Managing Marketing Channels and Supply Chains

1. CHAPTER
MANAGING
MARKETING
CHANNELS AND
SUPPLY CHAINS
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 13-1

2. AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
1. Explain what is meant by a marketing
channel of distribution and why
intermediaries are needed.
1. Distinguish among traditional
marketing channels, electronic
marketing channels, and different types
of vertical marketing systems.
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3. AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
1. Describe factors that marketing
executives consider when selecting and
managing a marketing channel.
1. Explain what supply chain and logistics
management are and how they relate to
marketing strategy.
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4. APPLE STORES: ADDING
HIGH-TOUCH TO HIGH-TECH
MARKETING CHANNELS
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5. NATURE AND IMPORTANCE OF
MARKETING CHANNELS
• What is a Marketing Channel of
Distribution?
 Marketing Channel
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6. FIGURE 13-1 Terms used for marketing
intermediaries
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7. NATURE AND IMPORTANCE OF
MARKETING CHANNELS
• Value Created by Intermediaries
 Functions Performed by Intermediaries
• Transactional Function
• Logistical Function
• Facilitating Function
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8. FIGURE 13-2 Marketing channel functions
performed by intermediaries
 Consumer Benefits from Intermediaries
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9. CHANNEL STRUCTURE AND
ORGANIZATION
• Marketing Channels for Consumer
Goods and Services
 Direct Channel
 Indirect Channels
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10. FIGURE 13-3 Common marketing channels
for consumer goods and services
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11. CHANNEL STRUCTURE AND
ORGANIZATION
• Marketing Channels for Business Goods
and Services
 Industrial Distributor
 Agent
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12. FIGURE 13-4 Common marketing channels
for business goods and services
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13. CHANNEL STRUCTURE AND
ORGANIZATION
• Electronic Marketing Channels
• Multiple Channels and Strategic Alliances
 Dual Distribution
 Strategic Channel Alliances
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14. FIGURE 13-5 Representative consumer
electronic marketing channels
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15. CHANNEL STRUCTURE AND
ORGANIZATION
• Vertical Marketing Systems
 Corporate Systems
• Corporate Vertical Marketing System
• Forward Integration
• Backward Integration
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16. FIGURE 13-6 Types of vertical marketing systems
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17. CHANNEL STRUCTURE AND
ORGANIZATION
• Vertical Marketing Systems
 Contractual Systems
• Contractual Vertical Marketing System
• Wholesaler-Sponsored Voluntary Chains
• Retailer-Sponsored Cooperatives
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18. CHANNEL STRUCTURE AND
ORGANIZATION
• Vertical Marketing Systems
 Contractual Systems
• Franchising
 Manufacturer-Sponsored Retail Franchise Systems
 Manufacturer-Sponsored Wholesale Systems
 Service-Sponsored Retail Franchise Systems
 Service-Sponsored Franchise Systems
 Administered Systems
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19. Sherwin-Williams and H&R Block
What vertical marketing system does each use?
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20. CHANNEL CHOICE AND
MANAGEMENT
• Factors in Choosing a Marketing
Channel
 Provide the Best Target Market Coverage
 Best Satisfy the Target Market’s
Buying Requirements
 Be the Most Profitable
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21. CHANNEL CHOICE AND
MANAGEMENT
• Factors in Choosing a Marketing
Channel
 Target Market Coverage
• Intensive Distribution
• Exclusive Distribution
• Selective Distribution
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22. CHANNEL CHOICE AND
MANAGEMENT
• Factors in Choosing a Marketing
Channel
 Satisfying Buyer Requirements
• Information • Variety
• Convenience • Pre- or Post-Sale Services
 Profitability
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23. Jiffy Lube and PETCO
What buyer requirements are satisfied?
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24. CHANNEL CHOICE AND
MANAGEMENT
• Channel Relationships: Conflict and
Cooperation
 Conflict in Marketing Channels
• Channel Conflict
• Vertical Conflict
 Disintermediation
• Horizontal Conflict
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25. CHANNEL CHOICE AND
MANAGEMENT
• Channel Relationships: Conflict and
Cooperation
 Cooperation in Marketing Channels
• Channel Captain
 Economic  Identification
 Expertise  Legitimate Right
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26. LOGISTICS AND
SUPPLY CHAIN MANAGEMENT
• Logistics
• Logistics Management
 Flow of the Product
 Cost-Effective
 Customer Service
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27. LOGISTICS AND
SUPPLY CHAIN MANAGEMENT
• Supply Chains versus Marketing
Channels
 Supply Chain
 Supply Chain Management
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28. FIGURE 13-7 Relating logistics management
and supply chain management to supplier
networks and marketing channels
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29. FIGURE 13-8: Sourcing, Assembling, and
Delivering a New Car: The Automotive
Supply Chain
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30. FIGURE 13-A Paint industry supply chain
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31. LOGISTICS AND
SUPPLY CHAIN MANAGEMENT
• Supply Chain Management and
Marketing Strategy
 Aligning a Supply Chain w/ Marketing Strategy
• Understand the Customer
• Understand the Supply Chain
• Harmonize the Supply Chain with the
Marketing Strategy
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32. LOGISTICS AND
SUPPLY CHAIN MANAGEMENT
• Dell: A Responsive Supply Chain
• Wal-Mart: An Efficient Supply Chain
 Cross-Docking
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33. TWO CONCEPTS OF LOGISTICS
MANAGEMENT IN A SUPPLY CHAIN
• Total Logistics Cost Concept
• Customer Service Concept
 Time
• Order Cycle or Replenishment Time
• Quick Response or Efficient Consumer Response
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34. FIGURE 13-9 Supply chain managers
balance total logistics cost factors against
customer service factors
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35. TWO CONCEPTS OF LOGISTICS
MANAGEMENT IN A SUPPLY CHAIN
• Customer Service Concept
 Dependability
 Communication
 Convenience
• Vendor-Managed Inventory (VMI)
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36. FIGURE 13-B Advantages and disadvantages
of five modes of transportation
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37. GOING ONLINE
FINDING A FRANCHISE
FOR YOU
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38. Going Online
1. Visit the Franchise.com website, and
click on the “Franchise Buyer” link.
Which franchise opportunities fit you?
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39. Going Online
2. Visit the International Franchise
Association website, and click on the
“Resource Center” link. Then, click
on the “News” link. What are the
current trends in franchising?
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40. SUPPLEMENTAL
LECTURE NOTE 13-2
TRANSPORTATION:
A KEY LOGISTICS FUNCTION
IN A SUPPLY CHAIN
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41. FedEx and Maersk
What transportation modes does each perform?
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42. IN-CLASS ACTIVITY 13-1
MARKETING CHANNELS FOR
APPLE COMPUTER
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43. Apple Computer Products
Mac mini
iMac G5
iPod
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44. Apple Computer Marketing Channel Structure:
Online Apple Store - Direct Channel
Producer
Consumer Customers
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45. Apple Computer Marketing Channel Structure:
Apple Retail Store - Direct Channel
Producer
Consumer Customers
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46. Apple Computer Marketing Channel Structure:
CompUSA - Direct Channel/Strategic Channel Alliance
Producer
Retailer CompUSA
Apple Employees
Staff CompUSA
Store-Within-
A-Store
Consumer Customers
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 13-46

47. Apple Computer Marketing Channel Structure:
Ingram Micro/Best Buy - Indirect Channel
Producer
Ingram
Wholesaler Micro
Retailer Best Buy
Consumer Customers
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48. Apple Computer Marketing Channel Structure:
MacMall Online/Catalog Sales - Indirect Channel
Producer
Retailer MacMall
Consumer Customers
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49. IN-CLASS ACTIVITY 13-2
MARKETING CHANNELS FOR
FASTENAL’S UNIQUE
THREADED FASTENERS
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50. Fastenal Fasteners
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51. Fastenal Fasteners (Unique Heads/Tops)
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52. Fastenal Fasteners (Unique Drivers/Tools)
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53. FIGURE 13-C Common marketing channels
for business goods and services
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54. Marketing Channel
A marketing channel consists of
individuals and firms involved in the
process of making a product or service
available for use or consumption by
consumers or industrial users.
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55. Dual Distribution
Dual distribution is an arrangement
whereby a firm reaches different buyers
by employing two or more different types
of channels for the same basic product.
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56. Vertical Marketing Systems
Vertical marketing systems are
professionally managed and centrally
coordinated marketing channels designed
to achieve channel economies and
maximum marketing impact.
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57. Franchising
Franchising is a contractual arrangement
between a parent company (a franchisor)
and an individual or firm (a franchisee)
that allows the franchisee to operate a
certain type of business under an
established name and according to
specific rules.
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58. Intensive Distribution
Intensive distribution is a level of
distribution density whereby a firm tries
to place its products and services in as
many outlets as possible.
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59. Exclusive Distribution
Exclusive distribution is a level of
distribution density whereby only one
retail outlet in a specific geographical
area carries the firm’s products.
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60. Selective Distribution
Selective distribution is a level of
distribution density whereby a firm
selects a few retail outlets in a specific
geographical area to carry its products.
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61. Channel Conflict
Channel conflict arises when one
channel member believes another channel
member is engaged in behavior that
prevents it from achieving its goals.
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62. Disintermediation
Disintermediation is channel conflict
that arises when a channel member
bypasses another member and sells or
buys products direct.
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63. Logistics
Logistics consists of those activities that
focus on getting the right amount of the
right products to the right place at the
right time at the lowest possible cost.
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64. Supply Chain
A supply chain is a sequence of firms
that perform activities required to create
and deliver a good or service to
consumers or industrial users.
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65. Total Logistics Cost
Total logistics cost consists of expenses
associated with transportation, materials
handling and warehousing, inventory,
stockouts (being out of inventory), order
processing, and return goods handling.
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66. Customer Service
Customer service is the ability of
logistics management to satisfy users in
terms of time, dependability,
communication, and convenience.
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67. Vendor-Managed Inventory
Vendor-managed inventory (VMI)
is an inventory management system
whereby the supplier determines the
product amount and assortment a
customer (such as a retailer) needs and
automatically delivers the appropriate
items.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 13-67