1. Managing Retailing, Whole Saling and Market Logistic
Delivering Value Through Supply Chain Management: Channels of Distribution and Logistics -
Managing Retailing, Whole Saling and Market Logistic

2. Chapter Objectives value chain key elements in a supply chain
distribution channel
functions of distribution channels
wholesaling intermediaries
found in distribution channels

3. Chapter Objectives types of distribution channels
steps for distribution channel strategies
how supply chain uses logistics

4. Place: The Final Frontier
Value chain: a series of activities directed at designing, producing, marketing, delivering, and supporting any product.
Supply chain: Activities necessary to turn raw materials into a good or service and put it in the hands of the consumer:
LIDROCK.COM

5. Figure 15.2: The Generic Value Chain

6. Links in the Supply Chain
Supply chain management:
the management of flows
among the firms
in a supply chain
to maximize total profitability
UPS.COM

7. Links in the Supply Chain
Supply chain management:
physical movement of goods
sharing of information about goods
In-sourcing:
contracting with a specialist
that services the company’s supply chains
UPS.COM

8. Supply Chain vs. Channel of Distribution
facilitates movement of a product
from producer to final customer
Supply chain:
begins with raw materials

9. Figure 15.3: Supply Chain

10. The Importance of Distribution
You Can’t Sell What Isn’t There

11. The Importance of Distribution: You Can’t Sell What Isn’t There!
Direct channel:
a producer to a customer
Indirect channel:
one or more intermediaries

12. The Importance of Distribution: You Can’t Sell What Isn’t There!
intermediaries
wholesalers, agents,
brokers, retailers
they help move
product to consumer
or business user

13. Functions of Distribution Channels
To ease the flow of goods
from producer to customer
To provide time, place, and ownership utility
logistics or physical distribution functions

14. Functions of Distribution Channels
create efficiencies
by reducing number of transactions
Breaking bulk:
purchasing large quantities of goods to sell one/few at a time to customers
Creating assortments:
providing variety of products in one location

15. Figure 15.4: Reducing Transactions via Intermediaries

16. Functions of Distribution Channels
To make purchase process easier
To manage risk
To perform communication and transaction functions

17. The Internet in the Distribution Channel
Radical changes in distribution strategies
Disintermediation:
eliminating traditional intermediaries
Knowledge management:
sharing knowledge
with other supply chain members
DELL

18. Channel Composition: Types of Wholesaling Intermediaries
firms that handle the flow of products
from the manufacturer
to the retailer/business user

19. Independent Intermediaries
Merchant wholesalers:
buy goods
from manufacturers
sell to retailers
and other B2B customers

20. Independent Intermediaries
Merchant wholesalers:
Full-service merchant wholesalers
Limited-service merchant wholesalers
Cash-and-carry wholesalers
Truck jobbers
Drop shippers
Rack jobbers
Mail-order wholesalers

22. Independent Intermediaries
Merchandise Agents/Brokers:
provide services in exchange for commissions
Manufacturers’ agents/reps
Selling agents
Commission merchants
Merchandise brokers

23. Independent Intermediaries
Manufacturer-Owned Intermediaries
Sales branches
Sales offices
Manufacturers’ showrooms

24. Types of Distribution Channels
Consumer Channels
Direct channel:
producer sells directly to customers
Indirect channel:
producer uses one or more intermediaries
to reach consumers

25. Types of Distribution Channels (cont’d)
Business-to-business channels
Dual distribution systems
Hybrid marketing systems
MERCK.COM

30. Figure 15.6: Steps in Distribution Planning

31. Planning a Channel Strategy
Step 1:
Develop distribution objectives
that support the firm’s
overall marketing goals.
How can distribution work with other elements of marketing mix to increase profit?
To Increase market share
Increase sales volume ?
To make firm product available when, where, and in the quantities customer at the minimum cost.

32. Strategy Bulky products Fragile Product New product
Primary distribution objective is to minimize shipping cost
Fragile Product
minimize handling
New product
Maximum product exposure
Make product available near customer (work / live)

33. Planning a Channel Strategy
Step 2:
Evaluate internal and external environmental influences
to develop best channel structure.
ability to handle distribution functions
Channel intermediaries available
How competition distributes products
Long / Short, intensive / selective / exclusive

34. Planning a Channel Strategy (cont’d)
Step 3: Choose a distribution strategy
Channel relationships:
conventional, vertical, or horizontal system
Conventional marketing system:
Multilevel distribution channel in which channel member work independently of one another
members work independently of one another

35. Planning a Channel Strategy (cont’d)
Step 3: Choose a distribution strategy
Vertical marketing system (VMS):
formal cooperation among channel members
Administered VMS
Corporate VMS
Contractual VMS
Retailer cooperative
Franchise organizations
IGAINC.COM

37. Planning a Channel Strategy (cont’d)
Step 3: Choose a distribution strategy
Horizontal marketing system:
two or more firms
at the same channel level
agree to work together
to get their product to the customer
Alliance

38. Planning a Channel Strategy (cont’d)
Step 3: Choose a distribution strategy
Distribution intensity
Exclusive distribution:
selling only through a single outlet in a region
Selective distribution:
using fewer outlets than intensive
but more than exclusive distribution
Intensive distribution:
selling through all suitable wholesalers or retailers

40. Planning a Channel Strategy (cont’d)
Step 4: distribution tactics
Selecting channel partners:
normally a long-term commitment
Managing the channel
Channel leader/captain:
dominant firm that controls the channel
(via economic, legitimate, reward/coercive power)

41. Distribution Channels and the Marketing Mix
Place decisions affect:
Pricing
Product and its positioning
ENTERPRISE
RENT-A-CAR

42. Logistics: Implementing the Supply Chain
the process of designing, managing, and improving the movement of products through the supply chain
Purchasing
Manufacturing
Storage
Transport

43. Logistics: Implementing the Supply Chain (cont’d)
Physical distribution:
the activities used to move finished goods
from manufacturers
to final customers

44. Logistics Functions
Order processing
Warehousing
Materials handling

45. Logistics Functions (cont’d)
Transportation:
mode by which
products move
among channel members

46. Logistics Functions Transportation modes differ in their--
Dependability
(safety and punctuality)
Cost
Speed of delivery
Accessibility
(different locations served)
Capability
(variety of products handled)
Traceability
(ability to locate goods in shipment)

47. Modes of Transportation
Railroads:
carry heavy, bulky items over long distances
Water:
carry large, bulky goods
(especially internationally)
Trucks:
carry consumer goods in short haul;
allow flexibility in locations

48. Modes of Transportation (cont’d)
Air:
carry high value-items;
fastest and most expensive mode
Pipelines:
carry petroleum/chemical products
Internet:
distribute services
such as banking, news, and entertainment

50. Logistics Functions (cont’d)
Inventory control:
activities to ensure foods are always available to meet customers’ demands
Radio frequency identification (RFID)
Just in time (JIT)

51. THE END