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Marketing Channels and Supply Chain Management. 10. chapter. Prepared by Deborah Baker Texas Christian University. Learning Objectives. 1. Explain what a marketing channel is and why intermediaries are needed.

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marketing channels and supply chain management

Marketing Channels andSupply Chain Management

10

chapter

Prepared by

Deborah Baker

Texas Christian University

Chapter 10 Version 3e

learning objectives
Learning Objectives

1. Explain what a marketing channel is and why intermediaries are needed.

2. Define the types of channel intermediaries and describe their functions and activities.

10

chapter

Chapter 10 Version 3e

learning objectives continued
Learning Objectives (continued)

3. Describe the channel structures for consumer and business-to-business products and discuss alternative channel arrangements.

4. Define supply chain management and discuss its benefits.

5. Discuss the issues that influence channel strategy.

10

chapter

Chapter 10 Version 3e

learning objectives continued1
Learning Objectives (continued)

6. Explain channel leadership, conflict, and partnering.

7. Describe the logistical components of the supply chain.

8. Discuss the concept of balancing logistics service and cost.

10

chapter

Chapter 10 Version 3e

learning objectives continued2
Learning Objectives (continued)

9. Discuss new technology and emerging trends in supply chain management.

10. Discuss channels and distribution decisions in global markets.

11. Identify the special problems and opportunities associated with distribution in service organizations.

10

chapter

Chapter 10 Version 3e

learning objective

1

Learning Objective

Explain what a marketing channel

is and why intermediaries are needed.

Chapter 10 Version 3e

marketing channels

Marketing

Channel

A set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or 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.

1

Marketing Channels

Chapter 10 Version 3e

marketing channel functions

Specialization and

Division of Labor

Channels

Fulfill

Three

Important

Functions

Overcoming

Discrepancies

Providing Contact

Efficiency

1

Marketing Channel Functions

Chapter 10 Version 3e

specialization and division of labor

1

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

Chapter 10 Version 3e

overcoming discrepancies

Discrepancy

of

Quantity

The difference between the amount of product produced and the

amount an end user wants to buy.

Discrepancy

of

Assortment

The lack of all the items a

customer needs to receive full satisfaction from a product or products.

1

Overcoming Discrepancies

Chapter 10 Version 3e

overcoming discrepancies1

Temporal

Discrepancy

A situation that occurs when a product is produced but a

customer is not ready to buy it.

Spatial

Discrepancy

The difference between the

location of a producer and the location of widely

scattered markets.

1

Overcoming Discrepancies

Chapter 10 Version 3e

contact efficiency

Zenith

Sony

RCA

Toshiba

Zenith

Sony

RCA

Toshiba

Circuit City

1

Contact Efficiency

Chapter 10 Version 3e

learning objective1

2

Learning Objective

Define the types of channel

intermediaries and describe their

functions and activities.

Chapter 10 Version 3e

channel intermediaries

Retailer

A channel intermediary that

sells mainly to customers.

Merchant

Wholesaler

An institution that buys goods from manufacturers, takes title to goods, stores them, and resells and ships them.

Agents and

Brokers

Wholesaling intermediaries who facilitate the sale of a product by representing channel member.

2

Channel Intermediaries

Chapter 10 Version 3e

channel intermediaries1

Retailers

Take Title to Goods

Merchant

Wholesalers

Take Title to Goods

Agents

and

Brokers

Do NOT Take Title to Goods

2

Channel Intermediaries

Chapter 10 Version 3e

channel functions performed by intermediaries

Contacting/Promotion

TransactionalFunctions

Negotiating

Risk Taking

Physically distributing

Logistical

Functions

Storing

Sorting

FacilitatingFunction

Researching

Financing

2

Channel Functions Performed by Intermediaries

Chapter 10 Version 3e

logistics

2

Logistics

The process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption.

Chapter 10 Version 3e

learning objective2

3

Learning Objective

Describe the channel structures

for consumer and

business-to-business products

and discuss alternative

channel arrangements.

Chapter 10 Version 3e

direct channel

3

Direct Channel

A distribution channel in which producers sell directly to consumers.

Chapter 10 Version 3e

channels for consumer products

Retailer

Channel

Wholesaler

Channel

Direct

Channel

Agent/Broker

Channel

Producer

Producer

Producer

Producer

Agents orBrokers

Wholesalers

Wholesalers

Retailers

Retailers

Retailers

Consumers

Consumers

Consumers

Consumers

3

Channels for Consumer Products

Chapter 10 Version 3e

channels for business to business products

IndustrialDistributor

Agent/Broker

Channel

Direct

Channel

Direct

Channel

Agent/Broker

IndustrialChannel

Producer

Producer

Producer

Producer

Producer

Agents or

Brokers

Agents or

Brokers

IndustrialDistributor

IndustrialDistributor

IndustrialUser

IndustrialUser

IndustrialUser

IndustrialUser

GovernmentBuyer

3

Channels for Business-to-Business Products

Chapter 10 Version 3e

alternative channel arrangements

Multiple Channels

NontraditionalChannels

DifferentChannelsMay be Used

Adaptive Channels

Strategic ChannelAlliances

3

Alternative Channel Arrangements

Chapter 10 Version 3e

learning objective3

4

Learning Objective

Define supply chain management

and discuss its benefits.

Chapter 10 Version 3e

supply chain management

4

Supply Chain Management

A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption.

Chapter 10 Version 3e

supply chain management1

4

Supply Chain Management

Results

of

Supply Chain

Management

Focus on Innovative Solutions

Competitive with focus on

Customer Satisfaction

Synchronized Flow

Customer Value

Chapter 10 Version 3e

role of supply chain management

Communicator of

customer demand from

point of sale to supplier

Role of

Supply Chain

Management

Physical flow process

that engineers the

movement of goods

4

Role of Supply Chain Management

Chapter 10 Version 3e

supply chain management activities

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

4

Supply Chain Management Activities

Chapter 10 Version 3e

benefits of supply chain management

Common Benefitsof Supply Chain

Management

Reduced Costs

Improved Service

Enhanced Revenues

4

Benefits of Supply Chain Management

Chapter 10 Version 3e

learning objective4

5

Learning Objective

Discuss the issues that

influence channel strategy.

Chapter 10 Version 3e

channel strategy decisions

Issues that InfluenceChannel Strategy

Factors

Affecting

Channel

Choice

Levels ofDistributionIntensity

Market Factors

Intensive Distribution

Product Factors

Selective Distribution

Producer Factors

Exclusive Distribution

5

Channel Strategy Decisions

Chapter 10 Version 3e

market factors

Customer Profiles

Consumer or Industrial

Customer

Size of Market

5

Market Factors

Market FactorsThat Affect

ChannelChoices

Geographic Location

Chapter 10 Version 3e

product factors

Product FactorsThat Affect

ChannelChoices

Product Complexity

Product Price

Product Life Cycle

Product Delicacy

5

Product Factors

Chapter 10 Version 3e

producer factors

Producer FactorsThat Affect

ChannelChoices

Producer Resources

Number of Product Lines

Desire for Channel Control

5

Producer Factors

Chapter 10 Version 3e

levels of distribution intensity

Intensity Level

Objective

Number of Intermediaries

Intensive

Achieve mass marketselling.

Convenience goods.

Many

Work with selected

intermediaries.

Shopping and some

specialty goods.

Several

Selective

Exclusive

Work with singleintermediary. Specialty goods and industrial

equipment.

One

5

Levels of Distribution Intensity

Chapter 10 Version 3e

learning objective5

6

Learning Objective

Explain channel leadership,

conflict, and partnering.

Chapter 10 Version 3e

managing channel relationships

Channel Power

Social Dimensions of Channels

Channel Control

Channel Leadership

Channel Conflict

Channel Partnering

6

Managing Channel Relationships

Chapter 10 Version 3e

channel power control and leadership

Channel

Power

A channel member’s capacity to control or influence the behavior of other channel members

Channel

Control

A situation that occurs when one marketing channel member intentionally affects another member’s behavior.

Channel Leader

A member of a marketing channel

that exercises authority/power over the activities of other members.

6

Channel Power, Control, and Leadership

Chapter 10 Version 3e

channel conflict

Occurs among channel members on the same level

Horizontal

Conflict

Vertical

Conflict

Occurs among channel members at different levels

6

Channel Conflict

A clash of goals and methods between distribution channel members.

Chapter 10 Version 3e

channel partnering

6

Channel Partnering

The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage.

Chapter 10 Version 3e

transaction vs partnership based firms

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

6

Transaction- vs. Partnership-Based Firms

Chapter 10 Version 3e

learning objective6

7

Learning Objective

Describe the logistical components

of the supply chain.

Chapter 10 Version 3e

integrated logistical components of the supply chain

Sourcing & Procurement

Production Scheduling

SupplyChainTeam

Order Processing & Customer Service

Logistics Information System

Inventory Control

Warehouse & Materials Handling

Transportation

7

Integrated Logistical Components of the Supply Chain

Chapter 10 Version 3e

sourcing and procurement

Plan Purchasing Strategies

Role of

Purchasing

Departments

Develop

Specifications

Select

Suppliers

Negotiate

Price

Negotiate

Service Levels

7

Sourcing and Procurement

Chapter 10 Version 3e

production scheduling

Traditional Focus

Customer Focus

Push/Pull Strategy

Push

Pull

Start of Production

Inventory-Based

Customer-Order Based

Manufacturing

Mass Production

Mass Customization

7

Production Scheduling

Chapter 10 Version 3e

just in time manufacturing

7

Just-in-Time Manufacturing

A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials just when they are needed on the production line.

JIT

Chapter 10 Version 3e

benefits of jit

7

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

Chapter 10 Version 3e

electronic data interchange

7

Electronic Data Interchange

Information technology that replaces paper documents that accompany business transactions.

EDI

Chapter 10 Version 3e

inventory control system

7

Inventory Control System

A method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer’s or a customer’s demand.

Chapter 10 Version 3e

warehouse and materials handling

Receive goods into

warehouse

Identify, sort and label goods

Functions

of

Materials

Handling

Dispatch the goods to

temporary storage

Recall, select, or pick the goods for shipment

7

Warehouse and Materials-Handling

Chapter 10 Version 3e

transportation

Criteria

for

Transportation Mode

Choice

Cost

Transit Time

Reliability

Capability

Accessibility

Traceability

7

Transportation

Chapter 10 Version 3e

criteria for ranking modes of transportation

Lowest

Highest

Relative

Cost

Truck

Rail

Pipe

Water

Air

Transit

Time

Water

Rail

Pipe

Truck

Air

Reliability

Pipe

Truck

Rail

Air

Water

Capability

Water

Rail

Truck

Air

Pipe

Accessibility

Truck

Rail

Air

Water

Pipe

Traceability

Air

Truck

Rail

Water

Pipe

7

Criteria for RankingModes of Transportation

Chapter 10 Version 3e

learning objective7

8

Learning Objective

Discuss the concept of

balancing logistics service and cost.

Chapter 10 Version 3e

logistics service

8

Logistics Service

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.

Chapter 10 Version 3e

logistical competencies

8

Logistical Competencies
  • 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 the supply chain

Chapter 10 Version 3e

learning objective8

9

Learning Objective

Discuss new technology

and emerging trends in

supply chain management.

Chapter 10 Version 3e

trends in supply chain management

9

Trends in Supply Chain Management

Advanced

Computer Technology

Trends

Affecting the

Logistics

Industry

Outsourcing ofLogistics Functions

Electronic Distribution

Chapter 10 Version 3e

learning objective9

10

Learning Objective

Discuss channels and distribution

decisions in global markets.

Chapter 10 Version 3e

channels and distribution decisions for global markets

Channel structure differs

Global Channel

Development

Channel types differ

“Gray” marketing channels

Awareness of trade legalities

Global SupplyChain Management

Transportation Infrastructure

10

Channels and Distribution Decisions for Global Markets

Chapter 10 Version 3e

learning objective10

11

Learning Objective

Identify the special problems and

opportunities associated with

distribution in service organizations.

Chapter 10 Version 3e

channels and distribution decisions for services

Areas of Focus

forService Distribution

Minimizing wait times

Managing service capacity

Improving delivery

through new channels

11

Channels and DistributionDecisions for Services

Chapter 10 Version 3e