Channel Management / Distribution - PowerPoint PPT Presentation

Loading...

PPT – Channel Management / Distribution PowerPoint presentation | free to download - id: 599f2d-Y2I5Z



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Channel Management / Distribution

Description:

... having the product where customers can buy it Time UTILITY Having the product available when the customer wants/needs it ... compete to sell to the same ... – PowerPoint PPT presentation

Number of Views:106
Avg rating:3.0/5.0
Slides: 69
Provided by: Haozh5
Learn more at: http://www.wsfcs.k12.nc.us
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Channel Management / Distribution


1
Channel Management / Distribution
2
STUDENTS WILL.Understand the concepts and
processes needed to identify, select, monitor,
and evaluate sales channels
3
STUDENTS WILL.Acquire foundational knowledge
of channel management to understand its role in
marketing.
4
  • A channel of distribution comprises a set of
    institutions which perform all of the activities
    utilised to move a product and its title from
    production to consumption
  • Bucklin - Theory of Distribution Channel Structure

5
Objectives
  1. Explain the nature and scope of channel
    management
  2. Explain the relationship between customer service
    and channel management

6
Physical distribution is
  • Organizing and moving products through the
    channels
  • aka Logistics ordering, transporting, storing,
    handling and inventory control
  • The 3rd largest expense for most businesses
  • (1 Materials 2 Labor)

7
OBJECTIVE ONEExplain the nature andscope of
channel management
8
Explain how channel members add value
  • Right PLACE
  • Right TIME
  • Place UTILITY
  • Location having the product where customers can
    buy it
  • Time UTILITY
  • Having the product available when the customer
    wants/needs it

9
Channel members add value to a product by
performing certain channel activities expertly
  • Marketing
  • Packaging
  • Financing
  • Storage
  • Delivery
  • Merchandising
  • Personal selling

10
Adding Value through Distribution
  • Intermediaries provide value to producers because
    they often have expertise in certain areas that
    producers do not have.
  • Intermediaries are experts in displaying,
    merchandising, and providing convenient shopping
    locations and hours for customers.

11
CHANNEL FUNCTIONS
  • Information
  • Promotion
  • Contact
  • Matching
  • Negotiation
  • physical distribution
  • Financing
  • Risk taking

12
CHANNEL FUNCTIONS (cont.)
  • Providing marketing information
  • Companies rely on market research to determine
    their target markets needs and wants
  • Ex small business producing handmade greeting
    cards
  • Promoting products
  • Can be expensive
  • Retailers often take a large portion of promotion
    responsibilities
  • Ex local supermarkets/discount stores

13
CHANNEL FUNCTIONS (cont.)
  • Contact
  • Matching
  • Negotiating with the customers
  • Different prices are paid by the wholesaler,
    retailer and consumers based on negotiation
  • Physical distribution
  • Financing and risk taking
  • Moving products through a channel costs money
  • When channel members work together to finance
    activities and to assume financial risks,
    channels will be more effective

14
Todays system of exchange
Promotion
Contact
Negotiation
Transporting and storing
Users
Financing
Producers
Packaging
Money
Goods
15
Explain key channel tasks
  • Marketing
  • Packaging
  • Financing
  • Storage
  • Delivery
  • Merchandising
  • Personal selling

16
Explain key channel tasks (cont.)
  • Providing marketing information
  • Rely on market research to determine their target
    markets needs and wants
  • Promoting products
  • Costs and responsibilities can be shared
  • Negotiating with customers
  • Offering to deliver and install products
  • Reducing discrepancies
  • Selling large quantities of products to
    wholesalers and retailers
  • Financing and risk-taking
  • Work together to finance activities to become
    more effective

17
Tasks of Intermediaries - Wholesalers
  • Break down bulk
  • Buys from producers and sell small quantities to
    retailers
  • Provides storage facilities
  • Reduces contact cost between producer and
    consumer
  • Wholesaler takes some of the marketing
    responsibility e.g sales force, promotions

18
Tasks of Intermediaries - Retailer
  • Much stronger personal relationship with the
    consumer
  • Hold a variety of products
  • Offer consumers credit
  • Promote and merchandise products
  • Price the final product
  • Build retailer brand in the high street

19
Tasks of Intermediaries - Internet
  • Sell to a geographically disperse market
  • Able to target and focus on specific segments
  • Relatively low set-up costs
  • Use of e-commerce technology (for payment,
    shopping software, etc)
  • Paradigm shift in commerce and consumption

20
Tasks of a Logistics Manager
  • plans the flow of materials in a manufacturing
    organization (beginning with raw materials and
    ending with delivery of finished products to
    channel intermediaries or end customers) and
    coordinates the work of departments involved in
    the process, such as procurement, transportation,
    manufacturing, finance, legal, and marketing.

21
REVIEW key channel tasks
  • Concentration/Equalization/Dispersion
  • Must consummate transactions between buyers and
    sellers, i.e., fix the discrepancies in
  • Quantity
  • Assortment
  • Time
  • Place

22
Describe when a channel will be most effective
  • The channel must be properly managed
  • Recognize the importance of their task and make
    informed decisions
  • Each member is assigned tasks it can do best

23
Describe when a channel will be most effective
(cont.)
  • Channel members share a common goal
  • Commitment to quality of the product
  • Satisfying the target markets needs and wants
  • All members cooperate to attain overall channel
    goals
  • If the channel is not effective, conflict
    occurs..

24
Distinguish between horizontal and vertical
conflict
  • Horizontal Conflict occurs between channel
    members at the same level
  • Good, old-fashioned business competition
  • Ex two retailers selling pet supplies compete to
    sell to the same target market

25
Distinguish between horizontal and vertical
conflict (cont.)
  • Vertical Conflict occurs between channel
    members at different levels within the same
    channel
  • Producers and wholesalers, wholesalers
    retailers, or producers and retailers

26
CHANNEL MANAGEMENT DECISIONS
  • Channel strategy is not formulated in a vacuum
  • Channel strategy and product strategy
  • Channel strategy and price strategy
  • Channel strategy and promotion strategy

27
Describe channel management decisions
  • Decisions about a products physical movement and
    transfer of ownership from producer to consumer.
  • FIRST - Setting channel objectives
  • Determine what the company is trying to achieve
  • Meet the needs and wants of their target market
  • Give their product a competitive edge
  • SECOND - Channel members
  • Selection
  • Management
  • Motivation
  • Evaluation

28
1. Selecting Channel Members
  • Determine the types of members the belong in the
    channel, as well as the channel length (total
    number of channel members)
  • Usually based on the nature of the product
  • Factors to consider
  • Create product value that others cannot or are
    not willing to provide
  • Channel the product to its desired market
  • Have a pricing and promotion strategy compatible
    with the products needs
  • Offer customer service compatible with the
    products needs
  • Be willing and able to work cooperatively with
    other members within the products channel

29
1. Selecting Channel Members (cont.)
  • Involves determining the characteristics that
    distinguish the better ones by evaluating channel
    members
  • Do they Provide value? Perform a function?
    Expect an economic return ?
  • Years in business
  • Lines carried
  • Profit record
  • Policies, strategies, image
  • Experience track record

30
1. Selecting Channel Members (cont.)
  • Selecting intermediaries that are sales agents
    involves evaluating
  • Number and character of other lines carried
  • Size and quality of sales force

31
1. Selecting Channel Members (cont.)
  • Market segment - must know the specific segment
    and target customer
  • Selecting intermediates that are retail stores
    that want exclusive or selective distribution
    involves evaluating
  • Stores customers
  • Store locations
  • Growth potential

32
2. Managing Channel Members
  • Determining channel responsibilities
  • Members must work together appropriately and
    perform the tasks they are best suited for
  • The company must sell not only through the
    intermediaries but also to/with them

33
2. Managing Channel Members (cont.)
  • Partner relationship management (PRM) and supply
    chain management (SCM) software are used to
  • Forge long-term partnerships with channel members
  • Recruit, train, organize, manage, motivate, and
    evaluate channel members

34
3. Motivating Channel Members
  • Develop a cooperative/collaborative and balanced
    relationship with the partner
  • Understand the partners customers their needs,
    wants, and demands
  • Understand the partners business operationally
    and financially and whats really important to
    them
  • Look at the partners needs in terms of customer
    support, technical support, and training
  • Establish clear and agreed upon expectations and
    goals
  • Develop recognition programs focusing on the
    partners contributions
  • Build internal support systems and dedicate
    resources to the partner

35
3. Motivating Channel Members (cont.)
  • Motivation can be positive or negative
  • Sanctions may be imposed on middlemen not
    performing well
  • Chargebacks financial penalties assessed for a
    variety of problems
  • Incentives may be offered for reaching
    performance goals

36
4. Evaluating Channel Members
  • Produces must evaluate intermediaries performance
    against such standards as
  • Sales quota attainment
  • Average inventory levels
  • Customer delivery time
  • Treatment of damaged and lost goods
  • Cooperation in promotional and training programs.

37
4. Evaluating Channel Members (cont.)
  • Should constantly evaluate the channel
  • What is working?
  • What is not working?
  • What can be improved?

38
4. Evaluating Channel Members (cont.)
  • Risks Dangers of Distribution Decisions
  • Transaction costs both apparent hidden
  • Risks include loss in transit, destruction,
    negligence, non-payment and so on.
  • So, careful choice evaluation of each every
    channel partner is a necessity.

39
Distribution Decisions - Major Considerations
  • Multiple channels
  • Control vs. costs
  • Intensity of distribution desired
  • Involvement in e-commerce

40
1. Multiple Channels
  • Some products meet the needs of both industrial
    and consumer markets.
  • J J Snack Foods sells its pretzels, drinks and
    cookies using multiple channels to
  • Supermarkets
  • Movie Theaters
  • Stadiums
  • Schools
  • Hospitals

41
2. Control vs. Costs
  • All manufacturers and producers must weigh the
    control they want to keep over the distribution
    of their products against the costs and
    profitability.
  • Direct sales force company employees are
    expensive with payroll, benefits, expenses may
    set sales quotas and easily monitor performance
  • Agents work independently, running their own
    businesses less expensive less control agents
    sell product lines that make them more money

42
Managements Desire for Control of Distribution
  • In general, the shorter the channel structure,
    the higher the degree of control, and vice versa.
  • The lower the intensity of distribution, the
    higher the degree of control, and vice versa.

43
3. Distribution Intensity
  • how widely a product will be distributed
    marketers want to achieve the ideal market
    exposure determining distribution patterns.
  • Achieve ideal market exposure (make their product
    available without over exposing and losing money)
  • To achieve market exposure, marketers must
    determine distribution intensity

44
Distribution Intensity
  • Exclusive Distribution
  • Selective Distribution
  • Intensive Distribution
  • Integrated Distribution

45
Intensity of Channel Structure
  • Channel intensity the number of intermediaries
    at each level of the marketing channel.

Intensive
Selective
Exclusive
All Possible Intermediaries
Relatively Few Intermediaries
Just One Intermediary
46
Intensive Distribution
  • the use of all suitable outlets to sell a
    product.
  • The objective is complete market coverage and
    the ultimate goal is to sell to as many customers
    as possible, wherever they choose to shop.
  • Ex. Motor oil is sold in quick-lube shops, farm
    stores, auto parts retailers, supermarkets,
    drugstores, hardware stores, warehouse clubs, and
    other mass merchandisers.

47
Selective Distribution
  • a limited number of outlets in a given
    geographical area are used to sell the product.
  • Very important to select channel members that
    maintain the image of the product are good
    credit risks, aggressive marketers good
    inventory planners.
  • Ex. Armani Lucky Brand sell their clothing only
    through top department stores that appeal to the
    affluent customers who buy its merchandise. It
    does not sell in a chain megastore or a variety
    store.

48
Exclusive Distribution
  • protected territories for distribution of a
    product in a given geographic area business
    maintains tight control over a product
  • Ex. Franchisor legally requires a franchisee to
    sell only the franchisors products

49
Integrated Distribution
  • Manufacturer acts as wholesaler and retailer for
    its own products.
  • EX. Sherwin-Williams Paint, Merle Norman
  • Ex. The Gap or Ann Taylor sells its clothing in
    company-owned retail stores.

50
Dual distribution
  • A manufacturer may sell its products through
    multiple outlets at the same time
  • Toll-free phone system
  • Company website
  • Multiple retailers

51
4. Involvement in E-commerce
  • means by which products are sold to customers
    and industrial buyers through the Internet.
  • Consumers have also become accustomed to buying
    products online.
  • one-stop shopping and substantial savings for
    industrial buyers.
  • E-marketplaces provide smaller businesses with
    the exposure that they could not get elsewhere

52
Channel Design Decisions
  • Channel design/structure form or shape that a
    marketing channel takes to perform the tasks
    necessary to make products available to
    consumers.
  • Includes ALL the parties involved

53
Channel Design Decisions (cont.)
  • Analyzing consumer needs
  • Setting Channel Objectives
  • Identifying Major Alternatives
  • Types of intermediaries
  • Company sales force
  • Manufacturers agency
  • Industrial distributors
  • Number of intermediaries
  • Responsibilities of intermediaries

54
3 Dimensions of Channel Design
  • Length of the channel
  • Intensity of various levels (Exclusive,
    Selective, Intensive)
  • Types of intermediaries involved

55
Length of Channel
  • Channel length number of levels in a
    distribution channel.

2 level
3 level
4 level
5 level
Manufacturer
Manufacturer
Manufacturer
Manufacturer
Agent
Wholesaler
Wholesaler
Retailer
Retailer
Retailer
Consumer
Consumer
Consumer
Consumer
56
Channel Design (cont.)
  • Efficient movement of finished product from the
    end of the production line to customers.
  • Coordinate the execution of distribution plans
  • So as to provide good customer service at
    acceptable cost.

57
Determinants of Channel Structure
  1. The distribution tasks that need to be performed
  2. The economics of performing distribution tasks
  3. Managements desire for control of distribution
  4. Transaction Efficiency (refers to the effort to
    reduce the number of transactions between
    producers consumers).

58
REVIEW Channel Structure/Design
  • Setting distribution objectives
  • Meeting customer needs is the ultimate goal
  • Specifying distribution tasks
  • who does what along the supply chain (channel of
    distribution)
  • Considering alternative channel structures
  • Three dimensions
  • Length/Intensity/Types of intermediaries
  • Choosing optimal channel structures
  • each participant in the marketing channel focuses
    on performing those activities at which it is
    most efficient. This results in much greater
    efficiency and higher output.

59
Discuss the relationship between the product
being distributed and the pattern of distribution
it uses
  • Consumer Good
  • Consumer Service
  • Industrial Good
  • Industrial Service

60
OBJECTIVE TWOExplain the relationship between
customer service and channel management
61
Explain how customer service facilitates order
processing
  • Ensures timely delivery of products
  • Effective communication is important
  • Order processing
  • Correct shipping information
  • Correct products
  • Handling complaints
  • Reducing the probability of complaints
  • Nice and friendly people

62
Identify actions that customer service can take
to facilitate order processing
  • EX. In retail selling, bag the merchandise with
    care. Products such as glassware may require
    individual wrapping before bagging.Work quickly
    to bag your customers merchandise and complete
    the payment process.
  • EX. In business-to-business sales, complete the
    paperwork quickly and leave a business card.

63
Customer
Call Center
Online Order
Warehouse
Actions to Facilitate Order Processing
Inventory Check
No, Customer Notified of Backorder
Items in Stock?
Yes, Item Packed for Shipment
Accounts Receivable Processes Payment
Item Shipped
64
Describe the role of customer service in
following up on orders
  • Following up with your customers after the sale
    is an important part of providing good customer
    service.
  • Should customer have questions or problems it is
    your duty to make sure they have a positive
    experience with your company.

65
Use of Technology in Distribution
  • Some businesses have the capacity to distribute
    most or all of their products through the
    internet
  • e-commerce Products are sold to customers and
    industrial buyers through the Internet.
  • e-marketplace
  • Satellite tracking a dispatcher has current
    knowledge of a delivery trucks location and
    destination

66
Use of Technology in Distribution (cont.)
  • Tracking of package
  • Bar coding on package
  • Package scanned at transition points in
    distribution chain
  • Customer uses internet to follow package along
    distribution chain e-mail may be used
  • Global distribution in some countries the postal
    service is not reliable package tracking
    facilitates global trade

67
Use of Technology in Distribution (cont.)
  • Problems
  • Cost of technology
  • Changing technology updating equipment
  • Need for compatible systems within and between
    businesses countries

68
YOU'RE DONE!!!
About PowerShow.com