Place Flashcards
Why do companies use marketing channels?
Value delivery network: suppliers, distributors, customers who “partner” to improve the performance of the entire system in delivering value
Upstream: supply raw materials and expertise to create a product
Downstream of supply chain (toward customer), including wholesales and retailed, to connect company and customer.
Marketing channels, or distribution channels: Set of interdependent organizations that help make a product or strive available for use or consumption.
Important because: channel decisions affect pricing, promotion, and new products
Intermediaries provide economies. How?
Producers make narrow assortments in large quantities
Consumers want broad assortments in small quantities
Marketing channel members buy large quantities and break them down into smaller quantities and bigger assortments
Reduce the number of channel transactions
Help complete transactions
-information, promotion, contact with prospective buyers, matching with buyer needs, negotiation on price and other terms of offer, physical distribution, financing to cover cost of the channel work, risk taking to assume risks in carrying out channel work
2 channel levels (layer of intermediaries who help bring product to final buyer)
Direct marketing channel: no intermediaries
Indirect: one or more intermediary levels
More levels can mean less control and more complexity.
-flows: physical (products), ownership, payment, information, promotion
Channel conflict (disagreement on goals, rewards, roles): vertical, horizontal
Vertical: different levels of same channel
-Goodyear began selling through mass merchant retailed and not just Goodyear outlets
Horizontal: same level of channel
-Holiday Inn complained that other Holiday Inns were hurting the overall image
Conventional distribution channel
One or more independent producers, wholesalers, retailers, each a separate business trying to max its own profits even at the expense of other members
Has led to damaging conflict and poor performance
Vertical marketing system: corporate, contractual, administered
VMS: producers, wholesalers, retailers and all in a unified system. One member owns the others, has contracts with them, or has so much power that they all cooperate
Corporate: leadership through common ownership (one guy owns everything)
Contractual: independent firms at different levels join together to obtain more economies and impact than they could achieve alone (franchise: one channel member links several stages of production-distribution)
- manufacturer-sponsored retailer franchise: Honda and its dealers
- manufacturer-sponsored wholesaler franchise system: Coca cola bottlers who buy concentrate and then sell the finished product in local markets
- service-firm-sponsored retailer franchise: Burger King and the world
Administered: coordinates successive stag through size and power of one of the parties (ie. manufacturers of a top brand, P&G cooperating with resellers for shelf space)
Horizontal marketing system: 2+ companies join together to follow a new marketing opportunity
McDonalds and Walmart give shoppers a bite to eat within the facility
Multichannel distribution system
Single firm sets up 2+ marketing channels to reach one or more customer segments
Trend to disintermediation: cut out intermediaries by producers or by other new intermediaries
Marketing channel design and alternatives to marketing channels
Analyze consumer needs, set objectives, identify alternative, evaluate them
Alternatives
- types: phone, Internet, retailers such as Walmart
- number: 3 strategies determine how many channel members per level (intensive=stock everywhere, exclusive=Rolex watches, selective distribution=somewhere in between, for controlled coverage)
- responsibilities: price policies, conditions of sale, territory rights, etc.
Evaluate alternatives: economic criteria (sales, costs, profit), control issues, adaptability criteria (flexible to environmental changes)
International distribution channels are complex because
Complex, hard to penetrate, vary from country to country, fragmented distribution systems and costs are vey high
Marketing channel management calls for selecting, managing, motivating individual channel members and evaluating performance over time
Selection: Years in business, other lines carried, growth and profit record, cooperativeness, reputation
Managing and motivating: PRM (partner relationship management) between company and marketing partners
Evaluate: sales quotas, average inventory levels, customer delivery time, cooperation
Marketing logistics have a major impact on customer satisfaction and company costs.
Supply chain management (managing upstream and downstream value-added flows of materials, final goods, related information among suppliers, company, resellers, final consumers) calls for consumer-centered thinking
Marketing logistics aka physical distribution: planning, implementing, controlling the physical flow of materials, final goods, related information from origin to consumption
Outbound: company to resellers to customers
Inbound: suppliers to company/factory
Reverse: moving broken, excess products returned by consumers or resellers
Logistics system goal - max service, min cost
Targeted level of customer service
Major functions of targeting and minimizing cost:
-warehousing: distribution centers are highly automated warehouses to efficiently take and fill orders
-inventory management: too little vs too much, just-in-time systems
-transportation: affects pricing, delivery performance, condition of goods whether arrive (trucks, railroads, water carriers, pipelines, air, Internet). Intermodal transport combines two or more means of transportation (fishyback, piggyback, trainship, air truck)
-logistics information management: EDI electronic data interchange, VMI vendor managed inventory, to provide real-time data
Integrated logistics management to provide better customer revive and trim distribution costs
Concept emphasize teamwork in and out of the company to max the entire distribution network
- cross-functional teamwork inside the company
- cross-company teamwork and shard projects
- third party logistics to performance any or all functions to get product to market
Role of retailers in distribution channel?
Retailing: activities involved in selling directly to final consumer for personal use
Retailer: business whose sales primarily come from retailing
New concept of shopper marketing is the idea that the retailer is a marketing medium that attracts crowds and is where purchase decisions are factually made
