Ch_12_Distribution.pptx

Chapter 12 Distribution Channels © 2023 McGraw Hill Limited 12-1  Chapter 12: Distribution Channels LEARNING OBJECTIVES LO1 Explain the importance of distribution and the interrelationships among distribution channels, supply...

Chapter 12 Distribution Channels © 2023 McGraw Hill Limited 12-1  Chapter 12: Distribution Channels LEARNING OBJECTIVES LO1 Explain the importance of distribution and the interrelationships among distribution channels, supply chain management, and logistics management LO2 Describe distribution channel design and management decisions and strategies LO3 Identify how distribution channels add value to businesses and consumers LO4 Explain how logistics management affects distribution strategy © 2023 McGraw Hill Limited 12-2  Distribution Channels  Nestlé ranks among the worst polluters of plastic, according to the environmental group Greenpeace.  Nestlé is pursuing a five-pillar approach to address concerns  By 2025, wants all plastic in any of its packaging to be completely recyclable or reusable.  It also has developed a new meatless burger in line with efforts to shift more consumption away from beef-based products. © 2023 McGraw Hill Limited 12-3  The Importance of Distribution The third P! Good distribution is critical to marketing success A well thought-out distribution strategy is critical when attempting to convince retailers to carry their products. The Instant Pot offers a multitude of functions to make meal preparation fast and easy. Entrepreneurial Marketing 12.1 - Instant Pot, Not Quite Instant Success © 2023 McGraw Hill Limited 12-4  Distribution Channels, Supply Chains, & Logistics Are Related Distribution Channel Institutions that transfer the ownership of goods and move goods from the point of production to the point of consumption © 2023 McGraw Hill Limited 12-5  Distribution Channels, Supply Chains, & Logistics are Related Supply Chain Management A set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right: quantities, locations, and time. Firms also minimize system-wide costs while satisfying the service levels their customers require. © 2023 McGraw Hill Limited 12-6  Distribution Channels, Supply Chains, & Logistics are Related Logistics Management Describes the integration of two or more activities to plan, implement, and control the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption. © 2023 McGraw Hill Limited 12-7  Distribution Components © 2023 McGraw Hill Limited 12-8  Designing Distribution Channels Channel Structure Direct distribution Indirect distribution Multichannel distribution or some combination of these forms © 2023 McGraw Hill Limited 12-9 Multichannel distribution © 2023 McGraw Hill Limited 12- Push Vs. Pull Distribution Strategies © 2023 McGraw Hill Limited 12- Distribution Intensity © 2023 McGraw Hill Limited 12-  Distribution Intensity Intensive Distributi on designed to get products into as many outlets as possible. Most consumer packaged-goods companies, such as PepsiCo strive for intensive distribution— they want to be everywhere. © 2023 McGraw Hill Limited 12-  Distribution Intensity Selective Distribution between intensive and exclusive, selective distribution uses a few selected customers in a area or territory © 2023 McGraw Hill Limited 12-  Distribution intensity Exclusive Distribution grants exclusive geographic territories to one or very few retail customers so no other retailers in the territory can sell a particular Cosmetics firms such as Estée Lauder use an exclusive distribution strategy by limiting distribution to a few select, higher-end retailers in each region. brand. © 2023 McGraw Hill Limited 12-  Distribution Channels Add Value Should this be a concern to channel members? Consumers? © 2023 McGraw Hill Limited 12-  Distribution Channels Add Value How does this add value? © 2023 McGraw Hill Limited 12-  Distribution Channels Add Value Distribution centres are an important component in adding value: Buying Selling Facilitation of Home Depot and Stanley Tool Company have a mutually beneficial partnership. Home Depot buys tools from Stanley because its customers find value in Stanley products. exchange Stanley sells tools to Home Depot because it has established an excellent market for its products. © 2023 McGraw Hill Limited 12-  Functions Performed By Intermediaries Transactional Function Buying Purchase goods for resale to other intermediaries or consumers Risk taking Own inventory that can become outdated Promotion Promote products to attract consumers Selling Transact with potential customers Logistical Function Physical distribution Transport goods to point of purchase Risk taking Maintain inventory and protect goods Facilitating Function Gathering Share competitive intelligence about information customers or other channel members Financing Extend credit and other financial services to consumers © 2023 McGraw Hill Limited 12-  Channel Conflict Channel Conflict when channel members are not in agreement about their goals, roles, or rewards Amazon and Procter & Gamble recognize that it is in their common interest to remain profitable business partners. © 2023 McGraw Hill Limited 12- Vertical Vs. Horizontal Channel Conflict © 2023 McGraw Hill Limited 12-  Types Or Phases Of Vertical Marketing Systems Three types or phases of vertical marketing systems: Administered Contractual Franchise Corporate © 2023 McGraw Hill Limited 12-  Canada’s Largest Franchises Ran Franchise Type Number of k Outlets 1 Tim Hortons® Coffee, doughnuts, 3,665 sandwiches 2 Subway Submarine sandwiches, 3,112 salads 3 McDonald’s Hamburgers, chicken, salads 2,904 4 Circle K Convenience store 2,201 5 Jan-Pro Commercial janitorial services 1,427 Cleaning Systems 6 Shell Canada Convenience store 1,369 7 A&W Food Hamburgers, onion rings, root 974 Services beer 8 Canada Bread Food 920 9 RE/MAX RealMcGraw © 2023 estate Hill Limited 850 12-  Managing Supply Chains Through Strategic Relationships Strategies include:  mutual trust  open communication  common goals  credible commitments Harry Rosen grew from a single 46-square-metre Toronto tailor shop to a national upscale menswear chain. It works hard to develop strategic partnerships with its suppliers based on mutual trust, open communications, common goals, and credible commitments. © 2023 McGraw Hill Limited 12-  Logistics Management: Making Information Flow © 2023 McGraw Hill Limited 12-  Data Warehouse  Purchase data collected at the point of sale goes into a huge database known as a data warehouse.  Using the data warehouse, the CEO can not only learn how the corporation is generally doing but can customize data requests. © 2023 McGraw Hill Limited 12-  Electronic Data Interchange  Computer-to-computer exchange of business documents from retailer to vendor and back  Advanced shipping notice  Reduces cycle time  Communication is improved  Easy data analysis © 2023 McGraw Hill Limited 12-  Vendor-Managed Inventory an approach for improving marketing channel efficiency in which the manufacturer is responsible for maintaining the retailer’s inventory levels in each of its stores. © 2023 McGraw Hill Limited 12- Logistics Management: Making Merchandise Flow The Distribution (or Fulfillment) Centre Inbound transportation Receiving and checking Storing and cross-docking Getting merchandise floor- ready Shipping merchandise to stores Just-in-time systems (JIT) © 2023 McGraw Hill Limited 12- Logistics Management: Making Merchandise Flow © 2023 McGraw Hill Limited 12-  Distribution Centres Versus Direct Store Delivery To determine which distribution system— distribution centres or direct store delivery—is better, retailers consider the total cost associated with each alternative and the customer service criterion of having the right merchandise at the store when the customer wants to buy it. © 2023 McGraw Hill Limited 12-  Getting Merchandise to Customers Customers can choose to take possession of purchased merchandise in a variety of ways, options include: Having merchandise shipping to stores Customer store pickup Deliver merchandise directly to customer from fulfillment centre Amazon is experimenting with delivering merchandise with drones. © 2023 McGraw Hill Limited 12-  Inventory Management Through Just-In-Time Systems Just-in-time (JIT) Quick response (QR) © 2023 McGraw Hill Limited 12- Benefits of JIT systems Reduced lead time Increased product availability and lower inventory investment © 2023 McGraw Hill Limited 12-