Chapter 12. Distribution Channels and Logistics Management . Issues Concerning Distribution Channels. What Role Does Physical Distribution Play in Attracting and Satisfying Customers?. What is the Nature Of Distribution Channels?. How do Channel Firms Interact and
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Distribution Channels and Logistics Management
What Role Does
Play in Attracting
What is the Nature
How do Channel
Firms Interact and
Organize to do the
Work of the
What Problems do
Companies Face in
These Functions Should be Assigned to the Channel Member Who Can Perform Them Most Efficiently and Effectively to Provide Satisfactory Assortments of Goods and Services to Target Customers.
Channel Level - Each Layer of Marketing Intermediaries that Perform Some Work in Bringing the Product and its Ownership Closer to the Final Buyer.
Common Ownership at Different
Levels of the Channel i.e. Sears
Contractual Agreements Among
Leadership is Assumed by One or
a Few Dominant Members i.e. Kraft
Degree of Direct Control
Horizontal Marketing System
Two or More Companies at One Channel Level Join Together to Follow a New Marketing Opportunity.
Banks in Grocery Stores
Hybrid Marketing System
A Single Firm Sets Up Two or More Marketing Channels to Reach One or More Customer Segments.
Retailers, Catalogs, and Sales Force
A Major Trend is Toward Disintermediation Which Means that Product and Service Producers are Bypassing Intermediaries and Going Directly to Final Buyers or That New Types of Channel Intermediaries are Emerging to Displace Traditional Ones.
Analyzing Consumer Service Needs
Setting Channel Objectives & Constraints
Identifying Major Alternatives
Evaluating the Major Alternatives
Designing International Distribution Channels
Selecting Channel Members
Motivating Channel Members
Evaluating Channel Members
Higher Distribution Costs;
Higher Customer Service Levels
Maximize Profits, Not Sales
Lower Distribution Costs;
Lower Customer Service Levels
Minimize Costs of
Transportation Rail, Truck, Water, Pipeline, Air, Intermodal
When to order
How much to order
Nation’s 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
Checklist for Choosing
Cross-Functional Teamwork inside the Company
Building Channel Partnerships
Concept Recognizes that Providing Better Customer Service and Trimming Distribution Costs Requires Teamwork, Both Inside the Company and Among All the Marketing Channel Organizations.