Chapter 13: Marketing Channels and Supply-Chain Management
A "Marketing Intermediary"
A "middleman" linking producers to others intermediaries to ultimate consumers through contractual arrangements or through the purchase and resale of products
Supply Chain
A "total distribution perspective"--all up-stream and all downstream activities
Marketing Channel
A group of individuals and organizations directing the flow of products from producers to customers
Vertical Marketing System (VMS)
A marketing channel managed by a single channel member to achieve efficient, low-cost distribution -Pre-Engineered -Centrally-Programmed -Professional Staff to Manage
Very high Accessibility (Transportation)
Accessibility
Physical Distribution (aka Logistics)
Activities used to move products from producers to consumers and other end users -Transportation -Warehousing -Order Processing -Inventory Management
Three Types of VMS's
Administered VMS (Kellogg's; Campbell's) Contractual VMS (KFC, McDonald's, Dunkin' Donuts) Corporate VMS (Stew Leonard's)
Very high cost (Transportation)
Airplanes
Intermodal Transportation
An integrated transportation approach in which two or more transportation modes are used in combination Containerization: piggyback, fishyback, birdyback modes
Just-in-Time (JIT)
An inventory management in which supplies arrive just when needed for production or resale
Products carried (new?)
Coal
Horizontal Integration
Combines organizations at the same level of operation under one management Creates efficiences and economies of sale Supplier-Supplier-Supplier Retailer-Retailer-Retailer
Channel Functions are most basic:
Contractual Function Communication Function Pricing Function Physical Function Leadership Function
Inventory Management
Developing and maintaining adequate assortments of products to meet customers' needs
Megacarriers
Freight transportation firms that provide several modes of shipment
Supply Chain Management
Long term partnerships among marketing channel members that reduce inefficiencies, costs, and redundancies to satisfy customers
Objective of Inventory Management
Minimize inventory costs yet have on hand a sufficient supply of goods to satisfy customers -Stockouts--inventory-related shortages of products -Recorder point=(Order Lead Time x Usage Rate) + Safety Stock
Freight Forwarders
Organizations that consolidate shipments from several firms into efficient lot sizes
Very high frequency (Transportation)
Pipelines
Marketing Channels Facilitate Exchange Efficiencies
Reduce the overall costs of market exchanges Reduce search costs for customers Maintain order in the marketplace
Dual Distribution
Runs the risk of being viewed as anti-competitive
Channel
Supplier Producer Agent and Broker Wholesaler Retailer Customer
Outsourcing
The contracting of physical distribution tasks to third parties with specialized logistics skills who do not have managerial authority within the marketing channel
Possession Utility
The customer has access to the product to use or to store for future use (raincoats).
Transportation
The movement of products from where they are made to intermediaries and end users
Form Utility
The product is assembled, prepared or otherwise refined to suit customer needs
Place Utility
The product is available in locations where customers wish to purchase it
Time Utility
The product is available when the customer wants it (newspaper delivery)
Vertical Channel Integration
Two or more stages of the marketing channel operate under one management. Channel members coordinate their efforts to reach a target market. Often effective against competition because of increased bargaining power and shared information and responsibilities
Very high load flexibility (Transportation)
Waterways