MKTG ch. 10 Place/channels

"every company for themselves can be sub-optimal for the system"

"every company for themselves can be sub-optimal for the system"

conventional marketing systems/channel

"every company for themselves" can be sub-optimal for the system producer → wholesaler → retailer → consumer

Marketing logistics/intermediaries

(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 Getting the right product to the right customer in the right place at the right time

major logistics functions include:

- warehousing - inventory management - transportation - logistics information management

types of marketing channel decisions:

1. marketing channel design 2. marketing channel management 3. marketing logostics

major logistics functions - warehousing

Companies must store their goods while they wait to be sold Not a distribution center, which is meant to move goods too

marketing channel management - selecting channel members

Like when Toyota first started Lexus, they had to turn down car dealerships because there were so many that wanted to sell the cars However, Timex (cheap watches) had trouble finding jewelry stores that would sell their watches

major logistics functions - inventory management

Managers must maintain enough inventory but not too much

left digit effect

We encode a price like $7.99 as $7...it's called the left digit effect...we encode it in our mind before we read all the digits.

vertical marketing systems

a channel structure in which producers, wholesalers, and retailers act as a unified system..... One channel member either owns the others, has contracts with them, or has so much power that they all cooperate 3 types: - corporate VMS - contractual VMS - administered VMS

franchise organization

a contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process - the franchise owner must follow certain rules set by the parent company

value delivery network

a network composed of the company, suppliers, distributors, and, ultimately, customers who partner to help the entire system deliver better customer value enables the system to deliver better customer value producer/wholesaler/retailer (all agree to partner together) => consumer

multichannel distribution system

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

corporate vertical marketing system

a vertical marketing system that combines successive stages of production and distribution under single ownership—channel leadership is established through COMMON OWNERSHIP Example - American Apparel makes all of its clothing domestically from raw materials until it reaches the consumer; high quality, not a sweatshop; vertical integration is faster, more flexible, and more efficient Apple iPad is sold through a corporate VMS

key trends in retailing:

a. Growth of non-store retailing b. Retail convergence/rise of mega-retailers - Walmart contains everything c. Global expansion of major retailers d. Increased importance of technology e. Retail stores as communities and places to hangout; importance of experiential retailing - The video about what crazy stuff you can get away with at the Apple Store

green supply chain

choosing your supply chain in a manner that reduces the company's environmental footprints - being environmentally responsible

marketing channel management

choosing, managing, and motivating individual channel members and evaluating channel member performance over time - selecting channel members - managing and motivating

marketing channel management - managing and motivating

company must convince distributors that they can succeed better by working together as a part of a cohesive value delivery system

conventional distribution channel

consists of one or more independent producers, wholesalers, and retailers each is a separate business seeking to maximize its own profits

marketing channel design

designing effective marketing channels by analyzing customer needs, setting channel alternatives, and evaluating channel alternatives

channel conflict

disagreement among channel members regarding goals, roles, or rewards

disintermediation

eliminating marketing intermediaries from a channel Example - Blockbuster is gone because of Netflix Example: Best Buy - fewer people are buying items in the store → must change target segment and leverage service product Black & Decker refuses to get rid of their intermediaries because their products are segmented so retailers help them target a certain audience

integrated logistics management

emphasizes teamwork, both inside the organization and between the marketing channel organizations, to maximize the distribution system performance

this often results in dealers searching for less competition between other dealers holding the same product

exclusive territorial agreements

third-party logistics (3PL) provider

expert logistics provider that performs any or all of the functions that get a client's product to market separate company providers include: Fedex, Ryder, Transplace,

exclusive distribution

giving a limited number of dealers the exclusive right to distribute the company's products in their territories when producers develop exclusive channels for their products; allows a closer relationship; often used with luxury goods - Often found in the distribution of luxury brands - Bentley's are only sold by a few dealerships in Pittsburgh

why we need channels

improves efficiency intermediaries help specializes the selling process "good distribution strategies can contribute strongly to customer value and create competitive advantage for a firm"

marketing channel decisions

include channel design, channel management, and marketing logistics (physical distribution)

contractual vertical marketing systems

individual firms join together through extensive contracts... Includes franchise organizations Hertz is a retailer, but works with Ford, which is a manufacturer; Westin hotels is a retailer, but works with Serta mattresses, which is a manufacturer Fast food restaurants like BK or McD's

distribution center

large, highly-automated warehouse that receives goods from various plants and suppliers - it takes orders, efficiently fills orders, and delivers products to the consumer in a timely manner

channel level

layer of intermediaries that helps bring the product and its ownership closer to a final buyer

administered vertical marketing systems

leadership is established based on the size and power of the dominant channel members (known as channel captains) one major controller making decisions Example - both Home Depot and Barnes & Noble have accumulated a lot of trust in their supply chain - Channel captains have a lot of control in the 4Ps; they are the leader in the voting process

supply chain management

managing upstream and downstream value-added flows of material, finals goods, and related information among suppliers, the company, final consumers, and resellers

indirect marketing channel

marketing channel that contains one or more intermediary levels

direct marketing channel

marketing channel with no intermediary levels

major logistics functions - transportation

moving your stuff from one place to another, including moving it to your customers or a retail location This choice affects the pricing of products, delivery performance, and the condition of goods when they arrive

what is the flow of the conventional marketing channel?

produce → wholesaler → retailer → consumer

traditional marketing channel (arrows)

producer → wholesaler → retailer → consumer

vertical marketing system (arrows)

producer, wholesaler, retailer → consumer

benefits of corporate VSM

quality assurance, fewer transformation costs, creative control, communication enhancements

types of marketing logistics/intermediaries

selective distribution exclusive distribution intensive distribution

marketing channel (distribution channel)

set of interdependent organizations that work together to make a product of service available for use by the consumer or a business user

intensive distribution

stocking the product in as many outlets as possible often used with convenience products like toothpaste, soap, and candy Like how you can get a Coke at a grocery store, diner, restaurant, gas station, vending machine in Pattee, etc.

major logistics functions - logistics information management

the IT/computer systems that help you keep track of your supply chain Transactions, billing, shipment and inventory levels, customer data, etc.

exclusive territorial agreements

the producer may agree not to sell to other dealers in a given area - this often results in dealers searching for less competition between other dealers holding the same product

The goal of horizontal marketing system is to match ___________ and ___________

to match supply and chain

horizontal marketing system

two or more companies at one level join together to follow a new marketing opportunity The goal of horizontal marketing system is to match supply and chain a subway inside a Wal-Mart; there are loads of foot traffic for Subway and Wal-Mart benefits are that the people spend more time there, which increases purchasing General Mills had no brand equity in foreign countries, so they partnered with Nestle to sell Cheerios in other countries

selective distribution

using more than one but fewer than all of the intermediaries who are willing to carry the company's products we do this to maintain a proper image of the brand and to have closer relationships with fewer, more selective dealers Like how Samsung TV's are sold in Best Buy, Walmart, and a few other retailers/small dealerships, but that's it

vertical marketing systems bring cross coordination and value to the system - less conflict

vertical marketing systems bring cross coordination and value to the system - less conflict

full-line forcing

when the producers only sell to dealers if the dealer will take some or all of the line as well

exclusive dealing

when the seller requires that dealers not handle competitors' products

intermodal transportation

when you combine two or more modes of transportation