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Marketing Channels and Supply Chain Management
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Definition
Value Delivery Network
The network made up of the
company, suppliers, distributors,
and ultimately customers who
“partner” with each other to
improve the performance of the
entire system.
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Channel choices affect
other decisions in the
marketing mix
A strong distribution
system can be a
competitive advantage
Channel decisions involve
long-term commitments to
other firms
Nature & Importance of Marketing Channels
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Figure 13-1:
How Channel Members Add Value
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How Channel Members Add Value
Intermediaries Require fewer contacts to
move the product to the final purchaser.
Help match product assortment demand with supply.
Help bridge major time, place, and possession gaps
Nature & Importance of Marketing Channels
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Nature & Importance of Marketing Channels
Key Functions Performed by Channel Members
Information
Promotion
Contact
Matching
Negotiation
Physical
Distribution
Financing
Risk taking
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Figure 13-2a:
Consumer Marketing Channels
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Number of Channel Levels
The number of intermediary levels indicates the length of a marketing channel.
Direct Channels
Indirect Channels
Producers lose more control and face greater channel complexity as additional channel levels are added.
Nature & Importance of Marketing Channels
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Nature & Importance of Marketing Channels
Channel Members Are Connected Via A Variety of Flows
Physical
Flow
Payment
Flow
Information
Flow
Promotion
Flow
Flow of Ownership
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Channel Conflict
Occurs when channel members disagree on roles, activities, or rewards.
Types of Conflict:
Horizontal conflict: occurs among firms at the same channel level
Vertical conflict: occurs among firms at different channel levels
Channel Behavior and Organization
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Figure 13-3:
Conventional Versus Vertical Marketing System
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Figure 13-4:
Multichannel Distribution System
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Multichannel
Distribution Systems
Also called hybrid
marketing channels
Occurs when a firm uses
two or more marketing
channels
Hybrid marketing has
many advantages
Channel Behavior and Organization
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Step 1: Analyzing
Consumer Needs
Cost and feasibility
of meeting needs
must be considered
Channel Design Decisions
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Step 2:
Setting Channel Objectives
Set channel objectives in terms of
targeted level of customer service
Many factors influence channel
objectives
Channel Design Decisions
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Step 3:
Identifying Major Alternatives
Channel Design Decisions
Types of Intermediaries
Company sales force
Manufacturer’s agency
Industrial distributors
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Step 3:
Identifying Major Alternatives
Number of marketing intermediaries
Intensive distribution
Selective distribution
Exclusive distribution
Responsibilities of channel members
Channel Design Decisions
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Step 4: Evaluating
Major Alternatives
Economic criteria
Sales, costs,
profitability
Control issues
Adaptive criteria
Channel Design Decisions
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Designing International
Distribution Channels
Global marketers usually
adapt their channel strategies
to structures that exist within
foreign countries
Key challenges:
Channels may be complex
or hard to penetrate
Channels may be
scattered, inefficient, or
totally lacking
Channel Design Decisions
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Selecting Channel
Members
Identify characteristics that
distinguish the best channel
members
Managing and Motivating
Channel Members
Partner relationship
management (PRM) is key
Channel Management Decisions
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Evaluating Channel
Members
Performance
should be checked
against standards
Channel members
should be rewarded
or replaced as
dictated by
performance
Channel Management Decisions
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Figure 13-5:
Supply Chain Management
Independent RetaIlers 99.8% of overall enterprises are small and medium sized
enterprises; approx. 40% of them has activities in retailingindustry in Turkey.
In the World, account for one-third of total store sales
70% of independents operated by owners and their families
Why so many? Ease of entry
From the local florist to the hardware store to the funky boutique
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Chaın RetaılersOperate multiple outlets under common ownership
Engage in some level of centralized or coordinated purchasing and decision making
In the U.S., there are roughly 110,000 retail chains operating about 900,000 establishments
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Louıs Vuitton – A Powerhouse of Upscale Retailing
The company operates in 50 countries with more than 460 stores worldwide
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Store-Based Retail Strategy Mixes
Food-Oriented
Convenience store
Conventional supermarket
Food-based superstore
Combination store
Box (limited-line) store
Warehouse store
General Merchandise
Specialty store
Traditional department
Full-line discount store
Variety store
Off-price chain
Factory outlet
Membership club
Flea market
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Box store cases: A101-bımItems are dısplayed ın cut cases
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TYPE OF SPECIALTY STORE: CATEGORY KILLERS
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MEMBERSHIP CLUB: METROGerman based, since 1964
750 wholesale stores in 25 countries; SALES: $ 29.7 bn
(2015)
In Turkey, since 1990
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Flea Market Strategy Mix
Street selling
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Retailer Strategy Mix
A strategy mix is the firm’s particular combination of:
store location
operating procedures
goods/services offered
pricing tactics
store atmosphere
customer services
promotional methods
TESCO VIRTUAL STOREhttps://www.youtube.com/watch?v=nJVoYsBym88
OPET: CLEAN TOILETTE CAMPAIGN
In class study:How does amazon create a value for ıts
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