MANAGING MARKETING CHANNELS AND SUPPLY CHAINS C HAPTER

What is a Marketing Channel? A set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer.

Retailer Wholesaler Agents and Brokers Agents and Brokers A channel intermediary that sells mainly to customers. A channel intermediary that sells mainly to customers. An institution that buys goods from manufacturers, takes title to goods, stores them, and resells and ships them. Wholesaling intermediaries who facilitate the sale of a product by representing channel member. Names for Marketing Intermediaries

Specialization and Division of Labor Specialization and Division of Labor Three Main Functions Three Main Functions Overcoming Discrepancies Overcoming Discrepancies Providing Contact Efficiency Providing Contact Efficiency JOB OF INTERMEMDIARIES

Provides efficiency and cost savings Attains economies of scale Aids producers who lack resources to market directly Builds good relationships with customers SPECIALIZATION AND DIVISION OF LABOR

Discrepancy of Quantity Discrepancy of Quantity Discrepancy of Assortment Discrepancy of Assortment The difference between the amount of product produced and the amount an end user wants to buy. The difference between the amount of product produced and the amount an end user wants to buy. The lack of all the items a customer needs to receive full satisfaction from a product or products. The lack of all the items a customer needs to receive full satisfaction from a product or products. OVERCOMING DISCREPANCIES

Temporal Discrepancy Temporal Discrepancy Spatial Discrepancy Spatial Discrepancy A situation that occurs when a product is produced but a customer is not ready to buy it. A situation that occurs when a product is produced but a customer is not ready to buy it. The difference between the location of a producer and the location of widely scattered markets. The difference between the location of a producer and the location of widely scattered markets. OVERCOMING DISCREPANCIES

Contact Efficiency

RetailersRetailers MerchantWholesalersMerchantWholesalers AgentsandBrokersAgentsandBrokers Take Title to Goods Do NOT Take Title to Goods CHANNEL INTERMEMDIARIES

CHANNELS FOR CONSUMER PRODUCTS DIRECT RESELLER WHOLESALER AGENT Producer

Producer Factors Product Factors Market Factors FactorsAffectingChannelChoiceFactorsAffectingChannelChoice Exclusive Distribution Selective Distribution Intensive Distribution Level of Distribution Intensity What makes you choose a particular channel?

Market Factors That Affect Channel Choices Market Factors That Affect Channel Choices Customer Profiles Consumer or Industrial Customer Consumer or Industrial Customer Size of Market Geographic Location MARKET FACTORS

Product Factors That Affect Channel Choices Product Factors That Affect Channel Choices Product Complexity Product Price Product Life Cycle Product Delicacy PRODUCT FACTORS

Producer Factors That Affect Channel Choices Producer Factors That Affect Channel Choices Producer Resources Number of Product Lines Desire for Channel Control PRODUCER FACTORS

Intensity Level ObjectiveObjective Number of Intermediaries Intensive Selective Exclusive Achieve mass market selling. Convenience goods. Achieve mass market selling. Convenience goods. Work with selected intermediaries. Shopping and some specialty goods. Work with selected intermediaries. Shopping and some specialty goods. Work with single intermediary. Specialty goods and industrial equipment. Work with single intermediary. Specialty goods and industrial equipment. Many Several One LEVELS OF DISTRIBUTION INTENSITY

Cost Transit Time Reliability Capability Accessibility Traceability Criteriafor Transportation Mode ChoiceCriteriafor Choice TRANSPORTATION FACTORS

Advantages and disadvantages of five modes of transportation

VERTICAL INTEGRATION Backward an Forward Integration – buy the step before or after you in the chain The degree to which a firm owns the stages of its supply chain management from materials supply- to manufacture -to distribution- to sale.

HORIZONTAL INTEGRATION When a company takes over another in the same business, thus eliminating a competitor and achieving a bigger market share For example - Whole Foods buys Wild Oats to gain a bigger share of the health food market Problem is monopoly creation, so govts watch these sales closely Mitsubishi Dealership Mazda Dealership Nissan Dealership Toyota Dealership Honda Dealership