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MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE. 9. Distribution and Supply Chain Management. Marketing Channels

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MARKETING STRATEGYO.C. FERRELL • MICHAEL D. HARTLINE

9

Distribution and Supply Chain Management

distribution and supply chain concepts
Marketing Channels

“An organized system of marketing institutions through which products, resources, information, funds, and/or product ownership flow from the point of production to the final user.”

Physical Distribution

“Coordinating the flow of information and products among members of the channel to ensure that products are available in the right places, in the right quantities, at the right times, and in a cost-efficient manner.”

Distribution andSupply Chain Concepts
marketing channel functions
Channel Function Specializations

Sorting

Breaking Bulk

Maintaining Inventories

Maintaining Convenient Locations

Providing Services

Channel Effectiveness and Efficiency

Distribution Decision Criteria

(1) Is the channel effective?

(2) Is the channel efficient?

Marketing Channel Functions
discussion question
Discussion Question
  • Some manufacturers and retailers advertise that customers should buy from them because they “eliminate the middleman.” Evaluate this comment in light of the functions that must be performed in a marketing channel. Does a channel with fewer members always deliver products to customers at lower prices? Defend your position.
strategic issues in distribution and supply chain management
Marketing Channel Structure

Exclusive Distribution

Selective Distribution

Intensive Distribution

Channel Integration (three key factors)

Connectivity

Community

Collaboration

Creating and Enhancing Value in the Supply Chain

Strategic Issues in Distributionand Supply Chain Management
discussion question7
Discussion Question
  • Describe the characteristics of a product that represent something you would go to great lengths to acquire, thus supporting a manufacturer’s use of an exclusive distribution strategy. How much more knowledgeable are the salespeople at an exclusive distribution location versus those at an intensive distribution location? Why is this so?
marketing strategy in action
Marketing Strategy in Action
  • Clinique cosmetics uses a selective distribution strategy as their primary marketing channel structure.
  • What is the motivation for using this strategy for this type of product line? What are the apparent benefits that Clinique receives from this strategy?
conflict and collaboration in the supply chain 1 of 2
The Basis of Conflict in the Supply Chain

Five basic sources of power:

Legitimate Power

Reward Power

Coercive Power

Information Power

Referent Power

Conflict and Collaborationin the Supply Chain(1 of 2)
conflict and collaboration in the supply chain 2 of 2
Collaborative Supply Chains

Category management must be:

Customer driven

Strategically driven

Multifunctional

Financially based

Systems dependent

Focused on immediate consumer response

Conflict and Collaborationin the Supply Chain(2 of 2)
trends in marketing channels 1 of 2
Advancing Technology

Growth of Internet and e-commerce

Radio frequency identification (RFID)

Shifting Power in the Channel

Discount mass merchandise retailers

Wal-Mart, Kmart, and Target

Category focused retailers (category killers)

Toys “R” Us, Lowe’s, Office Depot, AutoZone, and Best Buy

Outsourcing Channel Functions

Outsourcing is growing rapidly

Trends in Marketing Channels(1 of 2)
trends in marketing channels 2 of 2
The Growth of Direct Distribution and Nonstore Retailing

Examples of Nonstore Channels

Catalog and Direct Marketing

Direct Selling

E-Commerce

Home Shopping Networks

Vending

Direct Response Advertising

The Growth of Dual Distribution

Trends in Marketing Channels(2 of 2)
discussion question18
Discussion Question
  • What are the major differences you have experienced in buying a product through a physical retail store, a manufacturer’s physical store, a catalog, and an online merchant? What have some retailers in your area done to justify their ongoing presence in the channel?
legal and ethical issues in the supply chain
Dual Distribution

Exclusive Channel Arrangements

Tying Arrangements

Counterfeit Products

Legal and Ethical Issuesin the Supply Chain