Marketing Channels and Supply Chain Management

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Marketing Channels andSupply Chain Management
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Prepared by Deborah Baker Texas Christian
University Revised byDr. R. BaurAgricultural
Technical Institute
chapter
2
Chapter 9 Reviews
1. Explain the importance of developing new
products and describe the six categories of new
products. 2. Explain the steps in the
new-product development process.
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3. Explain the diffusion process through which
new products are adopted. 4. Explain the
concept of product life cycles.
chapter
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Chapter 10 Learning Objectives

• Explain what a marketing channel is and why
  intermediaries are needed.
• 2. Define the types of channel intermediaries and
  describe their functions and activities.
• 3. Describe channel structures for consumer B2B
  products and discuss alternative channel
  arrangements.
• 4. Define supply chain management discuss its
  benefits.
• 5. Discuss issues that influence channel
  strategy.

10
chapter
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Learning Objectives (continued)

• 6. Explain channel leadership, conflict, and
  partnering.
• 7. Describe components of the supply chain.
• 8. Discuss balancing logistics service cost.
• 9. Discuss new technology and emerging trends in
  supply chain management.
• Discuss channels and distribution decisions in
  global markets.
• Identify the special problems and opportunities
  associated with distribution in service
  organizations.

10
chapter
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Learning Objective
314
Explain what a marketing channel is and why
intermediaries are needed.
1
Marketing Channel
A set of interdependent organizations that ease
the transfer of ownership as products move from
producer to business user or consumer.
Producer
Wholesaler
Retailer
Consumer
Supply Chain
The connected chain of all the business entities,
both internal and external to the company, that
perform or support the logistics function.
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1. Specialization Division of Labor
Learning Objective
314
Explain what a marketing channel is and why
intermediaries are needed.
1
Marketing Channel Functions

• Provides economies of scale
• Aids producers who lack resources to market
  directly
• Builds good relationships with customers

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2. Overcoming Product Discrepancies
Learning Objective
314
Explain what a marketing channel is and why
intermediaries are needed.
1
a. Discrepancy of Quantity
The difference between the amount of product
produced and the amount an end user wants to
buy.
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2. Overcoming Product Discrepancies
Learning Objective
314
Explain what a marketing channel is and why
intermediaries are needed.
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b. Discrepancy of Assortment
The lack of all the items a customer needs to
receive full satisfaction from a product or
products.
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3. Overcoming Time Space Discrepancies
Learning Objective
315
Explain what a marketing channel is and why
intermediaries are needed.
1
3. Temporal Discrepancy
A situation that occurs when a product is
produced but a customer is not ready to buy it.
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3. Overcoming Time Space Discrepancies
Learning Objective
315
Explain what a marketing channel is and why
intermediaries are needed.
1
4. Spatial Discrepancy
The difference between the location of a
producer and the location of widely scattered
markets.
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3. Contact Efficiency
Learning Objective
315
Explain what a marketing channel is and why
intermediaries are needed.
1
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Channel Intermediaries
Define the types of channel intermediaries
describe their functions and activities.
2
Learning Objective
316
1. Retailer
A channel intermediary that sells mainly to
customers.
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Channel Intermediaries
Define the types of channel intermediaries
describe their functions and activities.
2
Learning Objective
316
2. Merchant Wholesaler
An institution that buys goods from
manufacturers, takes title to goods, stores
them, and resells and ships them.
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Channel Intermediaries
Define the types of channel intermediaries
describe their functions and activities.
2
Learning Objective
316
Wholesaling intermediaries who facilitate the
sale of a product by representing channel member.
3. Agents Brokers
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Channel Intermediaries
Define the types of channel intermediaries
describe their functions and activities.
2
Learning Objective
316
Merchant Wholesaler
Agents Brokers
Custom
Nature of Product
Standard
Complex
Simple
Technicality
Gross Margin
High
Low
Order Frequency
Frequent
Infrequent
Short
Lead Time
Long
Many
Customers
Few
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Define the types of channel intermediaries
describe their functions and activities.
Learning Objective
2
317
Retailers
Take Title to Possessionof Goods
Channel Intermediaries
Merchant Wholesalers
Take Title to Possessionof Goods
Agents
Takes Possession But Not Title
Brokers
Do NOT Take Title to GoodsNor Possession
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Define the types of channel intermediaries
describe their functions and activities.
Learning Objective
2
318
Channel Functions Performed by Intermediaries
1. Contacting/Promotion
A. TransactionalFunctions
2. Negotiating
3. Risk Taking
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Define the types of channel intermediaries
describe their functions and activities.
Learning Objective
2
318
Channel Functions Performed by Intermediaries
4. Physically distributing
B. Logistical Functions
5. Storing
6. Sorting
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Define the types of channel intermediaries
describe their functions and activities.
Learning Objective
2
318
Channel Functions Performed by Intermediaries
7. Researching
C. FacilitatingFunctions
8. Financing
9. Market Information
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Define the types of channel intermediaries
describe their functions and activities.
Learning Objective
2
YOU CAN DELETE A CHANNEL MEMBER
BUT YOU CAN NOT DELETE THEIR FUNCTIONS
SOME ONE MUST PERFORM THESE ESSENTIAL FUCTIONS
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Logistics
Define the types of channel intermediaries
describe their functions and activities.
Learning Objective
2
317
The process of managing the efficient flow and
storage of raw materials, in-process inventory,
and finished goods from point of origin to point
of consumption.
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Channels for Consumer Products
Describe channel structures for consumer BTB
products discuss alternative channels
Learning Objective
319
3
Wholesaler Channel
Retailer Channel
Direct Channel
Agent/Broker Channel
Producer
Producer
Producer
Producer
Agents orBrokers
Wholesalers
Wholesalers
Retailers
Retailers
Retailers
Consumers
Consumers
Consumers
Consumers
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Channels for B2B Products
Describe channel structures for consumer BTB
products discuss alternative channels
Learning Objective
320
3
Agent/Broker IndustrialChannel
Agent/Broker Channel
IndustrialDistributor
Direct Channel
Direct Channel
Producer
Producer
Producer
Producer
Agents or Brokers
Agents or Brokers
IndustrialDistributor
IndustrialDistributor
IndustrialUser
IndustrialUser
IndustrialUser
IndustrialUser
GovernmentBuyer
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Alternative Channel Arrangements
Describe channel structures for consumer BTB
products discuss alternative channels
Learning Objective
321
3
Multiple Channels
Ames Contractors Hardware Stores
Nontraditional Channels
DifferentChannelsMay be Used
Internet, Infomercials
Adaptive Channels
Groceries On-Line
Strategic Channel Alliances
Starbucks (roast pkg) Kraft (sell ship)
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Supply Chain Management
Learning Objective
322
Define supply chain mgt and discuss its benefits.
4
A management system that coordinates integrates
all activities performed by supply chain members
into a seamless process, from producers to
consumers.
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Supply Chain Management
Learning Objective
322
Define supply chain mgt and discuss its benefits.
4
Results of Supply Chain Management
Focus on Innovative Solutions
Competitive with focus on Customer Satisfaction
Synchronized Flow
Customer Value
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Role of Supply Chain Management
Learning Objective
Define supply chain mgt and discuss its benefits.
4
323
Communicator of customer demand From point of
sale to supplier
Role of Supply Chain Management
Physical flow process that engineers the
movement of goods
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Supply Chain Mgt Activities
Learning Objective
323
Define supply chain mgt and discuss its benefits.
4
Determine channel strategy and level of
distribution intensity
Manage relationships in the supply chain
Manage the logistical components of the supply
chain
Balance the costs of the supply chain with the
service level demanded by customer
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Benefits of Supply Chain Mgt
Learning Objective
323
Define supply chain mgt and discuss its benefits.
4
Common Benefitsof Supply Chain Management
Reduced Costs
Improved Service
Enhanced Revenues
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A. Market Factors
Learning Objective
325
Discuss the issues that influence channel
strategy.
5
1. Customer Profiles
Market FactorsThat Affect ChannelChoices
2. Consumer or Industrial Customer
3. Size of Market
4. Geographic Location
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B. Product Factors
Learning Objective
325
Discuss the issues that influence channel
strategy.
5
PRODUCT FactorsThat Affect ChannelChoices
1. Product Complexity
2. Product Price
3. Product Life Cycle
4. Product Delicacy
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C. Producer Factors
Learning Objective
326
Discuss the issues that influence channel
strategy.
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PRODUCER FactorsThat Affect ChannelChoices
3. Desire for Channel Control
2. Number of Product Lines
1. Producer Resources
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D. Levels of Distribution Intensity
Learning Objective
326
Discuss the issues that influence channel
strategy.
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Intensity Level
Objective
Number of Intermediaries
1. Intensive
Achieve mass marketselling. Convenience goods.
Many Candy, GumToothpaste, Snacks
Work with selected intermediaries. Shopping and
some specialty goods.
SeveralMAYTAG Clothing, Electronics
2. Selective
3. Exclusive
Work with singleintermediary. Specialty goods
and industrial equipment.
OneBMW carsChris Craft
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Learning Objective
328
Explain channel leadership, conflict, and
partnering.
6
A. Channel Power
A channel members capacity to control or
influence the behavior of other channel members
B. Channel Control
A situation that occurs when one marketing
channel member intentionally affects another
members behavior.
C. Channel Leader
A member of a marketing channel that exercises
authority/power over the activities of other
members.
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D. Channel Conflict
Learning Objective
329
Explain channel leadership, conflict, and
partnering.
6
A clash of goals methods between distribution
channel members.
1. Horizontal Conflict
Occurs among channel members on the same level
2. Vertical Conflict
Occurs among channel members at different levels
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E. Channel Partnering
Learning Objective
331
Explain channel leadership, conflict, and
partnering.
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The joint effort of all channel members to create
a supply chain that serves customers and creates
a competitive advantage.
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Learning Objective
331
Explain channel leadership, conflict, and
partnering.
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Transaction-Based
Partnership-Based
Short-term relationships
Long-term relationships
Multiple suppliers
Few suppliers
Adversarial relationships
Cooperative partnerships
Price dominates
Value-added services dominate
Minimal supplier investment
High supplier/buyer investment
Minimal information sharing
Extensive information sharing
Firms are independent
Firms are interdependent
Minimal functional area interaction
Extensive functionalarea interaction
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A. Sourcing and Procurement
333
Learning Objective
Describe logistical components of the supply
chain.
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1. Plan Purchasing Strategies
Role of Purchasing Departments
2. Develop Specifications
3. Select Suppliers
4. Negotiate Price
5. Negotiate Service Levels
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B. Production Scheduling
333
Learning Objective
Describe logistical components of the supply
chain.
7
Traditional Focus
Customer Focus
Push/Pull Strategy
Producer Push
Consumer Pull
Start of Production
Inventory-Based
Customer-Order Based
Manufacturing
Mass Production
Mass Customization
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Learning Objective
334
Describe logistical components of the supply
chain.
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Just-in-Time A process that redefines
simplifies Manufacturing manufacturing by
reducing inventory levels delivering raw
materials just when they are needed on the
production line.
Benefits of JIT

• Reduces paperwork
• Shortens lead times
• Reduces raw material inventories
• Creates better supplier relationships
• Reduces production and storeroom costs

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D. Inventory Control System
335
Learning Objective
Describe logistical components of the supply
chain.
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C. Order ProcessingElectronic Data Interchange
A method of developing and maintaining an
adequate assortment of materials or products to
meet a manufacturers or a customers demand.
Information technology that replaces paper
documents that accompany business transactions.
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336
Learning Objective
Describe logistical components of the supply
chain.
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1. Receive goods into warehouse
E. Functions Of Warehousing And Materials
Handling
2. Identify, sort and label goods
3. Dispatch the goods to temporary storage
4. Recall, select, or pick the goods for shipment
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F. Transportation Selection Criteria
337
Learning Objective
Describe logistical components of the supply
chain.
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Criteria for Transportation Mode Choice
1. Cost
2. Transit Time
3. Reliability
4. Capability
5. Accessibility
6. Traceability
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Transportation Ranking Criteria
338
Learning Objective
Describe logistical components of the supply
chain.
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Lowest
Highest
Relative Cost
Pipe
Air
Water
Rail
Truck
Transit Time
Water
Rail
Pipe
Truck
Air
Reliability
Pipe
Truck
Rail
Air
Water
Capability
Water
Rail
Truck
Air
Pipe
Accessibility
Air
Truck
Rail
Water
Pipe
Traceability
Air
Truck
Rail
Water
Pipe
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Logistics Service
Learning Objective
339
Discuss concept of balancing logistics service
and cost.
8
Interrelated activities performed by a member of
the supply chain to ensure that the right product
is in the right place at the right time.
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Logistical Competencies
Learning Objective
339
Discuss concept of balancing logistics service
and cost.
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• Devise logistics service strategies as a means of
  competitive differentiation
• Integrate members of supply chain to achieve
  operating excellence
• Respond quickly to changing logistical
  requirements
• Constantly monitor all aspects of supply chain

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Learning Objective
Discuss new technology emerging trends in
supply chain management.
340
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1. Advanced Computer Technology
Trends In Supply Chain Management
Automatic Pickers
2. Outsourcing ofLogistics Functions
DS Wooster
3. Electronic Distribution
Tickets, Software
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Global Markets Distribution Decisions
Learning Objective
344
Discuss channels distribution decisions in
global markets
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1. Channel structure differs
A. Global Channel Development
2. Channel types differ
3. Gray marketing channels
1. Awareness of trade legalities
B. Global SupplyChain Management
2. Transportation Infrastructure
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Learning Objective
Identify special problems opportunities
associated with distribution in service
organizations.
347
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Channels Distribution DecisionsFor Services

Minimizing wait times
Managing service capacity
Improving delivery through new channels
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Chapter 10 Summary
1. Explain mkting channel why it is
needed. 2. Define the types of channel
intermediaries and describe their functions and
activities. 3. Describe channel structures for
consumer B2B products and alternative channels
4. Discuss supply chain mgt its benefits. 5.
Discuss issues influencing channel strategy.
10
chapter
51
Chapter 10 Summary (continued)

• 6. Explain channel leadership, conflict, and
  partnering.
• 7. Describe components of the supply chain.
• 8. Discuss balancing logistics service cost.
• 9. Discuss new technology and emerging trends in
  supply chain management.
• Discuss channels and distribution decisions in
  global markets.
• Identify the special problems and opportunities
  associated with distribution in service
  organizations.

10
chapter
52
NEXT TOPIC

• CHAPTER 11
• RETAILING