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PRINCIPLES OF MARKETING. Chapter 12. Distribution Channels and Logistics Management. A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption. Channel decisions affect other marketing decisions

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Chapter 12


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chapter 12

PRINCIPLES OF MARKETING

Chapter 12

Distribution Channels

and

Logistics Management

distribution channels
A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption.

Channel decisions

affect other marketing decisions

involve long-term commitments

Distribution Channels
role of intermediaries
Greater efficiency in making goods available to target markets.

Intermediaries provide

Contacts

Experience

Specialization

Scale of operation

Match supply and demand.

Role of Intermediaries
channel functions
Channel Functions
  • Information
  • Promotion
  • Contact
  • Matching
  • Negotiation
  • Physical Distribution
  • Financing
  • Risk taking
channel levels
Channel Levels
  • Manufacturer
  • Wholesaler
  • Retailer
  • Consumer
channel behavior and conflict
The channel will be most effective when:

each member is assigned tasks it can do best.

all members cooperate to attain overall channel goals and satisfy the target market.

Focus on individual goals leads to conflict

Horizontal Conflict occurs among firms at the same level of the channel.

Vertical Conflict occurs between different levels of the same channel.

Channel Behavior and Conflict
vertical marketing systems
Corporate

common ownership at different channel levels

Contractual

contractual agreement among channel members

Administered

leadership assumed by dominant members

Vertical Marketing Systems
innovations in marketing systems
Innovations in Marketing Systems

Horizontal Marketing

System

Hybrid Marketing

System

  • A single firm sets up two or more marketing channels to increase coverage
  • Example:Retailers, Catalogs, and Sales Force
  • Two or more companies at one channel level join together to increase coverage
  • Example:Banks in Grocery Stores
slide9

Analyzing Consumer Service Needs

Setting Channel Objectives & Constraints

Identifying Major Alternatives

Channel Design Decisions

Evaluating the Major Alternatives

Exclusive

Distribution

Selective

Distribution

Intensive

Distribution

channel management decisions

Selecting

Channel Management Decisions

Motivating

FEEDBACK

Evaluating

logistics
Involves entire supply chain

Increasing importance of logistics

effective logistics is becoming a key to winning and keeping customers.

logistics is a major cost element for most companies.

the explosion in product variety has created a need for improved logistics management.

information technology has created opportunities for major gains in distribution efficiency.

Logistics
goals of logistics system
Goals of Logistics system
  • Provide a Targeted Level of Customer Service at the Least Cost.
  • Maximize Profits, Not Sales.

Higher Distribution Costs/ Higher Customer Service Levels

Lower Distribution Costs/ Lower Customer Service Levels

slide13

Logistics Functions

  • Order Processing
  • Warehousing
  • Inventory Management
  • Transportation
  • Design system to minimize costs of attaining objectives
slide14

Transportation Modes

Rail

Nation’s largest carrier, cost-effective

for shipping bulk products, piggyback

Truck

Flexible in routing & time schedules, efficient

for short-hauls of high value goods

Water

Low cost for shipping bulky, low-value

goods, slowest form

Pipeline

Ship petroleum, natural gas, and chemicals

from sources to markets

Air

High cost, ideal when speed is needed or to

ship high-value, low-bulk items

integrated logistics management

Cross-Functional Teamwork inside

the Company

Integrated Logistics Management

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.

Third-Party Logistics