9 MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE Distribution and Supply Chain Management
Distribution and Supply Chain Concepts Marketing Channels “An organized system of marketing institutions through which products, resources, information, funds, and/or product ownership flow from the point of production to the final user.” Physical Distribution “Coordinating the flow of information and products among members of the channel to ensure that products are available in the right places, in the right quantities, at the right times, and in a cost-efficient manner.”
Graphical Depiction of a Supply Chain Exhibit 9.1
Marketing Channel Functions Channel Function Specializations Sorting Breaking Bulk Maintaining Inventories Maintaining Convenient Locations Providing Services Channel Effectiveness and Efficiency Distribution Decision Criteria (1) Is the channel effective? (2) Is the channel efficient?
Strategic Issues in Distribution and Supply Chain Management Marketing Channel Structure Exclusive Distribution Selective Distribution Intensive Distribution Channel Integration (three key factors) Connectivity Community Collaboration Creating and Enhancing Value in the Supply Chain
Maximizing Profit Margin Performance Exhibit 9.2
Conflict and Collaboration in the Supply Chain (1 of 2) The Basis of Conflict in the Supply Chain Five basic sources of power: Legitimate Power Reward Power Coercive Power Information Power Referent Power
Factors in Successful Supply Chain Collaboration Exhibit 9.3
Conflict and Collaboration in the Supply Chain (2 of 2) Collaborative Supply Chains Category management must be: Customer driven Strategically driven Multifunctional Financially based Systems dependent Focused on immediate consumer response
Major Components of Category Management Exhibit 9.4
Trends in Marketing Channels (1 of 2) Advancing Technology Growth of Internet and e-commerce Radio frequency identification (RFID) Shifting Power in the Channel Discount mass merchandise retailers Wal-Mart, Kmart, and Target Category focused retailers (category killers) Toys “R” Us, Lowe’s, Office Depot, AutoZone, and Best Buy Outsourcing Channel Functions Outsourcing is growing rapidly
The Trend in Outsourcing Exhibit 9.5
Trends in Marketing Channels (2 of 2) The Growth of Direct Distribution and Nonstore Retailing Examples of Nonstore Channels Catalog and Direct Marketing Direct Selling E-Commerce Home Shopping Networks Vending Direct Response Advertising The Growth of Dual Distribution
Legal and Ethical Issues in the Supply Chain Dual Distribution Exclusive Channel Arrangements Tying Arrangements Counterfeit Products