Download Chapter 13 Marketing Channels and Supply Chain Management

Principles of
Contemporary Marketing
Kurtz & Boone
Chapter 13
Marketing Channels and
Supply Chain Management
CHAPTER 13 Marketing Channels and Supply Chain Management
Chapter Objectives
1.
Describe the types of marketing channels and the roles they
play in marketing strategy.
2.
Outline the major channel strategy decisions.
3.
Describe the concepts of channel management, conflict, and
cooperation.
4.
Identify and describe the different vertical marketing systems.
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CHAPTER 13 Marketing Channels and Supply Chain Management
Chapter Objectives
5.
Explain the roles of logistics and supply chain management in
an overall distribution strategy.
6.
Identify the major components of a physical distribution
system.
7.
Compare the major modes of transportation.
8.
Discuss the role of transportation intermediaries, combined
transportation modes, and warehousing in improving physical
distribution.
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CHAPTER 13 Marketing Channels and Supply Chain Management
The Role of Marketing Channels in Marketing
Strategy
o Four functions of marketing channels:
o Facilitating the exchange process by reducing the
number of marketplace contacts necessary to make a
sale
o Adjusting for discrepancies in the market’s assortment
of goods and services via sorting
o Standardizing exchange transactions by setting
expectations for products
o Facilitating searches by both buyers and sellers
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CHAPTER 13 Marketing Channels and Supply Chain Management
Direct Selling
o Direct channel - Carries goods directly from a
producer to the business purchaser or ultimate user
o Direct selling - Strategy designed to establish direct
sales contact between producer and final user
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CHAPTER 13 Marketing Channels and Supply Chain Management
Channels Using Marketing Intermediaries
o Producer to wholesaler to retailer to consumer
o Producer to wholesaler to business user
o Producer to agent to wholesaler to retailer to
consumer
o Producer to agent to wholesaler to business user
o Producer to agent to business user
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CHAPTER 13 Marketing Channels and Supply Chain Management
Dual Distribution and Reverse Channels
o Dual distribution - Network that moves products to a
firm’s target market through more than one marketing
channel
o Reverse channel - Channel designed to return goods to
their producers
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CHAPTER 13 Marketing Channels and Supply Chain Management
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CHAPTER 13 Marketing Channels and Supply Chain Management
Determining Distribution Intensity
o Intensive distribution - Distribution of a product
through all available channels
o Selective distribution - Distribution of a product
through a limited number of channels
o Exclusive Distribution - Distribution of a product
through a single wholesaler or retailer in a specific
geographic region
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CHAPTER 13 Marketing Channels and Supply Chain Management
Channel Conflict
o Horizontal conflict
o Vertical conflict
o The gray market
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CHAPTER 13 Marketing Channels and Supply Chain Management
Vertical Marketing Systems
o Planned channel system designed to improve
distribution efficiency and cost-effectiveness by
integrating various functions throughout the
distribution chain
o Rely on forward or backward integration
o Forward integration - Firm attempts to control
downstream distribution
o Backward integration - Manufacturer attempts to gain
greater control over inputs to production process
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CHAPTER 13 Marketing Channels and Supply Chain Management
Vertical Marketing Systems
o Three categories of VMSs
o Corporate systems
o Administered systems
o Contractual systems
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CHAPTER 13 Marketing Channels and Supply Chain Management
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CHAPTER 13 Marketing Channels and Supply Chain Management
Radio Frequency Identification (RFID)
o Technology that uses a tiny chip with identification
information that can be read by a scanner using radio
waves from a distance
o Can be used to grant access to restricted areas or to
speed delivery processing
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CHAPTER 13 Marketing Channels and Supply Chain Management
Enterprise Resource Planning
o Software system that consolidates data from among a
firm’s various business units
o ERP and its related software aren’t always perfect
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CHAPTER 13 Marketing Channels and Supply Chain Management
Physical Distribution
o A physical distribution system contains these elements:
o Customer service
o Transportation
o Inventory control
o Protective packaging and materials handling
o Order processing
o Warehousing
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CHAPTER 13 Marketing Channels and Supply Chain Management
The Problem of Suboptimization
o Results when the managers of individual physical
distribution functions attempt to minimize costs, but
the impact of one task on the others leads to less than
optimal results
o Occurs when a firm introduces a new product that may
not fit easily into its current physical distribution system
o Effective management of physical distribution requires
cost trade-offs
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CHAPTER 13 Marketing Channels and Supply Chain Management
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CHAPTER 13 Marketing Channels and Supply Chain Management
Intermodal Coordination
o Piggyback - Most widely used form of intermodal
coordination
o Birdyback service - Sends motor carriers to pick up a
shipment locally and deliver that shipment to local
destinations
o Fishyback service - Intermodal coordination system
between motor carriers and water carriers
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CHAPTER 13 Marketing Channels and Supply Chain Management
Warehousing
o Storage warehouse - Holds goods for moderate to long
periods in an attempt to balance supply and demand
for producers and purchasers
o Distribution warehouse - Assembles and redistributes
goods, keeping them moving as much as possible
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