module 8 ppt. ii

8/7/2019 module 8 ppt. II

1/15

Distribution Channels

and

Logistics Management

PRINCIPLES OF

MARKETING


2/15

Distribution Channels

A set of interdependent organizations(intermediaries) involved in the

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

Channel decisionsaffect other marketing decisionsinvolve long-term commitments


3/15

Role of Intermediaries

Greater efficiency in making goodsavailable to target markets.

Intermediaries provideContactsExperienceSpecializationScale of operation

Match supply and demand.


4/15

Channel Functions

Information

Promotion

Contact

Matching

Negotiation

Physical Distribution

Financing

Risk taking


5/15

Channel Levels

Manufacturer

Wholesaler

Retailer

Consumer


6/15

Conflict

The channel will be most effective when:each member is assigned tasks it can do best.all members cooperate to attain overall channel

goals and satisfy the target market.

Focus on individual goals leads to conflictHorizontal ConflictHorizontal Conflict occurs among firms at the same

level of the channel.Vertical ConflictVertical Conflict occurs between different levels of

the same channel.


7/15

Systems

Corporate

common ownership at different channel levelsContractualcontractual agreement among channel members

Administered

leadership assumed by dominant membersleadership assumed by dominant members


8/15

Horizontal MarketingHorizontal MarketingSystemSystem

Horizontal MarketingHorizontal MarketingSystemSystem

Hybrid MarketingHybrid MarketingSystemSystem

Hybrid MarketingHybrid MarketingSystemSystem

Two or more

companies at onechannel level jointogether to increasecoverage

Example: Banks in

Grocery Stores

A single firm sets up

two or moremarketing channelsto increase coverage

Example:Retailers,Catalogs, and Sales

Force


9/15

Channel Design DecisionsChannel Design Decisions

Analyzing Consumer Service NeedsAnalyzing Consumer Service Needs

Setting Channel Objectives & ConstraintsSetting Channel Objectives & Constraints

ExclusiveDistributionExclusive

DistributionSelective

DistributionSelective

DistributionIntensive

DistributionIntensive

Distribution

Identifying Major AlternativesIdentifying Major Alternatives

Evaluating the Major AlternativesEvaluating the Major Alternatives


10/15

Decisions

SelectingSelecting

MotivatingMotivating

EvaluatingEvaluating

FEE

DBA

CK


11/15

Logistics

Involves entire supply chainIncreasing importance of logisticseffective logistics is becoming a key to winning

and keeping customers.logistics is a major cost element for mostcompanies.the explosion in product variety has created a

need for improved logistics management.information technology has created opportunities

for major gains in distribution efficiency.


12/15

Provide a Targeted Level of Customer Service atthe Least Cost.

Maximize Profits, Not Sales.

Higher Distribution Costs/ HigherCustomer Service Levels

Lower Distribution Costs/ LowerCustomer Service Levels


13/15

Logistics FunctionsLogistics Functions

Order Processing

Warehousing

Inventory Management

Transportation

Design system to minimize costs of attainingobjectives


14/15

Transportation ModesTransportation Modes

RailNations largest carrier, cost-effectivefor shipping bulk products, piggyback

Rail

Nations largest carrier, cost-effectivefor shipping bulk products, piggyback

TruckFlexible in routing & time schedules, efficient

for short-hauls of high value goods

TruckFlexible in routing & time schedules, efficient

for short-hauls of high value goods

WaterLow cost for shipping bulky, low-value

goods, slowest form

WaterLow cost for shipping bulky, low-value

goods, slowest form

PipelineShip petroleum, natural gas, and chemicalsfrom sources to markets

PipelineShip petroleum, natural gas, and chemicals

from sources to markets

AirHigh cost, ideal when speed is needed or to

ship high-value, low-bulk items

AirHigh cost, ideal when speed is needed or to

ship high-value, low-bulk items


15/15

Concept Recognizes that Providing Better Customer

Service and Trimming Distribution Costs RequiresTeamworkTeamwork, Both Inside the Company and Among Allthe Marketing Channel Organizations.

Cross-Functional Teamwork insidethe Company

Cross-Functional Teamwork insidethe Company

Building Channel PartnershipsBuilding Channel Partnerships

Third-Party LogisticsThird-Party Logistics

module 8 ppt. ii

Documents