts of bulk products - sand coal farm products - over long distance increase in service recently --new equipment to handle special categories of goods --in transit services (diversion of shipped goods to other destinations en route / processing of goods en route)

air carriers (transportation)

cost high fast distant market reach perishables (flowers) high value, low bulk items (jewelry) reduces inventory levels, packaging costs and number of warehouses needed

marketing channel intermediaries

create greater efficiency in making goods available to target markets reduce work of producers and consumers from economic system poverties: role is to transform assortments of products made by producers into assortments wanted by customers

internet carriers (transportation)

digital products from producer to customer via satellite, cable, phone wire, wireless signla -music low product distribution cost moves information bits, not packages

channel conflict

disagreements among marketing channel members on goals, roles, and rewards - who should do what and for what rewards some conflict in channel healthy competition, good for channel and without it-> passive and non innovative

direct to consumer brands (DTC)

don't compete head to head with established competition in retail stores, instead, sell and ship directly to consumers via online and mobile channels new channel disruptor type increase with covid cut costs/lower prices convenient build direct relationships with customers personalized offerings startups compete with big brands (they react aggressively. establish or strengthen own DTC or buy and merge with disruptors) harrys and dollar shave club to Gillette traditional brands move to DTC while DTC go to stores (Harrys) can increase problems for company entire channel (run its retailers out of business)

analyzing consumer needs - marketing channels part of overall customer value network. (marketing channel design)

each channel member adds value for customer. so design marketing channel start with finding out what target consumers want from channel desired consumer services (delivery, assortment, services) balance consumer needs against feasibility and costs of meeting the needs but also against customer price preferences

channel level

each layer of marketing intermediaries that performs some work in bringing the product and its ownership closer to the final buyer producer and final consumer part of every channel producer perspective, greater number of levels = less control and greater channel complexity

designing international distribution channels (evaluating major alternatives)

face additional complexities in designing channels adapt to country unique channel strategies and structures

Upstream Partners in Supply Chain

firms that supply raw materials, components, parts, information, finances, and expertise needed to create a product or service

types of intermediaries(identifying major alternatives)

identify types of channel members to carry out channel network using many types of resellers in a channel provides benefits and drawbacks -reach more buyers and diff kinds, but more difficult to manage and control -direct and indirect channels compete with each other for many of same customers -> potential conflict ex: value added resellers

Downstream Partners in Supply Chain

include the marketing channels or distribution channels that look toward the customer, including retailers and wholesalers form vital link between firms and customers

trucks (transportation)

increase share of transport steadily flexible in route and efficient for short hauls of high value merchandise

value added resellers (type of intermediaries)

independent distributors and dealers that develop computer systems and applications tailored to the special needs of small and medium-sized business customers

contractural VMS (type of VMS 2)

independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than each could achieve alone coordinate activities and manager conflict through agreements -franchise organization (w 3 types) compete well with corporate. hard to distinguish

corporate VMS (type of VMS 1)

integrates successive stages of production and distribution under single ownership coordination and conflict management attained through regular organizational channels can give company more channel control / flexibility (ex: amazon developing own delivery network, more control over delivery. compete more effectively with retailers)

distribution centers (warehouse type)

large, highly automated warehouses that receive goods, take orders, fill them, and deliver goods to customers designed to move goods rather than just store them

administered VMS (type of VMS)

leadership is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members p and g, samsung, Walmart (strong influence over manufacturers) , Home Depot

goals of the logistics system

maximum customer service at least cost (distribution) --no logistics system can do both provide targeted level of customer service at least cost (maximize profits not sales)

inbound logistics

moving products and materials from suppliers to the factory

outbound logistics

moving products from the factory to resellers and ultimately to customers

producers make

narrow assortment of products, large quantities

direct marketing channel

no intermediary levels; the company sells directly to consumers

number of intermediaries strategies (identifying major alternatives)

number at each level -intensive distribution -exclusive distribution -selective distribution

horizontal channel conflict

occurs among firms at the same level of the channel ex: diff dealerships of Toyota cars in Columbus competing

vertical channel conflict

occurs between different levels of the same channel ex: McDonalds headquarters and franchise

indirect marketing channels

one or more intermediary levels

All of the institutions in a channel are connected by flows (5 types)

physical flow (of products) flow of ownership payment flow info flow promotion flow

Marketing logistics (physical distribution)

planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit right product to right customer in right place at right time in the past: physical distribution planners starts with products at plant and then tried to find low cost solutions to get to customers today: customer-centered logistics

responsibilities of each channel member

producers and intermediaries -agree on price policies, conditions of sale, territory rights, specific services to be performed by parties -producer establish list price/fair set of discounts for intermediaries -producer define each channel members territory, careful about new reseller placement

full-line forcing

producers of a strong brand sometimes sell it to dealers only if the dealers will take some or all of the rest of its line tying agreement, not illegal but violate Clayton act if lessen competition substantially

ways to deliver value

product creation product distribution consumer advertising and communication (drive value to ultimate customer)

for maximum effectiveness, channel analysis and decision making should be more -

purposeful

exclusive distribution (number of intermediaries strategies)

the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories -luxury brands --enhances distinctive positioning, earns greater dealer support and customer service

exclusive territorial agreements (exclusive dealing)

the producer may agree not to sell to other dealers in a given area, or the buyer may agree to sell only in its own territory

selective distribution (number of intermediaries strategies)

the use of more than one but fewer than all of the intermediaries that are willing to carry the company's products between exclusive and intensive -electronics and appliances -good relationship with dealers and good selling effort -enhance brand image, allows for higher markups bc greater value added dealer service

horizontal marketing systems

two or more companies at one level join together to follow a new marketing opportunity combien resources with competition or non competition temporary or permanent basis or new company (target and starbs) work well globally

supply chain

upstream and downstream partners to company

vendor-managed inventory (VMI) (logistics information management)

vender = manufacturer systems in which customer shares real time data on sales and current inventory levels with supplier or continuous inventory replenishment systems supplier managed inventory and delivery -close cooperation between buyer and seller

disintermediation

when product or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones channel disruption online taking business from brick and mortar presents opportunities and problems for producers and resellers opp:-channel innovators who find new ways to add value in the channel can displace traditional resellers and reap rewards threat:-new thing vulnerable to disruption by next. continue to innovate and disrupt own distribution model before competition can disruptor can take business by eliminating channel completely (block buster myopia) -analyze channels where disruptor could happen

managing and motivating channel members (marketing channel management)

when selected, channel members must be continuously managed and motivated to do best sell through intermediaries but also TO and WITH them --they are a 1st Line customer and partner --this creates a value delivery system that meets the needs of both the company and its marketing partners convince suppliers and distributors that they can succeed better by working together as a part of a cohesive value delivery system --companies should work in close harmony with others in the channel to find better ways to bring value to customers -many companies installing integrated high tech partnership relationship management (PRM) systems to coordinate whole channel marketing efforts

major logistics functions

with set logistics objectives, design logistics system to minimize cost of obtaining objectives -warehousing -inventory management -transportation -logisitics information management

conventional distribution channels

​Historically, __________ have lacked leadership and​ power, often resulting in damaging conflict and poor performance. 1 or more independent producers/wholesalers and retailers -separate businesses seeking to maximize own profits, perhaps at expense of system at whole -no channel member has much control over others -no formal means exist for assigning roles/resolving channel conflict