Marketing channels and supply chain management

(1)

Marketing Channels and

Supply Chain Management

12

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ter

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_{Prepared by}_{Prepared by}

wahabs wahabs

1

(2)

Learning Objectives

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E

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k ti

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l i

d

1.

1. Explain what a marketing channel is and

Explain what a marketing channel is and

why intermediaries are needed.

12

2.

2. Define the types of channel intermediaries

Define the types of channel intermediaries

and describe their functions and activities.

p

ter

c

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(3)

Learning Objectives (continued)

3 Describe the channel structures for

3. Describe the channel structures for

consumer and business

consumer and business--to

to--business

business

products and discuss alternative channel

12

arrangements.

4

4 Define supply chain management and

Define supply chain management and

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ter

4.

4. Define supply chain management and

Define supply chain management and

discuss its benefits.

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p

5.

5. Discuss the issues that influence channel

Discuss the issues that influence channel

strategy.

3

(4)

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d

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fli t

d

6.

6. Explain channel leadership, conflict, and

Explain channel leadership, conflict, and

partnering.

12

7.

7. Describe the logistical components of the

Describe the logistical components of the

supply chain.

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ter

8.

8. Discuss the concept of balancing logistics

Discuss the concept of balancing logistics

service and cost

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p

service and cost.

(5)

9

Di

t

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l

d

i

9.

9. Discuss new technology and emerging

Discuss new technology and emerging

trends in supply chain management.

12

10.

10. Discuss channels and distribution

Discuss channels and distribution

decisions in global markets.

p

ter

11.

11. Identify the special problems and

Identify the special problems and

opportunities associated with distribution

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opportunities associated with distribution

in service organizations.

5

(6)

Learning Objective

1

Learning Objective

(7)

Marketing Channels

1

Marketing Channels

Marketing

Channel

A set of interdependent organizations that ease the transfer of ownership as

products move from producer to

Channel

products move from producer to business user or consumer.

Supply

Ch i

The connected chain of all the business entities, both internal and external to the

th t f t th

Chain

company, that perform or support the logistics function.

(8)

Marketing Channel Functions

1

Marketing Channel Functions

Specialization and

Division of Labor

Channels

Fulfill

Three

Overcoming

Di

i

Important

Functions

Discrepancies

(9)

Specialization and

Di i i

f L b

1

Division of Labor

z

Provides econom ies of scale

z

Aids producers w ho lack resources t o

p

m arket direct ly

z

Builds good relat ionships w it h cust om ers

(10)

Overcoming Discrepancies

1

Discrepancy

of

The difference between the amount of product produced and the

Quantity

Discrepancy

p p

amount an end user wants to buy.

The lack of all the items a

Discrepancy

of

Assortment

The lack of all the items a customer needs to receive full

satisfaction from a product or products

(11)

Overcoming Discrepancies

1

Temporal

Discrepancy

A situation that occurs when a product is produced but a

Discrepancy

_{customer is not ready to buy it.}p p

The difference between the

Spatial

Discrepancy

The difference between the location of a producer and the

location of widely scattered markets scattered markets.

(12)

Contact Efficiency

1

Contact Efficiency

Zenith Sony RCA Toshiba

Zenith Sony RCA Toshiba

(13)

Learning Objective

2

Learning Objective

Define the types of channel

intermediaries and describe their

functions and activities.

(14)

Channel Intermediaries

2

Retailer

A channel intermediary that _{sells mainly to customers.}

Merchant

Wh l

l

An institution that buys goods from manufacturers, takes title

t d t th

Wholesaler

to goods, stores them, and resells and ships them.

Agents and

Brokers

Wholesaling intermediaries who facilitate the sale of a product by

(15)

Channel Intermediaries

2

Retailers

Take Title to Goods

Merchant

Wholesalers

Take Title to Goods

Agents

Take Title to Goods

Agents

and

Brokers

Do NOT Take Title to Goods

(16)

Channel Functions

P f

d b I t

di i

2

Performed by Intermediaries

Contacting/Promotion

Negotiating

Risk Taking

Transactional

Functions

Risk Taking

Logistical

Physically distributing

Logistical

Functions

Storing

Sorting

Facilitating

g

Researching

(17)

Logistics

2

Logistics

Th

f

The process of

st rat egically m anaging t he

ff

fl

d

efficient flow and st orage

of raw m at erials,

in-process invent ory, and

finished goods from point

of origin t o point of

consum pt ion.

(18)

Learning Objective

3

Learning Objective

Describe the channel structures

for consumer and

business

business--to

to--business products

business products

and discuss alternative

(19)

(20)

Channels for Consumer Products

3

Channels for Consumer Products

Wholesaler

Channel

Retailer

Channel

Direct

Ch

l

Ch

l

Agent/Broker

Ch

l

Ch

l

Producer Producer Producer Producer

Channel

Agents or Brokers

Wholesalers Wholesalers

Retailers Retailers Retailers

(21)

Channels for

Business-to-Business Products

3

Business Products

Agent/Broker Agent/Broker Industrial Industrial Direct

Direct Agent/BrokerAgent/Broker DirectDirect

Producer Producer Producer Producer

g g Channel Channel Distributor Distributor Channel Channel Producer Channel Channel g g Industrial Industrial Channel Channel

I d t i l I d t i l

Agents or Brokers

(22)

Alternative Channel Arrangements

3

Alternative Channel Arrangements

M lti l Ch l Multiple Channels

Different Different Channels Channels

Nontraditional Channels May be Used

May be Used

Adaptive Channels

(23)

Learning Objective

4

Learning Objective

4

Define supply chain management

and discuss its benefits.

(24)

4

A m anagem ent syst em

t hat coordinat es and

int egrat es all of t he

act ivit ies perform ed by

supply chain m em bers

int o a seam less process,

from t he source t o t he

point of consum pt ion.

(25)

4

Focus on Innovative Solutions

Competitive with focus on Customer Satisfaction

Results

of

Supply Chain

Synchronized Flow

Supply Chain

Management

_{Customer Value}

(26)

Role of Supply Chain Management

4

Role of Supply Chain Management

4

Communicator of

customer demand from point of sale to supplier

R l

f

R l

f

R l

f

R l

f

point of sale to supplier

Role of

Supply Chain

Management

Role of

Supply Chain

Management

Physical flow process that engineers the

Management

(27)

A ti iti

4

Activities

4

Determine channel strategy and

M l ti hi

gy 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

27

(28)

Benefits of

S

l Ch i M

t

4

Reduced Costs

Improved Service

Common Benefits Common Benefits

of Supply Chain of Supply Chain

Management

(29)

Learning Objective

5

Learning Objective

5

Discuss the issues that

influence channel strategy.

(30)

Channel Strategy Decisions

5

Channel Strategy Decisions

Issues that Influence Ch l St t

(31)

Market Factors

5

Market Factors

Customer Profiles

5

Customer Profiles

C I d t i l

Consumer or Industrial Customer

Market Factors Market Factors

That Affect That Affect

Size of Market That Affect

That Affect Channel Channel Choices

Choices _{Geographic Location}

(32)

Product Factors

5

Product Factors

Product Complexity

5

Product Complexity

Product Price

Product Factors Product Factors

That Affect That Affect

Product Life Cycle at ect

at ect Channel Channel Choices

(33)

Producer Factors

5

Producer Factors

5

Producer Resources

Number of Product Lines

Producer Factors Producer Factors Producer Factors Producer Factors

That Affect That Affect That Affect That Affect

Channel Channel Choices Choices

Desire for Channel Control

(34)

Levels of Distribution Intensity

5

Levels of Distribution Intensity

5

Intensity Level

Intensity Level ObjectiveObjective Number of Number of Intermediaries Intermediaries y

y jj

Intermediaries Intermediaries

Intensive Achieve mass market_selling_selling. _Many

Convenience goods. Work with selected

i t di i

Many

Selective _{Shopping and some}intermediaries.

specialty goods.

Several

Exclusive intermediary. Specialty

Work with single intermediary. Specialty

goods and industrial equipment

(35)

Learning Objective

6

Learning Objective

6

E

l i

h

l l

d

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E

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d

hi

Explain channel leadership,

conflict, and partnering.

(36)

Managing Channel Relationships

6

Managing Channel Relationships

Channel Power

6

Channel Control Channel Power

Channel Leadership Channel Control

Social

Dimensions

of Channels

Channel Conflict Channel Leadership

of Channels

Channel Partnering Channel Conflict

(37)

Channel Power,

C

t l

d L

d

hi

6

Control, and Leadership

Ch

l

A channel member’s capacity to

6

Channel

Power

A channel member s capacity to control or influence the behavior

of other channel members

Channel

C

t

l

A situation that occurs when one marketing channel member

i t ti ll ff t th

Control

intentionally affects another member’s behavior.

Channel

Leader

A member of a marketing channel that exercises authority/power over

the activities of other members.

(38)

Channel Conflict

6

Channel Conflict

6

A clash of goals and m et hods

bet w een dist ribut ion channel

m em bers.

H

i

t l

Horizontal

Conflict

Occurs among channel members on the same level

Vertical

Conflict

(39)

Channel Partnering

6

Channel Partnering

6

The j oint effort of all

channel m em bers t o

creat e a supply chain t hat

serves cust om ers and

creat es a com pet it ive

advant age

advant age.

(40)

Transaction- vs.

P t

hi B

d Fi

6

Partnership-Based Firms

Transaction

Transaction--Based Based PartnershipPartnership--Based Based

6

Short-term relationships Multiple suppliers Long-term relationships Few suppliers p pp Adversarial relationships Price dominates pp Cooperative partnerships

Value-added services dominate Price dominates

Minimal supplier investment Minimal information sharing

Value added services dominate High supplier/buyer investment Extensive information sharing Minimal information sharing

Firms are independent Minimal functional

Extensive information sharing Firms are interdependent

(41)

Learning Objective

7

Learning Objective

7

D

ib th l

i ti

l

t

D

ib th l

i ti

l

t

Describe the logistical components

of the supply chain.

(42)

Integrated Logistical

Components of the Supply

Ch i

7

Chain

Sourcing & Procurement

7

g

Production Scheduling

S

ystem

Order Processing & Customer Service

Supply Supply Chain Chain _rmation S Inventory Control Team Team & tics Info r

Warehouse & Materials Handling

Transportation

Logis

t

(43)

Sourcing and Procurement

7

Sourcing and Procurement

Plan

7

Develop S ifi ti

Purchasing Strategies

Select S li

Specifications

Role of

Purchasing

Departments

Negotiate P i

Suppliers

Departments

Negotiate Ser ice Le els

Price

43

(44)

Production Scheduling

7

Production Scheduling

7

Traditional Focus

Traditional Focus Customer FocusCustomer Focus

Push/Pull

Strategy Push

Start of

Pull

Customer Order Start of

Production

M f t i

Inventory-Based

M P d ti

Customer-Order Based

M C t i ti

(45)

Just in Time Manufacturing

7

Just-in-Time Manufacturing

7

A process t hat redefines

and sim plifies

m anufact uring by

reducing invent ory levels

and delivering raw

m at erials j ust when t hey

are needed on t he

product ion line.

45

(46)

Benefits of JIT

7

Benefits of JIT

7

z

Reduces raw m at erial invent ories

z

Short ens lead t im es

z

Short ens lead t im es

z

Creat es bet t er supplier relat ionships

z

Reduces product ion and st oreroom

cost s

(47)

Electronic Data Interchange

7

Electronic Data Interchange

7

I nform at ion t echnology

t h t l

t hat replaces paper

docum ent s t hat

b

i

accom pany business

t ransact ions.

(48)

Inventory Control System

7

Inventory Control System

7

A m et hod of developing

and m aint aining an

adequat e assort m ent of

m at erials or product s t o

p

m eet a m anufact urer ’s or

(49)

Warehouse and

M t i l H

dli

7

Materials-Handling

7

Receive goods into g warehouse

Id tif t d

Functions

of

Identify, sort and label goods

Materials

Handling

Dispatch the goods to_{temporary storage}

Recall, select, or pick the goods for shipment

49

(50)

Transportation

7

Transportation

Cost

7

Cost

Transit Time

Reliability

Capability

Criteria

for

T

t ti

T

t ti

_{Accessibility}

Traceability

Transportation

Mode

Choice

(51)

Criteria for Ranking

M d

f T

t ti

7

Modes of Transportation

7

Highest

Highest LowestLowest

Relative Cost

g g

Air Truck Rail Pipe Water

Transit Time

Reliability

Water Rail Pipe Truck Air

Pipe Truck Rail Air Water Reliability

Capability

Pipe Truck Rail Air Water

Water Rail Truck Air Pipe

Accessibility

T bilit

Truck Rail Air Water Pipe

51

(52)

Learning Objective

8

Learning Objective

8

Di

th

t f

Di

th

t f

Discuss the concept of

(53)

Logistics Service

8

Logistics Service

8

I nt errelat ed act ivit ies

perform ed by a m em ber

of t he supply chain t o

ensure t hat t he right

product is in t he right

place at t he right t im e

place at t he right t im e.

(54)

Logistical Competencies

8

Logistical Competencies

8

Devise logist ics service st rat egies as a

z

Devise logist ics service st rat egies as a

m eans of com pet it ive different iat ion

z

I nt egrat e m em bers of supply chain t o

achieve operat ing excellence

z

Respond quickly t o changing logist ical

requirem ent s

q

z

Const ant ly m onit or all aspect s of t he

(55)

Learning Objective

9

Learning Objective

9

Discuss new technology

and emerging trends in

l

h i

t

l

h i

t

supply chain management.

(56)

Trends in

S

l Ch i M

t

9

(57)

Learning Objective

10

Learning Objective

10

Di

h

l

d di t ib ti

Di

h

l

d di t ib ti

Discuss channels and distribution

decisions in global markets.

(58)

Channels and Distribution

D

i i

f

Gl b l M k t

10

Decisions for Global Markets

10

Channel structure differs

Channel types differ

Global Channel

Development

yp

“Gray” marketing channels

Development

Global Supply

Awareness of trade legalities

Global Supply

Chain Management

(59)

Learning Objective

11

Learning Objective

11

Id

tif th

i l

bl

d

Id

tif th

i l

bl

d

Identify the special problems and

opportunities associated with

distribution in service organizations

distribution in service organizations.

(60)

Channels and Distribution

D

i i

f

S

i

11

Decisions for Services

11

Mi i i i it ti

Minimizing wait times

Managing service capacity

Areas of Focus Areas of Focus

for

for Improving delivery

for for

Service Distribution Service Distribution

p g y