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Marketing Management 2nd Edition Michael R. Czinkota and Masaaki Kotabe Chapter 11: Distribution and Supply Chain Management Distribution Channel Member organizations through which a product passes to reach the end user. Intermediaries: Zero-level: Manufacturer Manufacturer Wholesaler

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Marketing Management 2nd Edition

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Marketing Management2nd Edition

Michael R. Czinkota and Masaaki Kotabe

Chapter 11:

Distribution and Supply Chain Management


Distribution Channel

  • Member organizations through which a product passes to reach the end user.

Intermediaries:

Zero-level:

Manufacturer

Manufacturer

Wholesaler

Intermediaries

Retailer

Consumer

Consumer


Channel Decisions

  • Choosing a channel is a major decision.

  • Once made, the decision can often be difficult and expensive to change.

  • Using intermediaries reduces the control of the producer.

  • Technology is changing distribution channel relationships.


Channel Compensation

  • Trade discounts

  • Quantity discounts

  • Promotional discounts

  • Cash discounts


Channel Membership

Intensive

distribution

Selective

distribution

Exclusive

distribution


Coca-Cola’s Channel

Coca-Cola USA

United PackersCannery

Coca-Cola Bottling Company United, Inc.Eastern Region -- Bottling

Supermarkets

Convenience/Oil stores

Cold Drink

MassMerchandisers

ChainDrug Stores

Kroger, Bi-Lo,Publix, Etc.

Texaco, BP,7-Eleven

Applebee’s,Outback

Wal-Mart,Kmart, Sam’s

Eckerd, DrugEmporium

Special EventsMaster’s Golf

CokeMachines

Consumers


Channel Integrationbest pursued at the mature stage of the market or product

Manufacturer

Forward

integration:

member

acquires a

downstream

member

Backward

integration:

member

acquires an

upstream

member

Wholesaler

Retailer

Franchise:

member licenses

property to

independent

business

Consumer


Retailing: Type of Product

  • Specialty Stores

  • Supermarkets

  • Department stores

  • Discount outlets


Retailing: Type of Service

  • Self-service

  • Self-selection

  • Personal service


Retailing: Location

  • Central shopping area

  • Sites outside cities

  • Catalogs

  • Door-to-Door

  • Television Shopping Networks

  • Electronic Retailing

Three most important words in retailing:

Location … location … location!


Wholesaling

  • Different types of wholesalers:

  • Cash-and-carry wholesalers

  • Full service wholesalers

  • Service merchandisers, or “rack jobbers”

  • Distributors

  • Agents


PurchasingInefficient or ineffective purchasing can easily lose far more value than the best possible management can add

Buy from

Single supplier

Buy from

Multiple suppliers

Supplier

Supplier

Supplier

Supplier


Purchasing

  • Buyer must understand needs of internal customers (departments selling the goods or services).

  • Buyer must understand the product.

  • Buyer must know the supplier.

  • Buyer should be part of product specification process.


Other Considerations

  • International Standards Organization (ISO) Certification

    • ISO 9000 series represent quality management and the practice of quality assurance.

    • ISO – 14000 is a standard specifically targeted at international environmental practices by evaluating companies at both the organizational and product levels.

  • Production Process Standards

  • Reverse Distribution Systems


The Supply Chain

Suppliers

Corporation

Customers

Domestic/

import

sourcing

Throughflow

Domestic/

export

distribution


Supply Chain Management

  • Five key decisions:

  • Production

  • Transport

    • Transit Time

    • Reliability

    • Cost

  • Facility

  • Inventory

    • JIT

    • EDI

  • Communications


Customer Service

  • Service levels

  • Customers complaints

  • Customer satisfaction

  • Organizing for customer service

    • Internal Marketing


Dissatisfaction Response


Sources of Increased Customer Profitability over Time


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