Download Chapter 12 - slide 9 Copyright © 2010 Pearson

Marketing Channels: Delivering
Customer Value
Chapter 12 - slide 1
Channel Behavior and Organization
Channel Behavior
Marketing channel consists of firms that
have partnered for their common good
with each member playing a specialized
role
Channel conflict refers to disagreement over
goals, roles, and rewards by channel
members
• Horizontal conflict
• Vertical conflict
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Publishing as Prentice Hall
Chapter 12 - slide 2
Channel Behavior and Organization
Conventional Distributions Systems
Conventional distribution systems consist of
one or more independent producers,
wholesalers, and retailers.
Each seeks to maximize its own profits, and
there is little control over the other
members and no formal means for
assigning roles and resolving conflict.
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 12 - slide 3
Channel Behavior and Organization
Vertical Marketing Systems
Vertical marketing systems (VMSs) provide channel
leadership and consist of producers,
wholesalers, and retailers acting as a unified
system and consist of:
• Corporate marketing systems
• Contractual marketing systems
• Administered marketing systems
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Chapter 12 - slide 4
Channel Behavior and
Organization
Corporate VMS
Corporate vertical marketing system integrates successive stages of production and
distribution under single ownership
Kroger – 42 factories , 8000 private lables
Safeway – 9 milk plants , 8 bakery plants , 4 ice cream plants , 4 soft drink bottling plants , 4
fruit and vegetable processing plant
Luxottica- Ray Ban , Polo Ralph , D&G , Prada , Versace through optical chain LensCrafters and
Sunglasses Hut
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Chapter 12 - slide 5
Corporate VMS
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Chapter 12 - slide 6
Corporate VMS
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Chapter 12 - slide 7
Channel Behavior and Organization
Contractual vertical marketing system consists of
independent firms at different levels of
production and distribution who join together
through contracts to obtain more economies or
sales impact than each could achieve alone.
The most common form is the franchise
organization.
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Chapter 12 - slide 8
Channel Behavior and Organization
Contractual vertical marketing system
Franchise organization links several stages in the production distribution
process
– Manufacturer-sponsored retailer franchise system- Ford
– Manufacturer-sponsored wholesaler franchise system –Coca Cola
– Service firm-sponsored retailer franchise system – Mc Donalds ,
Pizza Hut
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Chapter 12 - slide 9
Channel Behavior and Organization
Administered vertical marketing system has a
few dominant channel members without
common ownership. Leadership comes from
size and power.
Parle , GE , Amul , HUL , P&G , Dabur , Gillette
Big Bazar , Spencer’s & Wal Mart
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Chapter 12 - slide 10
Channel Behavior and Organization
Horizontal Marketing System
Horizontal marketing systems are when two or more
companies at one level join together to follow a new
marketing opportunity. Companies combine financial,
production, or marketing resources to accomplish more
than any one company could alone.
Mc Donald's Express Versions of its restaurants in Wal
Mart Store
Easy Day and Habib’s Express Cut
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Chapter 12 - slide 11
Channel Behavior and Organization
Multichannel Distribution Systems
Hybrid Marketing Channels
Multichannel Distribution systems (Hybrid
marketing channels) are when a single firm
sets up two or more marketing channels to
reach one or more customer segments
Eureks Forbes
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Chapter 12 - slide 12
Channel Behavior and
Organization
Multichannel Distribution System
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Chapter 12 - slide 13
Channel Behavior and Organization
Changing Channel Organization
Disintermediation occurs when product or service
producers cut out intermediaries and go directly
to final buyers, or when radically new types of
channel intermediaries displace traditional ones
Make My Trip.com , Yatra .com , Naukri.com ,
Netflix, Amazon.com
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Chapter 12 - slide 14
Channel Design Decisions
Analyzing
consumer
needs
Setting
channel
objectives
Identifying
major
channel
alternatives
Evaluation
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Chapter 12 - slide 15
Channel Design Decisions
Setting Channel Objectives
•
•
•
•
Targeted levels of customer service
What segments to serve
Best channels to use
Minimizing the cost of meeting customer service
requirements
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Chapter 12 - slide 16
Channel Design Decisions
Identifying Major Alternatives
• Types of intermediaries. e.g Dell
• Number of marketing intermediaries
• Responsibilities of channel members :
Mc Donald's -promotional support , Record
keeping system , Training at Hamburger
University , General Management assistance
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Chapter 12 - slide 17
Channel Design Decisions
No. Of Marketing Intermediaries
Intensive distribution
• Candy and toothpaste
Exclusive distribution
• Luxury automobiles and prestige
clothing
Selective distribution
• Television and home appliance
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Chapter 12 - slide 18
Channel Design Decisions
Evaluating the Major Alternatives
Each alternative should be evaluated against:
– Economic criteria
– Control
– Adaptive criteria
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Chapter 12 - slide 19
Channel Design Decisions
Designing International Distribution Channels
• Channel systems can vary from country to
country
• Must be able to adapt channel strategies to the
existing structures within each country
Avon in China : ban on door-to-door selling
forcing Avon to abandon its traditional
Marketing approach & sell through retail
shops
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Chapter 12 - slide 20
Marketing Logistics and
Supply Chain Management
Nature and Importance of Marketing
Logistics
Marketing logistics (physical distribution) involves
planning, implementing, and controlling the
physical flow of goods, services, and related
information from points of origin to points of
consumption to meet consumer requirements at
a profit
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Chapter 12 - slide 21
Marketing Logistics and
Supply Chain Management
Nature and Importance of Marketing Logistics
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Chapter 12 - slide 22
Marketing Logistics and
Supply Chain Management
Nature and Importance of Marketing Logistics
Supply chain management is the process of managing
upstream and downstream value-added flows of
materials, final goods, and related information
among suppliers, the company, resellers, and final
consumers
Competitive Advantage
Improved Logistics will lead to cost saving
http://www.youtube.com/watch?v=VEA9HlGIST8
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Chapter 12 - slide 23
Marketing Logistics and
Supply Chain Management
Major Logistics Functions
Warehousing
Inventory
management
Transportation
Logistics
information
management
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Chapter 12 - slide 24
Marketing Logistics and
Supply Chain Management
Transportation affects the pricing of products,
delivery performance, and condition of the
goods when they arrive.
Ajay S Mittal, CMD of Arshiya International; Anil K Gupta MD of CONCOR; and Ramesh
Chandra Dubey, president of Association of Container Train Operator, share their
perspective.
http://www.ndtv.com/video/player/money-mantra/making-logistics-efficient/146370
Truck
Rail
Water
Pipeline
Air
Internet
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Chapter 12 - slide 25
Marketing Logistics and
Supply Chain Management
Logistics Information Management
Logistics information management is the
management of the flow of information,
including customer orders, billing, inventory
levels, and customer data
• EDI (electronic data interchange)
• VMI (vendor-managed inventory)
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Chapter 12 - slide 26
Marketing Logistics and
Supply Chain Management
Integrated Logistics Management
Third-party logistics is the outsourcing of logistics
functions to third-party logistics providers (3PLs)
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Chapter 12 - slide 27