pom 6th ed. chapter 12
TRANSCRIPT
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it’s good and good for you
Slide 12.1
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Chapter 12Marketing channels: delivering
customer value
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Slide 12.2
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Marketing channels: delivering customer value
• Supply chains and the value delivery network• The nature and importance of marketing channels• Channel behaviour and organisation• Channel design decisions• Channel management decisions• Marketing logistics and supply chain management
Topic outline
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Slide 12.3
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Supply chains and the value delivery network
Upstream partners include raw material suppliers, components, parts, information, finances and expertise to create a product or service.
Downstream partners include the marketing channels or distribution channels that look toward the customer.
Supply chain partners
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Slide 12.4
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Supply chains and the value delivery network (Continued)
Supply chain ‘make and sell’ view includes the firm’s raw materials, productive inputs and factory capacity.
Demand chain ‘sense and respond’ view suggests that planning starts with the needs of the target customer, and the firm responds to these needs by organising a chain of resources and activities with the goal of creating customer value.
Supply chain views
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Slide 12.5
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Value delivery network is a network composed of the company, suppliers, distributors and, ultimately, customers who ‘partner’ with each other to improve the performance of the entire system in delivering customer value.
Value delivery network
Supply chains and the value delivery network (Continued)
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Slide 12.6
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
The nature and importance of marketing channels
Intermediaries offer producers greater efficiency in making goods available to target markets. Through their contacts, experience, specialisation and scale of operations, intermediaries usually offer the firm more than it can achieve on its own.
How channel members add value?
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Slide 12.7
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
The nature and importance of marketing channels (Continued)
• From an economic view, intermediaries transform the assortment of products into assortments wanted by consumers.
• Channel members add value by bridging the major time, place and possession gaps that separate goods and services from those who would use them.
How channel members add value?
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Slide 12.8
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
The nature and importance of marketing channels (Continued)
How channel members add value?
Figure 12.1 How adding a distributor reduces the number of channel transactions
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Slide 12.9
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
The nature and importance of marketing channels (Continued)
How channel members add value?
Information Promotion Contact
Matching Negotiation Physical distribution
Financing Risk taking
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Slide 12.10
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
The nature and importance of marketing channels (Continued)
Connected by types of flows:• Physical flow of products• Flow of ownership• Payment flow• Information flow• Promotion flow
Number of channel levels
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Slide 12.11
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
The nature and importance of marketing channels (Continued)
Number of channel levels
Figure 12.2 Consumer and business marketing channels
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Slide 12.12
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel behaviour and organisation
Marketing channel consists of firms that have partnered for their common good with each member playing a specialised role.
Channel conflict refers to disagreement among marketing channel members on goals, roles and rewards—who should do what and for what rewards.
• Horizontal conflict• Vertical conflict
Channel behaviour
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Slide 12.13
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel behaviour and organisation (Continued)
Conventional distribution channels consist of one or more independent producers, wholesalers and retailers, each a separate business seeking maximise its own profits, even at the expense of profits for the system as a whole.
Conventional distributions channels
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Slide 12.14
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel behaviour and organisation (Continued)
Vertical marketing systems (VMSs) provide channel leadership and consist of producers, wholesalers and retailers acting as a unified system and consist of:
• Corporate marketing systems• Contractual marketing systems• Administered marketing systems.
Vertical marketing systems
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Slide 12.15
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel behaviour and organisation (Continued)
Corporate vertical marketing system integrates successive stages of production and distribution under single ownership.
Vertical marketing systems
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Slide 12.16
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel behaviour and organisation (Continued)
Contractual vertical marketing system consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies or sales impact than each could achieve alone. The most common form is the franchise organisation.
Vertical marketing systems
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Slide 12.17
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel behaviour and organisation (Continued)
Franchise organisation links several stages in the production distribution process– Manufacturer-sponsored retailer franchise system– Manufacturer-sponsored wholesaler franchise system– Service firm-sponsored retailer franchise system.
Vertical marketing systems
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Slide 12.18
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel behaviour and organisation (Continued)
Administered vertical marketing system has a few dominant channel members without common ownership. Leadership comes from size and power.
Vertical marketing systems
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Slide 12.19
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel behaviour and organisation (Continued)
Horizontal marketing systems are when two or more companies at one level join together to follow a new marketing opportunity. Companies combine financial, production or marketing resources to accomplish more than any one company could alone.
Horizontal marketing system
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Slide 12.20
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel behaviour and organisation (Continued)
Multichannel distribution systems (hybrid marketing channels) are when a single firm sets up two or more marketing channels to reach one or more customer segments.
Multichannel distribution systems Hybrid marketing channels
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Slide 12.21
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel behaviour and organisation (Continued)
Multichannel distribution system
Figure 12.4 Multi-channel distribution system
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Slide 12.22
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel behaviour and organisation (Continued)
Disintermediation occurs when product or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones.
Changing channel organisation
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Slide 12.23
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel design decisions
Analysing consumer
needs
Setting channel
objectives
Identifying major
channel alternatives
Evaluation
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Slide 12.24
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel design decisions (Continued)
• Targeted levels of customer service• What segments to serve• Best channels to use• Minimising the cost of meeting customer
service requirements.
Setting channel objectives
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Slide 12.25
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel design decisions (Continued)
• Types of intermediaries• Number of marketing intermediaries• Responsibilities of channel members
Identifying major alternatives
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Slide 12.26
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel design decisions (Continued)
Identifying major alternatives
Intensive distribution• Candy and toothpaste
Exclusive distribution• Luxury automobiles and prestige
clothing
Selective distribution• Television and home appliance
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Slide 12.27
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel design decisions (Continued)
• Each alternative should be evaluated against:– Economic criteria– Control– Adaptive criteria
Evaluating the major alternatives
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Slide 12.28
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel design decisions (Continued)
• Channel systems can vary from country to country.
• Must be able to adapt channel strategies to the existing structures within each country.
Designing international distribution channels
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Slide 12.29
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Channel management decisions
Selecting channel
members
Managing channel
members
Motivating channel
members
Evaluating channel
members
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Slide 12.30
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Public policy and distribution decisions
Exclusive distribution is when the seller allows only certain outlets to carry its products.
Exclusive dealing is when the seller requires that the sellers not handle competitor’s products.
Exclusive territorial agreements are where producer or seller limit territory.
Tying agreements are agreements where the dealer must take most or all of the line.
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Slide 12.31
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Marketing logistics and supply chain management
Marketing logistics (physical distribution) involves planning, implementing and controlling the physical flow of goods, services and related information from points of origin to points of consumption to meet consumer requirements at a profit.
Nature and importance of marketing logistics
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Slide 12.32
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Marketing logistics and supply chain management (Continued)
Supply chain management is the process of managing upstream and downstream value-added flows of materials, final goods and related information among suppliers, the company, resellers and final consumers.
Nature and importance of marketing logistics
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Slide 12.33
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Marketing logistics and supply chain management (Continued)
Supply chain management
Figure 12.5 Supply chain management
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Slide 12.34
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Marketing logistics and supply chain management (Continued)
Major logistics functions
Warehousing Inventory management
TransportationLogistics
information management
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Slide 12.35
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Marketing logistics and supply chain management (Continued)
• How many?• What types?• Where to locate?• Warehouses• Distribution centres
Warehousing decisions
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Slide 12.36
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
• Just-in-time systems• RFID
– Knowing exact product location• Smart shelves
– Placing orders automatically.
Inventory management
Marketing logistics and supply chain management (Continued)
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Slide 12.37
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Major logistics functions
Transportation affects the pricing of products, delivery performance and condition of the goods when they arrive.
Truck Rail Water
Pipeline Air Internet
Marketing logistics and supply chain management (Continued)
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Slide 12.38
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Logistics information management is the management of the flow of information, including customer orders, billing, inventory levels and customer data.
• Electronic data interchange (EDI)• Vendor-managed inventory (VMI)
Logistics information management
Marketing logistics and supply chain management (Continued)
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Slide 12.39
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Integrated logistics management is the recognition that provide customer service and trimming distribution costs requires teamwork internally and externally.
Integrated logistics management
Marketing logistics and supply chain management (Continued)
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Slide 12.40
Kotler et al., Principles of Marketing, 6th edition © Pearson Education Limited 2013
Third-party logistics is the outsourcing of logistics functions to third-party logistics providers (3PLs).
Integrated logistics management
Marketing logistics and supply chain management (Continued)