managing channels and scm & logistics_revisison_2012 (6)

7/30/2019 Managing Channels and SCM & Logistics_Revisison_2012 (6)

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Copyright 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 13-1

REVISION


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APPLE STORES: ADDING

HIGH-TOUCH TO HIGH-TECH

MARKETING CHANNELS
http://www.apple.com/retail/


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NATURE AND IMPORTANCE OF

MARKETING CHANNELS

What is a Marketing Channel ofDistribution?

Marketing Channel


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FIGURE 1 Terms used for marketing

intermediaries


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Functions Performed by Intermediaries

NATURE AND IMPORTANCE OF

MARKETING CHANNELS

Value Created by Intermediaries

Transactional Function

Logistical Function

Facilitating Function

Consumer Benefits from Intermediaries


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FIGURE 2 Marketing channel functions

performed by intermediaries


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Concept Check

1. What is meant by a marketingchannel?



A: A marketing channel consists ofindividuals and firms involved in the

process of making a product or

service available for use orconsumption by consumers or

industrial users.



Concept Check

2. What are the three basic functionsperformed by intermediaries?



A: Intermediaries perform transactional,logistical, and facilitating functions.



Marketing Channels for ConsumerGoods and Services

Direct Channel

Indirect Channels

CHANNEL STRUCTURE AND

ORGANIZATION



FIGURE 3 Common marketing channels for

consumer goods and services



Marketing Channels for Business Goodsand Services

Industrial Distributor

Agent


ORGANIZATION



FIGURE 4 Common marketing channels for

business goods and services




ORGANIZATION

Electronic Marketing Channels

Multiple Channels and Strategic Alliances

Dual Distribution

Strategic Channel Alliances



FIGURE 5 Representative consumer

electronic marketing channels



FIGURE 6 Types of vertical marketing

systems



Corporate Systems


ORGANIZATION

Corporate Vertical Marketing System

Forward Integration

Vertical Marketing Systems

Backward Integration




ORGANIZATION

Wholesaler-Sponsored Voluntary Chains

Retailer-Sponsored Cooperatives

Contractual Systems

Contractual Vertical Marketing System



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ORGANIZATION

Contractual Systems

Franchising

Manufacturer-Sponsored Wholesale Systems

Manufacturer-Sponsored Retail Franchise Systems

Service-Sponsored Franchise Systems

Service-Sponsored Retail Franchise Systems


Administered Systems


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Sherwin-Williams and H&R Block

What vertical marketing system does each use?
http://www.hrblock.com/http://www.sherwin-williams.com/


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Concept Check

1. What is the difference between adirect and an indirect channel?


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A: A direct channel is one in which a producer ofconsumer or business goods and services and

ultimate consumers or industrial users deal

directly with each other whereas an indirect

channel has intermediaries that are inserted

between the producer and consumers or

industrial users and who perform numerous

channel functions.


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Concept Check

2. What is the major distinction between acorporate vertical marketing system and an

administered vertical marketing system?


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A: A corporate vertical marketing system combinessuccessive stages of production and distribution

under a single ownership. An administered

vertical marketing system achieves coordinationby the size and influence of one channel

member rather than through ownership.


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CHANNEL CHOICE AND

MANAGEMENT

Factors in Choosing a MarketingChannel

Provide the Best Target Market Coverage

Best Satisfy the Target Markets

Buying Requirements

Be the Most Profitable


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CHANNEL CHOICE AND

MANAGEMENT

Target Market Coverage

Intensive Distribution

Exclusive Distribution

Selective Distribution



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CHANNEL CHOICE AND

MANAGEMENT

Satisfying Buyer Requirements

Information

Convenience

Variety

Pre- or Post-Sale Services

Profitability



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Jiffy Lube and PETCO

What buyer requirements are satisfied?
http://www.petco.com/http://www.jiffylube.com/


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CHANNEL CHOICE AND

MANAGEMENT

Conflict in Marketing Channels

Channel Conflict

Channel Relationships: Conflict andCooperation

Vertical Conflict

Horizontal Conflict

Disintermediation


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CHANNEL CHOICE AND

MANAGEMENT

Cooperation in Marketing Channels

Channel Captain

Channel Relationships: Conflict andCooperation

Economic

Expertise

Identification

Legitimate Right


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Concept Check

1. What are the three degrees ofdistribution density?


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A: intensive; exclusive; selective


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Concept Check

2. What are the three questions marketingexecutives consider when choosing a

marketing channel and intermediaries?


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A: The three questions are: (1) Which willprovide the best coverage of the target

market? (2) Which will best satisfy thebuying requirements of the target market?

(3) Which will be the most profitable?


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LOGISTICS AND

SUPPLY CHAIN MANAGEMENT

Flow of the Product

Logistics

Logistics Management

Cost-Effective

Customer Service


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LOGISTICS AND


Supply Chains versus MarketingChannels

Supply Chain

Supply Chain Management


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FIGURE 7 Relating logistics management

and supply chain management to supplier

networks and marketing channels


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LOGISTICS AND


Sourcing, Assembling, and Delivering aNew Car: The Automotive Supply Chain

FIGURE 8 The automotive supply chain


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FIGURE 8 The automotive supply chain

FIGURE 8 1 Paint industry supply chain


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FIGURE 8.1 Paint industry supply chain


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LOGISTICS AND


Aligning a Supply Chain w/ Marketing Strategy

Supply Chain Management andMarketing Strategy

Understand the Customer

Understand the Supply Chain

Harmonize the Supply Chain with theMarketing Strategy


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LOGISTICS AND


Cross-Docking

Dell: A Responsive Supply Chain

Wal-Mart: An Efficient Supply Chain
http://www.walmart.com/http://www.dell.com/


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Concept Check

1. What is the principal differencebetween a marketing channel and a

supply chain?


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A: A supply chain also includes supplierswho provide raw materials to a

manufacturer as well as the wholesalersand retailersthe marketing channel

who deliver the finished goods to ultimate

consumers.


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Concept Check

2. The choice of a supply chaininvolves what three steps?


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A: (1) Understand the customer.

(2) Understand the supply chain.

(3) Harmonize the supply chain withthe marketing strategy.


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TWO CONCEPTS OF LOGISTICS

MANAGEMENT IN A SUPPLY CHAIN

Time

Customer Service Concept

Order Cycle or Replenishment Time

Quick Response or Efficient Consumer Response

Total Logistics Cost Concept

FIGURE 9 Supply chain managers balance


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FIGURE 9 Supply chain managers balance

total logistics cost factors against customer

service factors


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TWO CONCEPTS OF LOGISTICS

MANAGEMENT IN A SUPPLY CHAIN

Dependability

Customer Service Concept

Vendor-Managed Inventory (VMI)

Communication

Convenience


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1. What is the logistics managementobjective in a supply chain?

Concept Check


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A: To minimize total logistics costs

while delivering the appropriate level

of customerservice.


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2. A managers key task is to balance whichfour customer service factors against

which five logistics cost factors?

Concept Check


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A: Customer service factors: time,dependability, communication, and

convenience. Logistics cost factors:transportation, materials handling and

warehousing, order processing, stockouts,

and inventory.


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TRANSPORTATION:A KEY LOGISTICS FUNCTION

IN A SUPPLY CHAIN

SUPPLEMENTALLECTURE NOTE

FedEx and Maersk


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FedEx and MaerskWhat transportation modes does each perform?

FIGURE 1B Ad t d di d t
http://www.fedex.com/http://www.maersksealand.com/


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FIGURE 1B Advantages and disadvantages

of five modes of transportation


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MARKETING CHANNELS FORAPPLE COMPUTER

IN-CLASS ACTIVITY 1

Apple Computer Products


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Apple Computer Products

Mac mini

iPodiMac G5

Apple Computer Marketing Channel Structure:
http://www.apple.com/


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Online Apple Store - Direct Channel

CustomersConsumer

Producer



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Apple Retail Store - Direct Channel

CustomersConsumer

Producer



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CompUSA - Direct Channel/Strategic Channel Alliance

CustomersConsumer

Retailer

Producer

Apple Employees

Staff CompUSA

Store-Within-A-Store

CompUSA



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Ingram Micro/Best Buy - Indirect Channel

CustomersConsumer

Wholesaler

Retailer

Producer

Best Buy

Ingram

Micro



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MacMall Online/Catalog Sales - Indirect Channel

CustomersConsumer

Retailer

Producer

MacMall


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MARKETING CHANNELS FORRANBAXY

IN-CLASS ACTIVITY 2

Read Case


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Ranbaxy became a part of the Daiichi Sankyo Group in 2008 after

Japan's third-largest drug-maker bought a majority stake in the Indianfirm for Rs 22,000 crore.

Drug firm Ranbaxy Laboratories and Japan's Daiichi Sankyo said thatRanbaxy will market its parent company's products in Malaysia as part oftheir initiative to harness synergies between the two firms.

In a joint statement, Ranbaxy and Daiichi Sankyo said, "Daiichi SankyoCompany Limited and Ranbaxy Laboratories Ltd announced a synergisticinitiative in Malaysia where Ranbaxy will market innovative productsoriginally discovered by Daiichi Sankyo." Initially, the domestic firm willmarket Cravit (levofloxacin) used for treating severe bacterial infectionsin the Malaysian market from January 1, 2012, it added.

The product is currently marketed by First Pharmaceutical in Malaysia,the statement said. "Daiichi Sankyo and First Pharma have agreed totransfer the marketing rights of Cravit from First Pharma to Ranbaxy.


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First Pharma will continue to be Daiichi Sankyo's marketing partner for otherproducts (except Cravit) it had in-licenced from Daiichi Sankyo," it added.

Commenting on the development Daiichi Sankyo President and CEO Joji

Nakayama said: "We are pleased to announce another synergistic businessdevelopment with Ranbaxy in ASEAN. Our previous collaboration, in Singapore,has already proved Ranbaxy's marketing excellence in this strongly emergingregion."

The synergy between Ranbaxy and Daiichi Sankyo will allow us to introduceinnovator products from Daiichi Sankyo, complementing our own portfolio ofbranded generics to bring a wider range of medicines to doctors and patients,"Ranbaxy CEO and Managing Director Arun Sawhney said. Originally discovered byDaiichi Sankyo and launched in Japan in 1993, levofloxacin, under the brand nameCravit, is a synthetic anti-bacterial agent used for treating a broad range ofinfections, the company said.

Ranbaxy became a part of the Daiichi Sankyo Group in 2008 after Japan's third-largest drug-maker bought a majority stake in the Indian firm for Rs 22,000 crore.Shares of Ranbaxy were being quoted at Rs 390.60 apiece in afternoon trade onthe BSE today, down 1.20 per cent from their previous close.

Source Channel One

FIGURE 1C Common marketing channels


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for business goods and services


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Marketing Channel

A marketing channel consists of

individuals and firms involved in the

process of making a product or serviceavailable for use or consumption by

consumers or industrial users.


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Dual Distribution

Dual distribution is an arrangement

whereby a firm reaches different buyersby employing two or more different types

of channels for the same basic product.


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Vertical marketing systems are

professionally managed and centrally

coordinated marketing channels designedto achieve channel economies and

maximum marketing impact.


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Franchising

Franchising is a contractual arrangement

between a parent company (a franchisor)

and an individual or firm (a franchisee)that allows the franchisee to operate a

certain type of business under an

established name and according tospecific rules.

I i Di ib i


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Intensive Distribution

Intensive distribution is a level of

distribution density whereby a firm tries

to place its products and services in asmany outlets as possible.

E l i Di t ib ti


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Exclusive Distribution

Exclusive distribution is a level of

distribution density whereby only one

retail outlet in a specific geographicalarea carries the firms products.

S l ti Di t ib ti


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Selective Distribution

Selective distribution is a level of

distribution density whereby a firm

selects a few retail outlets in a specificgeographical area to carry its products.

Ch l C fli t


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Channel Conflict

Channel conflict arises when one

channel member believes another channel

member is engaged in behavior thatprevents it from achieving its goals.

Di i t di ti


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Disintermediation

Disintermediation is channel conflict

that arises when a channel member

bypasses another member and sells orbuys products direct.

L i ti


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Logistics

Logistics consists of those activities that

focus on getting the right amount of the

right products to the right place at theright time at the lowest possible cost.

S l Ch i


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Supply Chain

A supply chain is a sequence of firms

that perform activities required to create

and deliver a good or service toconsumers or industrial users.

T t l L i ti C t


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Total Logistics Cost

Total logistics cost consists of expenses

associated with transportation, materials

handling and warehousing, inventory,stockouts (being out of inventory), order

processing, and return goods handling.

C t S i


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Customer Service

Customer service is the ability of

logistics management to satisfy users in

terms of time, dependability,communication, and convenience.

V d M d I t


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Vendor-Managed Inventory

Vendor-managed inventory (VMI)

is an inventory management system

whereby the supplier determines theproduct amount and assortment a

customer (such as a retailer) needs and

automatically delivers the appropriateitems.


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managing channels and scm & logistics_revisison_2012 (6)

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