Marketing Channels and Supply Chain Management

1. Marketing Channels and Supply Chain Management Key Concepts

2. A set of interdependent ORGANIZATIONS that ease the transfer of ownership as products move from producer to business user or consumer. What is a Marketing Channel? Marketing Channels

3. The connected chain of all the business entities, both internal and external to the company, that perform or support the LOGISTICS function. What is a Supply Chain? Supply Chain

4. Specialization and division of labor Overcoming discrepancies Providing contact efficiency What are the functions in Marketing Channel?

5. Specialization and Division of Labor • Creates greater efficiency • Provides lower costs • Achieves economies of scale • Aids producers who lack resources to market directly • Builds good relationships with customers

6. Providing Contact Efficiency

7. Channel Intermediaries Who are the channel intermediaries and what value do they provide?

8. Retailer A channel intermediary that sells mainly to FINAL USERS. 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 REPRESESNTING channel members. Channel Intermediaries

9. Retailers Take Title to Goods Merchant Wholesalers Take Title to Goods Agents and Brokers Do NOT Take Title to Goods Channel Intermediaries

10. Product characteristics Buyer considerations Market characteristics Factors Suggesting Type of Wholesaling Intermediary to Use

11. Contacting/Promotion TransactionalFunctions Negotiating Risk Taking Physically distributing Logistical Functions Storing Sorting FacilitatingFunctions Researching Financing Channel Functions Performed by Intermediaries

12. 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. Logistics Logistics

13. CHANNELINTERMEDIARIES CHANNELFUNCTIONS Retailers Wholesalers Agents and Brokers Perform Transactional Logistical Facilitating Channel Intermediaries and Functions

14. Retailer Channel Wholesaler Channel Direct Channel Agent/Broker Channel Producer Producer Producer Producer Agents orBrokers Wholesalers Wholesalers Retailers Retailers Retailers Consumers Consumers Consumers Consumers Channels for Consumer Products

15. Agent/Broker IndustrialChannel Direct Channel Direct Channel IndustrialDistributor Agent/Broker Channel Producer Producer Producer Producer Producer Agents or Brokers Agents or Brokers IndustrialDistributor IndustrialDistributor Govt.Buyer IndustrialUser IndustrialUser IndustrialUser IndustrialUser Channels for Business Products

16. Multiple channels Nontraditional channels Strategic channel alliances Alternative Channel Arrangements

17. CONSUMERCHANNELS BUSINESSCHANNELS ALTERNATIVECHANNELS • Direct • Retail • Wholesaler • Agent/broker • Direct • Industrial • Agent/broker • Agent/brokerindustrial • Multiple • Nontraditional • Strategicalliances Channel Structures

18. 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, resulting in enhanced customer and economic value. Supply Chain Supply Chain Management

19. Role of Supply Chain Management Communicator of customer demand from point of sale to supplier Physical flow process that engineers the movement of goods

20. The Supply Chain Process

21. Means of differentiation Reduced costs Greater supply chain flexibility Improved customer service Higher revenues Benefits of Supply Chain Management

22. Factors Affecting Channel CHOICE Level ofDistributionINTENSITY Market Factors Intensive Distribution Product Factors Selective Distribution Producer Factors Exclusive Distribution Channel Strategy Decisions

23. Market FactorsThat Affect ChannelChoices Customer profiles Consumer or Industrial Customer Size of market Geographic location Market Factors

24. Product Complexity Product FactorsThat Affect ChannelChoices Product Price Product Standardization Product Life Cycle Product Delicacy Product Factors

25. Market FactorsThat Affect ChannelChoices Customer profiles Consumer or Industrial Customer Size of market Geographic location Market Factors

26. Product Complexity Product FactorsThat Affect ChannelChoices Product Price Product Standardization Product Life Cycle Product Delicacy Product Factors

27. Producer FactorsThat Affect ChannelChoices Producer Resources Number of Product Lines Desire for Channel Control Product Factors

28. Intensity Level Objective Number of Intermediaries Achieve mass marketselling. Convenience goods. Many Intensive Selective Work with selected intermediaries. Shopping and some specialty goods. Several Exclusive Work with singleintermediary. Specialty goods and industrial equipment. One Levels of Distribution Intensity

29. Managing Channel Relationships What are the issues that influence channel strategy?

30. Power Control Leadership Conflict Partnering Social Dimensions of Channels

31. 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 Channel Power, Control, and Leadership

32. Channel Conflict A clash of goals and methods between distribution channel members Channel Partnering The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage Channel Conflict and Partnering LO6

33. Channel Conflict Conflicts may occur if channel members: • Have CONFLICTING goals • Fail to fulfill EXPECTATIONS of other channel members • Have IDEOLOGICAL differences • Have different PERCEPTIONS of reality

34. Transaction-Based Partnership-Based Short-term Adversarial Independent Price important Long-term Cooperative Dependent Value-added services Supplier / Manufacturer Relationships Number of Suppliers Information Sharing InvestmentRequired Many Minimal Minimal Few High High Channel Partnering

35. Channel Power,Control, Leadership Channel Partnering ChannelRelationship Synergy Channel Conflict Horizontal Vertical Channel Leadership, Conflict, & Partnering

36. Sourcing & Procurement Production Scheduling SupplyChainTeam Order Processing Logistics Information System Inventory Control Warehouse & Materials Handling Transportation Logistical Components of the Supply Chain

37. Sourcing and Procurement • Plan purchasing strategies • Develop specifications • Select suppliers • Negotiate price and service levels • Reduce costs The Role of Purchasing:

38. Traditional Focus Customer Focus Push / Pull Strategy Push Pull Start of Production Inventory-Based Customer-Order Based Manufacturing Mass Production Mass Customization Production Scheduling

39. A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials JUST WHEN THEY ARE NEEDED on the production line. Just-in-Time Manufacturing JIT

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

41. Receive high-quality parts Meet supplier delivery commitments Have a crisis management plan JIT Requirements

42. INFO TECHNOLOGY that replaces paper documents that accompany business transactions with electronic transmission of the information. Order Processing ElectronicDataInterchange

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

44. Materials Requirement Planning(MRP) An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer. Distribution Resource Planning (DRP) An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer. Order Processing

45. RECEIVE goods into warehouse Identify, sort, and label goods DISPATCH the goods to temporary storage Recall, select, or pick the goods for shipment Materials Handling Functions

46. 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 Criteria for RankingModes of Transportation LO7

47. Advanced computer technology Outsourcing of logistics functions Electronic distribution Trends in Supply Chain Management

48. Advanced Computer Technology • Automatic identification systems - Bar coding - Radio frequency technology • Communications technology • Supply chain software systems

49. Outsourcing Logistics Functions • Reduce inventories • Locate stock at fewer plants and distribution centers • Provide same or better levels of service Outsourcing Benefits

50. Channel structure and type differ Global Channel Development Gray marketing channels Awareness of trade legalities Global SupplyChain Management Transportation Issues Channels and Distribution Decisions for Global Markets