2. Part Six Distribution Decisions

3. Chapter 15 Marketing Channels and Supply Chain Management

4. Objectives Describe nature/functions of marketing channels
Explain how supply chain management can facilitate distribution for benefit of all channel members, especially customers
Identify types of marketing channels
Understand factors affecting decisions when selecting marketing channels
Examine major levels of marketing coverage
Explore concepts of leadership, cooperation, and conflict in channel relationships
Specify how channel integration can improve channel efficiency
Examine legal issues affecting channel management

5. Distribution
Activities involved in making products available to customers when and where they want to purchase them.

6. Modern Distribution Management
Marketing Channel
A group of individuals and organizations that direct the flow of products from producers to customers.
Modern Distribution Management

7. Marketing Intermediary
A middleman linking producers to other middlemen or ultimate consumers through contractual arrangements or through the purchase and resale of products.

8. Marketing Channel Activities Performed By Intermediaries

9. Potential Channel Members
Wholesalers- buy and sell products to other wholesalers, retailers and industrial customers
Retailers- purchase products and resell them to ultimate consumers

10. Distribution Decisions
powerful influence on the rest of the marketing mix
determine a product’s presence and accessibility to buyers
entail long-term commitment

11. Homeland Security and Supply Chain Management
Channel Functions
Create utility
Time
Place
Possession
Facilitate exchange efficiencies
Form Supply Chains
Total distribution system that serves customers and creates competitive advantage
Homeland Security and Supply Chain Management

12. Efficiency In Exchanges Provided By Intermediary

13. Supply Chain Management
Long-term partnerships among marketing channel members that reduce inefficiencies, costs, and redundancies and develop innovative approaches to satisfy customers

14. Tasks In Supply Chain Management

15. Technology in Supply Chain Management
Integrated information sharing
Reduction of costs
Improved service
Enhanced value to customer
Tools improve overall performance
Electronic billing
Purchase order verification
Image processing
Customer Relationship Management systems

16. Types of Marketing Channels – Consumer Products
Direct marketing channels vs. intermediaries
Goods from producer – retailer – customer
Goods from producer – wholesaler – retailer – customer
Goods from producer – agent – wholesaler – retailer – customer

17. Typical Marketing Channels For Consumer Products

18. Types of Marketing Channels – Business Products
Direct channels
Industrial distributor facilitates exchange
Industrial distributor is an independent organization that takes industrial products’ title and carries inventory
Manufacturers’ agent
Does not acquire title or take possession
Manufacturers’ agent and industrial distributor

19. Typical Marketing Channels For Business Products

20. Collaborative Forecasting Between Sears and Michelin
Types of Marketing Channels – Multiple Marketing Channels and Channel Alliance
Dual distribution
The use of two or more marketing channels to distribute the same product to the same target market
Strategic Channel Alliance
The products of one organization are distributed through the marketing channels of another
Collaborative Forecasting Between Sears and Michelin

21. Selecting Marketing Channels

22. Selecting Channels Customer Characteristics – consumer vs. business
Product Attributes – expensive vs. standardized; durable vs. fragile
Type of Organization – large vs. small
Competition – high vs. low
Marketing Environmental Forces
Characteristics of Intermediaries

23. Intensity Of Market Coverage

24. Intensity Of Distribution
Intensive – using all available outlets to distribute product
Selective – using only some available outlets to distribute a product
Exclusive – using a single outlet in a fairly large geographic area to distribute a product

25. Supply Chain Management – Channel Leadership
Channel captain – organizes and controls marketing channel
Channel power – ability of one channel member to influence another member’s goal achievement

26. Supply Chain Management – Channel Cooperation
Vital to gain something from other members
Enables members to
Speed up inventory replenishment
Improve customer service
Cut costs
Improve channel cooperation
View chain as competing against others
Members direct efforts to common objectives
Precise definition of each member’s tasks

27. Supply Chain Management – Channel Conflict
Self-interest
Poor communication
Increased use of multiple channels

28. Seven Myths of Channel Integration
Vertical – combining two or more stages of the channel under one management
Horizontal – combining organizations at the same level of operation under one management
Seven Myths of Channel Integration

29. Vertical Marketing Systems
A marketing channel managed by a single channel member to achieve efficient distribution satisfying target market customers
Corporate
Administered
Contractual

30. Legal Issues In Channel Management
Dual Distribution
Restricted Sales Territories
Tying Agreement- supplier furnishes product to channel member with stipulation channel member must purchase other products
Exclusive Dealing- manufacturer forbid intermediary to carry products of competitors
Refusal to Deal