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1 Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Marketing Channels and Supply Chain Management Supply Chain Management Prepared by Prepared by Deborah Baker Deborah Baker Texas Christian University Texas Christian University Chapter 10

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Page 1: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Marketing Channels andMarketing Channels andSupply Chain ManagementSupply Chain Management

Prepared byPrepared byDeborah BakerDeborah Baker

Texas Christian UniversityTexas Christian University

Chapter 10

Page 2: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

2Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning ObjectivesLearning Objectives

1. Explain what a marketing channel is and why intermediaries are needed.

2. Define the types of channel intermediaries and describe their functions and activities.

Page 3: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

3Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objectives Learning Objectives (continued)(continued)

3. Describe the channel structures for consumer and business-to-business products and discuss alternative channel arrangements.

4. Define supply chain management and discuss its benefits.

5. Discuss the issues that influence channel strategy.

Page 4: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

4Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objectives Learning Objectives (continued)(continued)

6. Explain channel leadership, conflict, and partnering.

7. Describe the logistical components of the supply chain.

8. Discuss new technology and emerging trends in supply chain management.

Page 5: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

5Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objectives Learning Objectives (continued)(continued)

9. Discuss channels and distribution decisions in global markets.

10. Identify the special problems and opportunities associated with distribution in service organizations.

Page 6: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

6Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objective Learning Objective

Explain what a marketing channel is and why intermediaries are needed.

11

On Linehttp://www.heb.com

On Linehttp://www.heb.com

Page 7: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

7Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Marketing ChannelsMarketing Channels

MarketingChannel

MarketingChannel

SupplyChain

SupplyChain

A set of interdependent organizations that ease the transfer of ownership as

products move from producer to business user or consumer.

A set of interdependent organizations that ease the transfer of ownership as

products move from producer to business user or consumer.

The connected chain of all the business entities, both internal and external to the company, that perform or support

the logistics function.

The connected chain of all the business entities, both internal and external to the company, that perform or support

the logistics function.

11

Page 8: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

8Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Marketing Channel FunctionsMarketing Channel Functions

Specialization andDivision of Labor

Specialization andDivision of Labor

ChannelsFulfillThree

ImportantFunctions

ChannelsFulfillThree

ImportantFunctions

OvercomingDiscrepanciesOvercoming

Discrepancies

Providing ContactEfficiency

Providing ContactEfficiency

11

Page 9: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

9Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Specialization and Specialization and Division of LaborDivision of Labor

Provides efficiency and cost savings

Attains economies of scale

Aids producers who lack resources to market directly

Builds good relationships with customers

11

Page 10: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

10Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Overcoming DiscrepanciesOvercoming Discrepancies

Discrepancyof

Quantity

Discrepancyof

Quantity

Discrepancyof

Assortment

Discrepancyof

Assortment

The difference between the amount of product produced and the amount an end user wants to buy.

The difference between the amount of product produced and the amount an end user wants to buy.

The lack of all the items a customer needs to receive full satisfaction from a product or products.

The lack of all the items a customer needs to receive full satisfaction from a product or products.

11

Page 11: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

11Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Overcoming DiscrepanciesOvercoming Discrepancies

TemporalDiscrepancy

TemporalDiscrepancy

SpatialDiscrepancy

SpatialDiscrepancy

A situation that occurs when a product is produced but a

customer is not ready to buy it.

A situation that occurs when a product is produced but a

customer is not ready to buy it.

The difference between the location of a producer and the

location of widely scattered markets.

The difference between the location of a producer and the

location of widely scattered markets.

11

Page 12: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

12Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Contact EfficiencyContact Efficiency11

Page 13: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

13Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objective Learning Objective

Define the types of channel intermediaries and describe their functions and activities.

22

Page 14: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

14Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Channel IntermediariesChannel Intermediaries

RetailerRetailer

MerchantWholesalerMerchant

Wholesaler

Agents andBrokers

Agents andBrokers

A channel intermediary that sells mainly to customers.

A channel intermediary that sells mainly to customers.

An institution that buys goods from manufacturers, takes title

to goods, stores them, and resells and ships them.

An institution that buys goods from manufacturers, takes title

to goods, stores them, and resells and ships them.

Wholesaling intermediaries who facilitate the sale of a product by representing channel member.

Wholesaling intermediaries who facilitate the sale of a product by representing channel member.

22

Page 15: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

15Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Channel IntermediariesChannel Intermediaries

RetailersRetailersRetailersRetailers

Merchant Merchant WholesalersWholesalersMerchant Merchant

WholesalersWholesalers

Agents Agents andand

BrokersBrokers

Agents Agents andand

BrokersBrokers

Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods

Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods

Do NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to Goods

22

Page 16: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

16Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Factors Suggesting Type of Factors Suggesting Type of Wholesaling Intermediary to Wholesaling Intermediary to

UseUse22

Page 17: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

17Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Channel Functions Channel Functions Performed by IntermediariesPerformed by Intermediaries

Contacting/Promotion

Negotiating

Risk Taking

Researching

Financing

Physically distributing

Storing

Sorting

FacilitatingFunction

FacilitatingFunction

TransactionalFunctions

TransactionalFunctions

Logistical Functions

Logistical Functions

22

Page 18: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

18Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

LogisticsLogistics

The process of strategically

managing the efficient flow

and storage of raw

materials, in-process

inventory, and finished

goods from point of origin

to point of consumption.

22

Page 19: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

19Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objective Learning Objective

Describe the channel structures for consumer and business-to-business products and discuss alternative channel arrangements.

33

Page 20: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

20Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Direct ChannelDirect Channel

A distribution channel in

which producers sell

directly to consumers.

33

Page 21: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

21Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Channels for Consumer Channels for Consumer ProductsProducts

Producer Producer Producer Producer

Consumers Consumers Consumers Consumers

Retailers Retailers Retailers

Wholesalers Wholesalers

Agents orBrokers

WholesalerWholesalerChannelChannel

RetailerRetailerChannelChannel

DirectDirectChannelChannel

Agent/BrokerAgent/BrokerChannelChannel

33

Page 22: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

22Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Channels for Channels for Business-to-Business ProductsBusiness-to-Business Products

Producer

IndustrialUser

DirectDirectChannelChannel

Producer

Govt.Buyer

DirectDirectChannelChannel

Producer Producer Producer

IndustrialUser

IndustrialUser

IndustrialUser

IndustrialDistributor

IndustrialDistributor

Agents orBrokers

Agents orBrokers

Agent/BrokerAgent/BrokerChannelChannel

IndustrialIndustrialDistributorDistributor

Agent/BrokerAgent/BrokerIndustrialIndustrialChannelChannel

33

Page 23: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

23Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Business-to-Business Business-to-Business Exchanges Exchanges

on the Interneton the Internet

Linking buyers and sellers

Dropping the middleman from the supply chain

Creating “private exchanges” to automate the supply chain

33

On Linehttp://www.sherwinwilliams.com

On Linehttp://www.sherwinwilliams.com

Page 24: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

24Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Alternative Channel Alternative Channel ArrangementsArrangements

Multiple Channels

Strategic ChannelAlliances

NontraditionalChannels

33

Page 25: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

25Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objective Learning Objective

Define supply chain management and discuss its benefits.

44

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26Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Supply Chain ManagementSupply Chain Management

A management system that

coordinates and integrates

all of the activities

performed by supply chain

members into a seamless

process, from the source to

the point of consumption.

44

Page 27: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

27Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Physical flow process that engineers the

movement of goods

Physical flow process that engineers the

movement of goods

Communicator of customer demand frompoint of sale to supplier

Communicator of customer demand frompoint of sale to supplier

Role of Supply Chain Role of Supply Chain ManagementManagement

44

Page 28: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

28Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Benefits of Benefits of Supply Chain ManagementSupply Chain Management

Greater Supply Chain Flexibility Greater Supply Chain Flexibility

Improved Customer ServiceImproved Customer Service

Higher RevenuesHigher Revenues

Reduced Costs Reduced Costs

44

On Linehttp://www.nashfinch.com

On Linehttp://www.nashfinch.com

Page 29: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

29Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objective Learning Objective

Discuss the issues that influence channel strategy.

55

Page 30: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

30Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Channel Strategy DecisionsChannel Strategy Decisions

Producer FactorsProducer Factors

Product FactorsProduct Factors

Market FactorsMarket Factors

Factors Factors Affecting Affecting Channel Channel ChoiceChoice

Factors Factors Affecting Affecting Channel Channel ChoiceChoice

Exclusive DistributionExclusive Distribution

Selective DistributionSelective Distribution

Intensive DistributionIntensive Distribution

Level ofLevel ofDistributionDistribution

IntensityIntensity

Level ofLevel ofDistributionDistribution

IntensityIntensity

55

Page 31: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

31Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Market FactorsMarket Factors

Market FactorsMarket FactorsThat Affect That Affect

ChannelChannelChoicesChoices

Market FactorsMarket FactorsThat Affect That Affect

ChannelChannelChoicesChoices

Customer ProfilesCustomer Profiles

Consumer or IndustrialCustomer

Consumer or IndustrialCustomer

Size of MarketSize of Market

Geographic Location

55

Page 32: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

32Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Product FactorsProduct Factors

Product FactorsProduct FactorsThat Affect That Affect

ChannelChannelChoicesChoices

Product FactorsProduct FactorsThat Affect That Affect

ChannelChannelChoicesChoices

Product Complexity Product Complexity

Product PriceProduct Price

Product Life CycleProduct Life Cycle

Product DelicacyProduct Delicacy

55

Page 33: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

33Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Producer FactorsProducer Factors

Producer FactorsProducer FactorsThat Affect That Affect

ChannelChannelChoicesChoices

Producer FactorsProducer FactorsThat Affect That Affect

ChannelChannelChoicesChoices

Producer Resources Producer Resources

Number of Product LinesNumber of Product Lines

Desire for Channel ControlDesire for Channel Control

55

Page 34: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

34Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Levels of Distribution Levels of Distribution IntensityIntensity

Intensity LevelIntensity LevelIntensity LevelIntensity Level ObjectiveObjectiveObjectiveObjective Number of Number of IntermediariesIntermediaries

Number of Number of IntermediariesIntermediaries

IntensiveIntensive

SelectiveSelective

ExclusiveExclusive

Achieve mass marketselling.

Convenience goods.

Achieve mass marketselling.

Convenience goods.

Work with selected intermediaries.

Shopping and some specialty goods.

Work with selected intermediaries.

Shopping and some specialty goods.

Work with singleintermediary. Specialty

goods and industrial equipment.

Work with singleintermediary. Specialty

goods and industrial equipment.

ManyMany

SeveralSeveral

OneOne

55

On Linehttp://www.radioshack.comhttp://www.sprint.comhttp://www.compaq.comhttp://www.rca.comhttp://www.directv.com

On Linehttp://www.radioshack.comhttp://www.sprint.comhttp://www.compaq.comhttp://www.rca.comhttp://www.directv.com

Page 35: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

35Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objective Learning Objective

Explain channel leadership, conflict, and partnering.

66

Page 36: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

36Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Managing Channel Managing Channel RelationshipsRelationships

Channel PartneringChannel Partnering

Channel ConflictChannel Conflict

Channel LeadershipChannel Leadership

Channel ControlChannel Control

Channel PowerChannel Power

Social Social Dimensions Dimensions of Channelsof Channels

Social Social Dimensions Dimensions of Channelsof Channels

66

Page 37: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

37Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Channel Power, Channel Power, Control, and LeadershipControl, and Leadership

ChannelPower

ChannelPower

ChannelControl

ChannelControl

Channel Leader

Channel Leader

A channel member’s capacity to control or influence the behavior

of other channel members

A channel member’s capacity to control or influence the behavior

of other channel members

A situation that occurs when one marketing channel member intentionally affects another

member’s behavior.

A situation that occurs when one marketing channel member intentionally affects another

member’s behavior.

A member of a marketing channelthat exercises authority/power over

the activities of other members.

A member of a marketing channelthat exercises authority/power over

the activities of other members.

66

Page 38: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

38Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Channel ConflictChannel Conflict

A clash of goals and methods

between distribution channel members.

HorizontalConflict

HorizontalConflict

Occurs among channel members on the same level

Occurs among channel members on the same level

VerticalConflictVerticalConflict

Occurs among channel members at different levels

Occurs among channel members at different levels

66

Page 39: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

39Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Channel PartneringChannel Partnering

The joint effort of all

channel members to create

a supply chain that serves

customers and creates a

competitive advantage.

66

Page 40: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

40Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Transaction-Transaction-BasedBased

Partnership-BasedPartnership-Based

Supplier / Supplier / Manufacturer Manufacturer RelationshipsRelationships

Short-term

Adversarial

Independent

Price important

Long-term

Cooperative

Dependent

Value-added services

Number of Number of SuppliersSuppliers

Many Few

Information Information SharingSharing

Minimal High

Investment Investment RequiredRequired

Minimal High

Transaction- vs. Transaction- vs. Partnership-Based FirmsPartnership-Based Firms

66

Page 41: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

41Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objective Learning Objective

Describe the logistical components of the supply chain.

77

Page 42: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

42Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Integrated Logistical Integrated Logistical Components of the Supply ChainComponents of the Supply Chain

Sourcing & ProcurementSourcing & Procurement

Production SchedulingProduction Scheduling

Order Processing & Customer ServiceOrder Processing & Customer Service

Inventory ControlInventory Control

SupplySupplyChainChainTeamTeam

SupplySupplyChainChainTeamTeam

Warehouse & Materials HandlingWarehouse & Materials Handling

TransportationTransportation

Lo

gis

tics

Info

rma

tio

n S

yste

mL

og

isti

cs In

form

ati

on

Sys

tem

77

Page 43: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

43Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Sourcing and ProcurementSourcing and Procurement

NegotiateService Levels

NegotiateService Levels

NegotiatePrice

NegotiatePrice

SelectSuppliers

SelectSuppliers

DevelopSpecifications

DevelopSpecifications

Plan Purchasing Strategies

Plan Purchasing Strategies

Role ofRole ofPurchasingPurchasing

DepartmentsDepartments

Role ofRole ofPurchasingPurchasing

DepartmentsDepartments

77

Page 44: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

44Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Production SchedulingProduction Scheduling

Push / Pull Push / Pull StrategyStrategyPush / Pull Push / Pull StrategyStrategy

Traditional FocusTraditional Focus Traditional FocusTraditional Focus

PushPush

Start of Start of ProductionProductionStart of Start of ProductionProduction

ManufacturingManufacturingManufacturingManufacturing

Inventory-BasedInventory-Based

Mass ProductionMass Production

Customer FocusCustomer Focus Customer FocusCustomer Focus

PullPull

Customer-Order Based

Customer-Order Based

Mass CustomizationMass Customization

77

Page 45: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

45Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Just-in-Time ManufacturingJust-in-Time Manufacturing

A process that redefines

and simplifies

manufacturing by reducing

inventory levels and

delivering raw materials

just when they are needed

on the production line.

77

Page 46: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

46Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Benefits of JITBenefits of JIT

Reduces raw material inventories

Shortens lead times

Creates better supplier relationships

Reduces production and storeroom costs

Reduces paperwork

77

Page 47: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

47Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

JIT RequirementsJIT Requirements

Requirements Requirements forfor

Manufacturers Manufacturers Using JITUsing JIT

Requirements Requirements forfor

Manufacturers Manufacturers Using JITUsing JIT

Receive High-Quality Parts Receive High-Quality Parts

Meet Supplier Delivery Commitments

Meet Supplier Delivery Commitments

Have a Crisis Management Plan

Have a Crisis Management Plan

77

Page 48: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

48Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Electronic Data InterchangeElectronic Data Interchange

Information technology

that replaces paper

documents that accompany

business transactions.

77

On Linehttp://www.walmartstores.com

On Linehttp://www.walmartstores.com

Page 49: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

49Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Inventory Control SystemInventory Control System

A method of developing

and maintaining an

adequate assortment of

materials or products to

meet a manufacturer’s or a

customer’s demand.

77

Page 50: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

50Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

MRP and DRPMRP and DRP

MaterialsRequirement

Planning

MaterialsRequirement

Planning

DistributionResourcePlanning

DistributionResourcePlanning

An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer.

An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer.

An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer.

An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer.

77

Page 51: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

51Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Warehouse and Warehouse and Materials-HandlingMaterials-Handling

Materials Materials HandlingHandlingFunctionsFunctions

Materials Materials HandlingHandlingFunctionsFunctions

Receive goods into warehouse

Dispatch the goods totemporary storage

Recall, select, or pick the goods for shipment

Identify, sort, and label goods

77

Page 52: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

52Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

TransportationTransportation

CostCost

Transit TimeTransit Time

ReliabilityReliability

CapabilityCapability

AccessibilityAccessibility

TraceabilityTraceability

Criteria Criteria forfor

Transportation Transportation ModeMode

ChoiceChoice

Criteria Criteria forfor

Transportation Transportation ModeMode

ChoiceChoice

77

Page 53: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

53Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Criteria for RankingCriteria for RankingModes of TransportationModes of Transportation

Relative Cost

TransitTime

Reliability

Capability

Accessibility

Traceability

HighestHighest LowestLowest

Air WaterPipeRailTruck

Water Rail Pipe Truck Air

Pipe Truck Rail Air Water

Water

Truck

Rail Truck Air Pipe

Rail Air Water Pipe

Air Truck Rail Water Pipe

77

Page 54: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

54Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objective Learning Objective

Discuss new technology and emerging trends in supply chain management.

88

Page 55: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

55Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Trends in Trends in Supply Chain ManagementSupply Chain Management

Electronic DistributionElectronic Distribution

Outsourcing ofLogistics Functions

Outsourcing ofLogistics Functions

AdvancedComputer Technology

AdvancedComputer TechnologyTrends Trends

Affecting the Affecting the Logistics Logistics IndustryIndustry

Trends Trends Affecting the Affecting the

Logistics Logistics IndustryIndustry

88

Page 56: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

56Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning Objective Learning Objective

Discuss channels and distribution decisions in global markets.

99

Page 57: 1Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Marketing Channels and Supply Chain Management Prepared

57Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Channels and Distribution Channels and Distribution Decisions for Global MarketsDecisions for Global Markets

Global SupplyGlobal SupplyChain ManagementChain Management

Global SupplyGlobal SupplyChain ManagementChain Management

Awareness of trade legalitiesAwareness of trade legalities

Transportation IssuesTransportation Issues

Global Channel Global Channel DevelopmentDevelopment

Global Channel Global Channel DevelopmentDevelopment

Channel structure and type differ

Channel structure and type differ

Gray marketing channelsGray marketing channels

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On Linehttp://www.wto.com

On Linehttp://www.wto.com

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58Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Learning ObjectiveLearning Objective

Identify the special problems and opportunities associated with distribution in service organizations.

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59Chapter 10 Essentials of Marketing 4e Lamb Hair McDaniel©2005 South-Western/Thomson Learning

Channels and DistributionChannels and DistributionDecisions for ServicesDecisions for Services

Areas of Focus Areas of Focus forfor

Service Service DistributionDistribution

Areas of Focus Areas of Focus forfor

Service Service DistributionDistribution

Minimizing wait times Minimizing wait times

Managing service capacityManaging service capacity

Improving service delivery Improving service delivery

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