chapter 13 marketing channels and supply chain management principles of contemporary marketing kurtz...
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Chapter 13Marketing Channels and
Supply Chain Management
Principles of
Contemporary MarketingKurtz & Boone
CHAPTER 13 Marketing Channels and Supply Chain Management
Chapter Objectives
1. Describe the types of marketing channels and the roles they play in marketing strategy.
2. Outline the major channel strategy decisions.
3. Describe the concepts of channel management, conflict, and cooperation.
4. Identify and describe the different vertical marketing systems.
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CHAPTER 13 Marketing Channels and Supply Chain Management
Chapter Objectives
5. Explain the roles of logistics and supply chain management in an overall distribution strategy.
6. Identify the major components of a physical distribution system.
7. Compare the major modes of transportation.
8. Discuss the role of transportation intermediaries, combined transportation modes, and warehousing in improving physical distribution.
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Four functions of marketing channels:o Facilitating the exchange process by
reducing the number of marketplace contacts necessary to make a sale
o Adjusting for discrepancies in the market’s assortment of goods and services via sorting
o Standardizing exchange transactions by setting expectations for products
o Facilitating searches by both buyers and sellers
The Role of Marketing Channels in Marketing Strategy
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Direct channel - Carries goods directly from a producer to the business purchaser or ultimate user
o Direct selling - Strategy designed to establish direct sales contact between producer and final user
Direct Selling
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Producer to wholesaler to retailer to consumer
o Producer to wholesaler to business user
o Producer to agent to wholesaler to retailer to consumer
o Producer to agent to wholesaler to business user
o Producer to agent to business user
Channels Using Marketing Intermediaries
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Dual distribution - Network that moves products to a firm’s target market through more than one marketing channel
o Reverse channel - Channel designed to return goods to their producers
Dual Distribution and Reverse Channels
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CHAPTER 13 Marketing Channels and Supply Chain Management
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Intensive distribution - Distribution of a product through all available channels
o Selective distribution - Distribution of a product through a limited number of channels
o Exclusive Distribution - Distribution of a product through a single wholesaler or retailer in a specific geographic region
Determining Distribution Intensity
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Horizontal conflict
o Vertical conflict
o The gray market
Channel Conflict
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Planned channel system designed to improve distribution efficiency and cost-effectiveness by integrating various functions throughout the distribution chain
o Rely on forward or backward integrationo Forward integration - Firm attempts to
control downstream distribution
o Backward integration - Manufacturer attempts to gain greater control over inputs to production process
Vertical Marketing Systems
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Three categories of VMSso Corporate systems
o Administered systems
o Contractual systems
Vertical Marketing Systems
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CHAPTER 13 Marketing Channels and Supply Chain Management
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Technology that uses a tiny chip with identification information that can be read by a scanner using radio waves from a distance
o Can be used to grant access to restricted areas or to speed delivery processing
Radio Frequency Identification (RFID)
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Software system that consolidates data from among a firm’s various business units
o ERP and its related software aren’t always perfect
Enterprise Resource Planning
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CHAPTER 13 Marketing Channels and Supply Chain Management
o A physical distribution system contains these elements:o Customer service
o Transportation
o Inventory control
o Protective packaging and materials handling
o Order processing
o Warehousing
Physical Distribution
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Results when the managers of individual physical distribution functions attempt to minimize costs, but the impact of one task on the others leads to less than optimal resultso Occurs when a firm introduces a new
product that may not fit easily into its current physical distribution system
o Effective management of physical distribution requires cost trade-offs
The Problem of Suboptimization
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CHAPTER 13 Marketing Channels and Supply Chain Management
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Piggyback - Most widely used form of intermodal coordination
o Birdyback service - Sends motor carriers to pick up a shipment locally and deliver that shipment to local destinations
o Fishyback service - Intermodal coordination system between motor carriers and water carriers
Intermodal Coordination
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CHAPTER 13 Marketing Channels and Supply Chain Management
o Storage warehouse - Holds goods for moderate to long periods in an attempt to balance supply and demand for producers and purchasers
o Distribution warehouse - Assembles and redistributes goods, keeping them moving as much as possible
Warehousing
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