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					Marketing Channels

     BA320
     Summer 2006
        Agenda for Today

       Explain why companies use distribution
        channels and discuss the functions these
        channels perform.
       Discuss how channel members interact and
        how they organize to perform the work of the
        channel.
       Identify the major channel alternatives open to a
        company.
       Explain how companies select, motivate,
        and evaluate channel members.
       Discuss the nature & importance of marketing
        logistics and supply chain management.
    BA320- Summer 2006                               9-2
                 Supply Chains

 Producing and making products
  available to buyers requires building
  relationships with “upstream” and
  “downstream” partners.
      – Upstream: firms that supply the raw
        materials, components, parts, and other
        elements necessary to create a good.
      – Downstream: marketing channel partners
        that link the firm to the customer.
BA320- Summer 2006                                9-3
                 Marketing Channel
                 or Distribution Channel

 A set of interdependent organizations
  involved in the process of making a
  product or service available for use or
  consumption by the consumer or
  business user.
      – Wholesalers
      – Distributors
      – Dealerships
      – Retailers
BA320- Summer 2006                          9-4
                 How Channel Members Add
                 Value

 The use of intermediaries results from
  their greater efficiency in making goods
  available to target markets.
 Offers the firm more than it can achieve
  on its own through the intermediaries:
      – Contacts
      – Experience
      – Specialization
      – Scale of operation

BA320- Summer 2006                         9-5
Figure 10-1
How Distributors Reduce the Number of
Channel Transactions




BA320- Summer 2006                      9-6
                 Key Channel Functions

       Transaction           Transaction
        Completing:            Fulfilling:
             – Information     – Physical
             – Promotion         distribution
             – Contact         – Financing
             – Matching        – Risk taking
             – Negotiation


BA320- Summer 2006                              9-7
   Number of Channel Levels
                      Number of
                       intermediary
                       levels
                       indicates the
                       length of a
                       channel.
                       – Direct
                         marketing
                         channels
                       – Indirect
                         marketing
                         channels

BA320- Summer 2006                     9-8
                 Channel Behavior

 The channel will be most effective when:
      – Each member is assigned tasks it can do best.
      – All members cooperate to attain overall channel
        goals.
 If this does not happen, conflict occurs:
      – Horizontal Conflict occurs among firms at the
        same level of the channel (e.g., retailer to retailer).
      – Vertical Conflict occurs between different levels
        of the same channel (e.g., wholesaler to retailer).
 Some conflict can be healthy competition.
BA320- Summer 2006                                            9-9
                     Let’s Talk!

                             Branded goods using
                             the Wolfgang Puck,
                             T.G. I. Friday’s, Taco
                             Bell, Emeril’s, and
                             Starbuck’s names are
                             now being sold in
                             grocery stores.




BA320- Summer 2006                               9-10
Figure 10-3
Conventional Marketing Channel Vs. Vertical
Marketing System




BA320- Summer 2006                            9-11
                 Types of Vertical Marketing
                 Systems

   Corporate VMS
   Contractual VMS
   Franchise organization
   Administered VMS




BA320- Summer 2006                             9-12
                 Franchise Organizations

 Manufacturer-Sponsored
    Retailer Franchise
      – Ford and its independent
        franchised dealers
 Manufacturer-Sponsored
    Wholesaler Franchise
      – Coca-Cola’s licensed bottlers
 Service-Firm Sponsored                   What type of franchises
    Retailer Franchise                      are illustrated above?
      – McDonald’s, Avis, and
        Holiday Inn                     http://www.franchise.org/


BA320- Summer 2006                                                   9-13
                 Innovations in Marketing
                 Systems

 Horizontal Marketing System
      – Two or more companies at one level join
        together to follow a new marketing
        opportunity.
 Multichannel Distribution System
      – Occurs when a single firm sets up two or
        more marketing channels to reach one or
        more customer segments.
      – Also called hybrid marketing system.
BA320- Summer 2006                                 9-14
                     Marketing in Action


Disintermediation




Black & Decker chose to avoid disintermediation by not
using the Internet to sell their products, but rather direct
consumers to stores that carry the firm’s products.
BA320- Summer 2006                                        9-15
                 Channel Design Decisions

   Analyzing Consumer Needs
   Setting Channel Objectives
   Identifying Major Alternatives
   Evaluating the Major Alternatives




BA320- Summer 2006                      9-16
                 The Hasbro Case




BA320- Summer 2006                 9-17
                 Channel Management
                 Decisions

 Selecting channel members
 Managing and motivating channel
  members
      – Partner relationship management
 Evaluating channel members




BA320- Summer 2006                        9-18
                 Marketing Logistics

 Planning, implementing, and controlling
  the physical flow of goods, services,
  and related information from points of
  origin to points of consumption to meet
  customer requirements at a profit.
 Includes:
      – Outbound distribution
      – Inbound distribution
      – Reverse distribution
BA320- Summer 2006                     9-19
                 Goals of the Logistics System
                 & Major Logistics Functions
 Goals of the Logistics System:
      – Deliver a targeted level of customer
        service at the least cost.

 Major Logistics Functions:
      – Warehousing
      – Inventory management
      – Transportation
      – Logistics information management

BA320- Summer 2006                             9-20
                 Integrated Logistics
                 Management

 The logistics concept that emphasizes
  teamwork, both inside the company and
  among all the marketing channel
  organizations, to maximize the performance
  of the entire distribution system.
 Involves:
      – Cross-functional teamwork inside the company
      – Building logistics partnerships
      – Third-party logistics


BA320- Summer 2006                                     9-21
                 Transportation

                               Trucks
                               Railroads
                               Water carriers
                               Pipelines
                               Air
                               Internet
                               Intermodal
                                transportation

BA320- Summer 2006                               9-22
                     Marketing in Action


Intermodal Transportation




 Intermodal transportation combines two or more modes of
 transportation. Fishyback = water and trucks; Piggyback = trucks
 and rail; Trainship = water and rail; Airship = air and water.

BA320- Summer 2006                                             9-23
                     Marketing in Action


Third-Party Logistics

                                UPS’s Supply Chain
                                Solution Group can
                                help a firm shorten its
                                supply chain and
                                convert the supply
                                chain into a strategic
                                asset.



BA320- Summer 2006                                    9-24
  Rest Stop: Reviewing the Concepts

1. Explain why companies use distribution
   channels and discuss the functions these
   channels perform.
2. Discuss how channel members interact and
   how they organize to perform the work of the
   channel.
3. Identify the major channel alternatives open to
   a company.
4. Explain how companies select, motivate,
   and evaluate channel members.
5. Discuss the nature & importance of marketing
   logistics and supply chain management.
BA320- Summer 2006                             9-25

				
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posted:6/2/2011
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