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Chapter 15 Distributing Products Quickly and Efficiently 14- 1 Marketing Intermediaries and the Supply Chain This arrow really represents a series of suppliers , e.g. the farmer, grain wholesaler and flour mill owner are each in the chain that provides flour.

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Presentation Transcript
slide1

Chapter

15

Distributing

Products

Quickly and

Efficiently

14-1

slide2

Marketing Intermediaries

and the Supply Chain

This arrow really represents a series of suppliers, e.g. the farmer, grain wholesaler and flour mill owner are each in the chain that provides flour.

The Wholesalers arrow represents one or more sequential wholesalers.

are intermediaries bad
Are Intermediaries Bad?
  • About half the cost of the things we buy are marketing costs that go largely to pay for the work of intermediaries.
  • Why don’t we get rid of the intermediaries and pass the savings on to the consumer?
cutting out the middleman
Cutting Out the Middleman

Traditional Book Distribution

Borders/ Barnes and Noble Model

Amazon.com

Publisher

Publisher

Publisher

Wholesalers

Amazon.com

Retail Chain

Independent bookstores

Consumers

Consumers

Consumers

slide6

For every dollar you spend

on food, ___¢ goes to…

functions performed by marketing intermediaries
Functions Performed by Marketing Intermediaries
  • Transportation
  • Storage
  • Selling, including
    • Merchandising
    • Personal selling
    • Advertising
slide8

Hitachi

Sony

Mitsubishi

Toshiba

Exchange Efficiency in a World Without Intermediaries

slide9

Hitachi

Sony

Mitsubishi

Toshiba

Best Buy

Exchange Efficiency in a World with Intermediaries

three basic points about intermediaries
Three Basic Points About Intermediaries
  • Marketing intermediaries can be eliminated, but their activities can’t.
  • Intermediaries have survived in the past because they have performed marketing functions more effectively and efficiently than others could.
  • Intermediaries add costs to products, but these costs are usually more than offset by the values they create.
place utility
Place Utility

The 18 Starbucks Locations Nearest You

possession utility cont
Possession Utility (cont.)
  • Credit
  • Delivery
  • Installation
  • Anything that “facilitates the transfer of ownership”
types of merchant wholesalers
Types of Merchant Wholesalers

Full-service wholesalers

  • Perform sales functions, carry inventories (with the associated risks), provide delivery, and extend credit to customers
  • Rack jobbers

Limited-function wholesalers

  • Cash-and-carry wholesalers
  • Drop-shippers
agents and brokers
Agents and Brokers
  • Neither take title to the goods
  • Agents maintain a long-term relationship with the people they represent. Examples:
    • Sports agents
    • Manufacturer’s agent (rep)
    • Insurance agent
  • Brokers are usually hired on a temporary basis. Examples:
    • Real estate broker
    • Farm commodities broker
slide22

Intensity

Level

Objective & Product Type

Examples

Intensive

  • Achieve mass marketselling
  • Convenience goods

Candy, gum,

magazines,

soda pop, batteries

Retail Distribution Strategy

slide23

Retail Distribution Strategy

Intensity

Level

Objective & Product Type

Examples

Selective

  • Work with selected
  • intermediaries
  • Shopping and some
  • specialty goods.

DVD players, TVs,

personal computers,

cameras, furniture,

most clothing

slide24

Retail Distribution Strategy

Intensity

Level

Objective & Product Type

Examples

Exclusive

  • Work with very fewintermediaries
  • Specialty goods

Some designer clothing and purses,

private helicopters, private airplanes

non store retailing
Non-Store Retailing
  • Direct selling
  • Vending machines, kiosks, and carts
multilevel marketing
Multilevel marketing
  • E.g. Amway, Mary Kay Cosmetics
  • NOT pyramid schemes!

Pyramid scheme example: The “Plane Game”

electronic retailing
Electronic retailing

Sometimes calledE-tailingorB2C E-commerce

  • Amazon.com
  • Target.com
supply chain management
Supply Chain Management

“Re-engineering the processes along the entire value chain from producers to consumers to simultaneously reduce inventories and reduce stock-out or line-down situations.”

slide30

The Supply Chain for Fiberrific Cereal

Foodstuff

Suppliers

Foodstuff

Suppliers

Foodstuff

Suppliers

Packaging

Suppliers

Packaging

Suppliers

Packaging

Suppliers

Wholesalers

Wholesalers

Retailers

Retailers

Retailers

ManufacturingFacility

Storage

CompanyHQ

Warehouse

Consumer

logistics
Logistics
  • Inbound logistics: is concerned with bringing raw materials, packaging, and parts from suppliers to your company efficiently.
  • Materials handling: is the movement of raw materials, parts, and goods within the company.
outbound logistics
Outbound Logistics
  • Outbound logistics is concerned with managing the flow of finished products from your company to your customers.
freight forwarder
Freight Forwarder
  • A freight forwarder is a company that puts many small shipments together to create a single large shipment that can be transported cost-effectively to the final destination.
choosing the right transportation mode
Choosing the right transportation mode
  • The largest percentage of goods in the U.S. (by volume) is shipped by rail (35-40%).
  • Trucks are the second most popular surface transportation mode, handling about 25% of the volume.
    • Can deliver to almost any business destination
choosing the right transportation mode35
Choosing the right transportation mode
  • Water transportation is the cheapest per pound, but is slow and offers limited destinations.
  • Pipelines are used primarily for transporting water, petroleum, and petroleum products.
  • Air transportation is the fastest, but the most expensive per pound.
intermodal transportation
Intermodal transportation

Piggyback: loading truck trailers on railcars.

intermodal transportation37
Intermodal transportation
  • Fishyback: loading truck trailers onto ships
intermodal transportation38
Intermodal transportation
  • Birdyback: loading truck trailers onto airplanes