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15-1McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
15-2
LO1Explain what is meant by a marketing channel of distribution and why intermediaries are needed.
Distinguish among traditional marketing channels, electronic marketing channels, and different types of vertical marketing systems.
LO2
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 15, YOU SHOULD BE ABLE TO:
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LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 15, YOU SHOULD BE ABLE TO:
LO3Describe factors that marketing executives consider when selecting and managing a marketing channel.
Explain what supply chain and logistics management are and how they relate to marketing strategy.
LO4
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CALLAWAY GOLF: DESIGNING AND DELIVERING THE GOODS FOR GREAT GOLF
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FIGURE 15-1FIGURE 15-1 The variety of terms usedfor marketing intermediaries that vary in specificity and use in consumer and business markets
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NATURE AND IMPORTANCE OF MARKETING CHANNELS
THE VALUE CREATED BY INTERMEDIARIES
LO1
Marketing Channel
Functions Performed by Intermediaries
• Transactional Function
• Logistical Function
• Facilitating Function
Utilities Received by Consumers
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FIGURE 15-2FIGURE 15-2 Marketing channel intermediaries perform three functions,each consisting of different activities
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CHANNEL STRUCTURE & ORGANIZATIONMARKETING CHANNELS FOR
CONSUMER PRODUCTS AND SERVICES
LO2
Direct Channel
Indirect Channel
• Retailers
• WholesalersRetailers
• AgentsWholesalersRetailers
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FIGURE 15-3FIGURE 15-3 Common marketing channels for consumer products and services by the kind and number of intermediaries
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CHANNEL STRUCTURE & ORGANIZATIONMARKETING CHANNELS FOR
BUSINESS PRODUCTS AND SERVICES
LO2
Direct Channel
Indirect Channel
• Industrial Distributor
• Agents
• AgentsIndustrial Distributors
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FIGURE 15-4FIGURE 15-4 Common marketing channels for business products and services by the kind and number of intermediaries
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CHANNEL STRUCTURE & ORGANIZATIONELECTRONIC & DIRECT MARKETING CHANNELS;
MULTICHANNEL MARKETING
LO2
Electronic Marketing Channels
Direct Marketing Channels
Multichannel Marketing
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FIGURE 15-5FIGURE 15-5 Consumer electronic marketing channels are similar to those for consumer products and services
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CHANNEL STRUCTURE & ORGANIZATIONDUAL DISTRIBUTION &
STRATEGIC CHANNEL ALLIANCES
LO2
Dual Distribution
Strategic ChannelAlliances
Honey NutCherrios Ad
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MARKETING MATTERSNestlé and General Mills—Cereal Partners Worldwide
LO2
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FIGURE 15-6FIGURE 15-6 Three types of vertical marketing systems: corporate, contractual (most popular), and administered
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CHANNEL STRUCTURE & ORGANIZATIONVERICAL MARKETING SYSTEMS
LO2
Vertical Marketing Systems
Corporate Systems
• Wholesaler-Sponsored Voluntary Chains
Contractual Systems
• Retailer-Sponsored Cooperatives
• Forward Integration
• Backward Integration
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CHANNEL STRUCTURE & ORGANIZATIONVERICAL MARKETING SYSTEMS
LO2
Contractual Systems
• Franchising
Manufacturer-Sponsored Retail Franchises
Manufacturer-Sponsored Wholesale Franchises
Service-Sponsored Retail Franchises
Service-Sponsored Franchises
Administered Systems
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CHANNEL CHOICE AND MANAGEMENTCHANNEL CHOICE CONSIDERATIONS
LO3
Target Market Coverage (Density)
• Intensive Distribution
• Exclusive Distribution
• Selective Distribution
Gucci
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CHANNEL CHOICE AND MANAGEMENTCHANNEL CHOICE CONSIDERATIONS
LO3
• Information • Convenience
• Variety • Pre- or Post-SaleService
Buyer Requirements
Profitability
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Jiffy Lube and PetcoWhat buyer requirements have been satisfied?
LO3
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GOING ONLINEVisit an Apple Store to
See What All the Excitement is About
LO3
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USING MARKETING DASHBOARDSChannel Sales and Profit at
Charlesburg Furniture
LO3
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CHANNEL CHOICE AND MANAGEMENTCHANNEL RELATIONSHIPS
LO3
Sources of Channel Conflict
• Vertical Conflict
• Disintermediation
• Horizontal Conflict
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CHANNEL CHOICE AND MANAGEMENTCHANNEL RELATIONSHIPS
LO3
Channel Influence
• Economic
• Expertise
• Identification
• Legitimate Right
Channel Captain
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CHANNEL CHOICE AND MANAGEMENTCHANNEL RELATIONSHIPS
LO4
Legal Considerations
• Dual Distribution
• Vertical Integration
• Exclusive Dealing
• Tying Arrangements
• Refusal to Deal
• Resale Restrictions
• Full-Line Forcing
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FIGURE 15-7FIGURE 15-7 The Clayton Act and Sherman Act place legal restrictions on specific marketing channel strategies and practices
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LOGISTICS & SUPPLY CHAIN MANAGEMENTKEY CONCEPTS
LO4
Logistics
LogisticsManagement
• CustomerRequirements
• Customer Service
Supply Chain
Supply ChainManagement
• Cost-Effective Flow
• The AutomotiveSupply Chain
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FIGURE 15-8FIGURE 15-8 Relating logistics management and supply chain management to supplier networks and marketing channels
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FIGURE 15-9FIGURE 15-9 The automotive supply chain includes thousands of firms that provide the 5,000 or so parts in a typical car
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Aligning a Supply Chain with Marketing Strategy
• Understand the Customer
• Understand the Supply Chain
• Harmonize the Supply Chainwith the Marketing Strategy
LOGISTICS & SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MGMT & MKT STRATEGY
LO4
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MARKETING MATTERSIBM’s Integrated Supply Chain—
Delivering a Total Solution for Its Customers
LO4
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LOGISTICS & SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MGMT & MKT STRATEGY
LO4
Dell: A Responsive Supply Chain
Wal-Mart: An Efficient Supply Chain
• Cross-docking
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TWO CONCEPTS OF LOGISTICS MANAGEMENT IN A SUPPLY CHAIN
LO4
Total Logistics Cost Concept
Customer Service Concept
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FIGURE 15-10FIGURE 15-10 Supply chain managers balance five total logistics cost factors against four customer service factors
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TWO CONCEPTS OF LOGISTICS MANAGEMENT IN A SUPPLY CHAIN
LO4
Time
• Lead Time
Order Cycle Time
Replenishment Time
• Quick Response
• Efficient Consumer Response
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TWO CONCEPTS OF LOGISTICS MANAGEMENT IN A SUPPLY CHAIN
LO4
Dependability
Communication
Convenience
• Vendor-Managed Inventory (VMI)
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CLOSING THE LOOP:REVERSE LOGISTICS
LO4
Reverse Logistics UPS Video
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MAKING RESPONSIBLE DECISIONSReverse Logistics and Green Marketing
Go Together at Hewlett-Packard: Recycling e-Waste
LO4
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AMAZON: DELIVERING THE GOODS…MILLIONS OF TIMES A DAY
VIDEO CASE 15
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VIDEO CASE 15AMAZON
1. How do Amazon.com’s logistics and supply chain management activities help the company create value for its customers?
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VIDEO CASE 15AMAZON
2. What systems did Amazon develop to improve the flow of products from suppliers to Amazon distribution centers? What systems improved the flow of orders from the distribution centers to customers?
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VIDEO CASE 15AMAZON
3. Why will logistics and supply chain management play an important role in the future success of Amazon.com?
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Marketing Channel
A marketing channel consistsof Individuals and firms involvedin the process of making aproduct or service available for use or consumption by consumers or industrial users.
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Multichannel Marketing
Multichannel marketing involvesthe blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.
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Dual Distribution
Dual distribution involves an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.
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Vertical Marketing Systems
Vertical marketing systemsare professionally managed and centrally coordinated marketing channels designed to achieve channel economies andmaximum marketing impact.
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Intensive Distribution
Intensive distribution is a level of distribution density whereby a firm tries to place its products and services in as many outlets as possible.
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Exclusive Distribution
Exclusive distribution is a level of distribution density whereby only one retailer in a specific geographical area carries the firm’s products.
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Selective Distribution
Selective distribution is a level of distribution density whereby a firm selects a few retailers in a specific geographical area to carry its products.
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Channel Conflict
Channel conflict arises whenone channel member believes another channel member is engaged in behavior thatprevents it from achieving its goals.
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Disintermediation
Disintermediation involveschannel conflict that arises whena channel member bypasses another member and sells orbuys products direct.
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Logistics
Logistics consists of those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost.
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Supply Chain
A supply chain consists of a sequence of firms that perform activities required to create and deliver a product or service to ultimate consumers or industrial users.
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Total Logistics Cost
Total logistics cost consists of the expenses associated with transportation, materials handling and warehousing, inventory, stockouts (being out of inventory), order processing, and return goods handling.
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Customer Service
Customer service is the abilityof logistics management to satisfy users in terms of time, dependability, communication, and convenience.
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Vendor-Managed Inventory (VMI)
Vendor-managed inventory (VMI) is an inventory-management system whereby the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items.
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Reverse Logistics
Reverse logistics is a processof reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution,or disposal.