Flashcards in Place (Distribution) Deck (25):
What is the Marketing Logistics Network?
- a system of efficiently making products for end users
- involves "delivery" and distribution: Getting it out to customers and distribution involves where and how you can get the product
- will reduce lead time: the time to serve the product e.g. Iconic is one day express, or maccas drive through is fast. Lead time from overseas on ebay can take long as well.
How does the MLN add to the value chain?
Starts with the manufacturer and ends at end user. Between each part of the chain, something beneficial is added to the product, there is value added. E.g. giving it to another company that can add components then retailers then delivery etc.
What are the four functions of logistics (place)?
This enables effective and efficient distribution.
- Warehousing: storage element, where you keep your products. Needs to be readily accessible so you can transition it to the next place comfortably.
- Inventory management: Just keeping track of your inventory, what goes in and out, how much you have etc. Important to have proper supply to meet demand. Also important to keep track of loss as you know where everything is (can get stolen etc).
- Transportation: Just delivery, getting the product to the customer.
-Logistics info mgmt: Involves keeping track of data such as time to see how effective you are at delivery etc.
What is a distribution channel?
- they are a group of interdependent organisations
- work together to deliver goods, includes retailers. So working with the intermediaries.
You can look at distribution channels as a ______
What is are distribution channels?
Basically the various means a firm distributes its products to its customers.
How does overcoming discrepancies add value?
Discrepancy is the difference between what is happening and what should be happening.
There are 4 ways to do this, by considering: quantity, assortment, temporal factors, spatial factors (QATS)
What is quantity in relation to overcoming discrepancies?
What is demanded is what should be provided to maximise profits. Obviously you want to supply at the right quantity (not too much or too little - unnecessary costs).
This adds value as it saves the company money (as opposed to it being lost).
What is assortment in relation to overcoming discrepancies?
Specifically, WHAT is demanded. You dont want to be giving dildos for a customer base that wants bananas.
This adds value by having relevant products that their customer base wants, retaining their customer base and saving losses.
What is the temporal factor in relation to overcoming discrepancies?
Basically you want to sell things at the right time e.g. seasonal changes. Also, minimising lead time.
This adds value by giving the product to the customer at the time they want it.
What is the spatial factor in relation to overcoming discrepancies?
Related to the geography. You don't want your retailer to be too far from where the customer base is.
Or, you can make your delivery process more effective.
Adds value more customers can access your products and buy them, giving them further profit.
How does distribution add value via specialisation?
Through information, contacts (industry), negotiation, financing, promotion (PINFC)
What is 'information' in relation to specialisation?
Specialising in information means you have an exclusive business channel. Allows you to learn a lot about that industry, and they most effective way to compete and market.
This adds value as a business gets better as it gathers more relevant information.
What is 'contacts' in relation to specialisation?
Based on WHO you know. If you are connected to leading industry experts, your products will likely be better.
Or if you have good contacts in retail industry, can better distribute products.
Add value through these ways.
What is 'negotiation' in relation to specialisation?
Having leverage with the people you're dealing with. If you manage to get favourable outcomes in the delivery of your products to your customer, you get value added e.g. you're a large client working with a delivery company for a long time - get better deals.
Note that the more advanced your distribution channel is, the more leverage you have.
What is 'financing' in relation to specialisation?
How you fund your distribution channels. Involves economy of scales, the bigger you are, the lower the per product cost there is. As you get bigger, you get better so you get leniency.
What are the types of distribution channels?
What is a vertical channel?
Basically just moving good from manufacturer to manufacturer where components are added to retailer etc. Each intermediary do something different.
Hard because very segmented, making communication between each limited.
What is a horizontal channel?
Companies on the same level that are competitors in the industry that work together to increase their economy of scales.
This is problematic as there are competitive problems.
What is a vertical marketing network?
Three kinds: corporate, contractual, administered.
What is the corporate type of a modern vertical marketing network?
A modern vertical channel. It's when one company owns every part of the value chain and distribution channel. This is good because you don't have to worry about other businesses affecting you.
What is the contractual type of a modern vertical marketing network?
A bunch of businesses under a contract from another firm. Makes it more expansive e.g. more retail stores.
What is the administered type of a modern vertical marketing network?
Essentially a monopoly. You create the entire value chain as there is no one else there to help you. You are the only market player essentially.
This is obviously resource exhaustive, minimising profit.
What is a hybrid marketing network?
Essentially combination of corporate, contractual and administered vertical marketing network.
The main difference is that it has a wide horizontal channel as well, which allows businesses to work together.
Those companies can then have their own vertical chains, which gives them stricter controls over their logistics.
Sharing contacts, resources, etc means more efficient industry in general.