Distribution & Supply Chain Management
Issues Concerning Distribution Channels
What is the Nature Of Distribution Channels? What Role Does Physical Distribution Play in Attracting and Satisfying Customers?
How do Channel What Problems do Firms Interact and Companies Face in Organize to do the Designing and Work of the Managing Their Channel? Channels?
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Whats a Distribution Channel (PLACE)
A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user.
Distribution Channel
Manufacturer
Retailer
Distributor
Consumers 4
Why are Marketing Intermediaries Used?
Results from their greater efficiency in making goods available to target markets. Offer the firm more than it can achieve on its own:
Contacts, Experience, Specialization.
Purpose: match supply from producers to demand from consumers.
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How a Marketing Intermediary Reduces the Number of Channel Transactions
Number of Channel Levels
that Perform Some Work in Bringing the Product and its Ownership Closer to the Final Buyer. Channel 1 Direct Channel
M C
Channel Level - Each Layer of Marketing Intermediaries
Channel 2
M
Indirect Channel
Channel 3
M
Channel 4
M W J R C
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Channel Behavior & Conflict
Will be effective when
Each member is assigned tasks it can do best. All members cooperate to attain overall channel goals and satisfy the target market.
Conflict occurs: Horizontal Conflict occurs among firms at the
same level of the channel, i.e retailer to retailer. the same channel, i.e. wholesaler to retailer.
Vertical Conflict occurs between different levels of
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Manufacturer
Vertical
Distributor
Retailer
Consumers
Horizontal
Distributor Retailer Retailer Retailer
Retailer
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Conventional Marketing Channel Vs a Vertical Marketing System
Conventional Marketing Channel
Manufacturer Wholesaler Retailer Consumer
Vertical Marketing System
Manufacturer Wholesaler Retailer
Consumer
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Types of Vertical Marketing Systems
Common Ownership at Different Levels of the Channel
Corporate
Degree of Direct Control
Contractual Agreements Among Channel Members
Contractual
Leadership is Assumed by One or a Few Dominant Members
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Administered
Changing Channel Organization
Major Trend is Toward Disintermediation Which Means Producers are Bypassing Intermediaries and Going Directly to Final Buyers That New Types of Channel Intermediaries are Emerging to Displace Traditional Ones.
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Channel Design Decisions
Analyzing Consumer Service Needs
Setting Channel Objectives & Constraints
Identifying Major Alternatives Intensive Distribution Selective Distribution Exclusive Distribution
Evaluating the Major Alternatives Designing International Distribution Channels
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Selective Distribution
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Channel Management Decisions
Selecting Channel Members
FEEDBACK
Motivating Channel Members
Evaluating Channel Members
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Nature and Importance of Marketing Logistics
Involves getting the right product to the right customers in the right place at the right time. Companies place greater emphasis on logistics because:
customer service and satisfaction have become the cornerstone of marketing strategy. logistics is a major cost element for most companies.. Improvements in information technology has created opportunities for major gains in distribution efficiency.
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Goals of the Logistics System
Higher Distribution Costs; Higher Customer Service Levels Goal:
To Provide a Targeted Level of Customer Service at the Least Cost.
Lower Distribution Costs; Lower Customer Service Levels
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Major Logistics Functions
Minimize Costs of Attaining Logistics Objectives
Costs
Order Processing
Received Processed Shipped
Transportation
Rail, Truck, Water, Pipeline, Air, Intermodal
Logistics
Warehousing
Storage Distribution Automated
Functions
When to order How much to order Just-in-time
Inventory
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Transportation Modes
Rail
Nations largest carrier, cost-effective for shipping bulk products, piggyback Flexible in routing & time schedules, efficient for short-hauls of high value goods Low cost for shipping bulky, low-value, non perishable goods, slowest form Ship petroleum, natural gas, and chemicals from sources to markets High cost, ideal when speed is needed or distance markets have to be reached
Truck
Water
Pipeline
Air
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Choosing Transportation Modes
Checklist for Choosing Transportation Modes
1. Speed 2. Dependability 3. Availability 4. Costs 5. Others
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