Summary

This document covers marketing channels, supply chains, and distribution strategies. It discusses conventional and vertical marketing systems, and the different distribution strategies such as multichannel systems and logistics management. The document also examines how intermediaries add value, transport, and warehousing.

Full Transcript

Marketing Channels Chapter 10 October 19, 2024 Supply Chains Supply Chain: relationships with key suppliers and resellers with the end goal of making a product or service available to buyers. Two Types of Supply Chains: Upstream partners sup...

Marketing Channels Chapter 10 October 19, 2024 Supply Chains Supply Chain: relationships with key suppliers and resellers with the end goal of making a product or service available to buyers. Two Types of Supply Chains: Upstream partners supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service. Downstream partners serve as distribution or marketing channels that link the company Value and Delivery Network: Made up of the its customers. company, Includes wholesalers suppliers, distributors and and retailers. customers who “partner” with each other to improve the performance of the entire system. Marketing (Distribution) Channel Marketing Channel: a set of interdependent organizations that help make a company’s product or service available for use by consumers or business users. Also known as a distribution channel. A company’s channel decisions: Affect every other marketing decision Can lead to competitive advantage May involve long-term commitments to other firms Conventional Distribution Channel versus Vertical Marketing System Conventional Distribution Channel  Consists of one or more independent producers, wholesalers and retailers.  Each is a separate business seeking to maximize its own profits, perhaps even at the expense of the system as a whole.  No channel member has much control over the other members and no formal means exists for assigning roles and resolving channel conflict. Vertical Marketing System (VMS) Vertical marketing system: Consists of producers, wholesalers and retailers acting as a unified system. One channel member owns the others, has contracts with them, or wields so much power that they must all cooperate. The VMS can be dominated by the producer, the wholesaler, or the retailer. Zara’s Competitive Advantage  Zara’s supply chain is vertically integrated: they own their own manufacturing plants that produce fabric design, make and label clothing. This allows for:  Efficient flow of merchandise  Control over production and supply throughout the process  Procurement of raw materials to finished materials sold in their retail stores Horizontal Marketing System  When two companies at one or more level join to create a new marketing opportunity.  Usually noncompetitors, have complimentary merchandise and maximize selling space.  Example: Chapters and Starbucks partner to benefit each other and their customers. Effective Channel Management: How Intermediaries Add Value Transport Accurate and timely Bridge the major Ensure correct merchandise information to time, place and quantities of goods between vendors, vendors, distribution possession gaps that when and where warehouse, warehouses, separate goods and needed distributors, stores, transport services services from users consumers Transform the Create greater products made by Take financial risks efficiency in making producers into those and risks during goods available to wanted by transport target markets consumers Multichannel Distribution Systems  A single firm sets up two or more marketing channels to reach customer segments.  Advantages:  Expansion of sales and marketing coverage  Tailor-made products and services for the specific needs of customer segments  Disadvantages:  Harder to control  Generates conflict Marketing Logistics  Involves planning, implementing, and controlling the physical flow of goods, services and related information.  Getting the right product to the right customer in the right place at the right time profitably.  Logistics functions include:  Inventory management  Logistics information management  Transportation  Warehousing Returned Merchandise  Damaged merchandise is returned to the vendor or sold at a discount.  Out of season or overruns of fashion merchandise are sold to stores like Winners, TJ Maxx and Marshalls.  Undamaged merchandise returned to the sales floor. Warehousing  Storage warehouses store goods for moderate to long periods.  Distribution centres are large, highly automated warehouses that receive goods, take orders, fill them and deliver goods to customers as quickly as possible.  Amazon employs teams of robotic super-retrievers in its distribution centres. Transportation Companies can choose among many transportation modes, including:  Trucks: account for 64% of total tons transported in North America  Railroads: 10% of the total shipped  Water carriers: account for 4% of goods transported  Air carriers: account for only Multimodal Transportation: 1% two or more modes Combining of transportation. Logistics Information Managemen t Companies manage their supply chains through information, which is shared and managed through:  Electronic data interchange (EDI), which allow vendors and organizations to share product information.  Vendor-managed inventory (VMI) occurs when buyers share sales and inventory information directly with key suppliers. Distribution Strategy Group Work How is your product currently distributed? Can it be sold through additional channels or more deeply through the same channels? Retailer: What kind? Niche? Large? Specialized? Big box? Supermarket? Online: Direct? Through Amazon? Through another company’s website? Multiple Channels: Selling your product through more than one channel? In-store and online? Just online?

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