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Chapter topics: Channel objectives Channel design & strategy Distribution channels consumer & industrial Global retailing Channel conflict Vertical marketing systems Physical distribution, supply chains, and logistics Transportation modes
2011 Pearson Education, Inc.
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Channel Objectives
Marketing channels exist to create utility for customers
Place utility: availability of a product or service in a potential customer location that is convenient to a p Time utility: availability of a product or service when desired by a customer Form utility: availability of the product processed, prepared, in proper condition and/or ready to use Information utility: availability of answers to questions and general communication about useful product d tf features t and db benefits fit
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Power objectives
channel control independence organizational stability organizational image
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Characteristics of Long Channels Consumers Geographically diverse Little technical knowledge and regular servicing not required Small orders Durable Standardized Inexpensive
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Expensive
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Consumer Products
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Peer-to-Peer Selling
The Internet and other related media are dramatically altering distribution Interactive TV may become a viable direct g channel in the future marketing
Consumer Channels
Manufacturer-owned M f t d stores t
Walt Disney opening 600 new stores globally Nike, Levi Strauss, Apple
Consumer Products
Piggyback Marketing
Channel innovation that has grown in popularity One manufacturer distributes product by utilizing another companys distribution channel h l Requires that the combined product lines be complementa complementary and appeal to the same customer
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Flagship retail stores for Apple, Sony well Sony, well-known known fashion houses, houses Nokia, Nike: to build brand loyalty, showcase products products, and help gather marketing intelligence
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Industrial Products
Establishing Channels
Direct involvement the company establishes it own sales its l force f or operates t it its own retail t il stores Indirect involvement the company utilizes independent agents, distributors, and/or wholesalers Channel strategy gy must fit the companys p y competitive position and marketing objectives within each national market
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Mexican storefront
2011 Pearson Education, Inc.
Global Retailing
Department stores Specialty retailers Supermarkets Convenience stores Discount stores and warehouse clubs Hypermarkets S Supercenters t Category killers Outlet stores
Global Retailing
Environmental Factors
Saturation in the home country market Recession or other economic factors Strict regulation on store development High operating costs
Critical Question
Channel Conflict
Horizontal Conflict Most often, horizontal conflict causes sparks between different types of marketing intermediaries that handle similar products g among g Sometimes results from disagreements channel members at the same level Vertical Conflict Channel members at different levels find many reasons for disputes Example: when retailers develop private brands to compete with producers brands or when producers establish their own retail outlets or websites 12-24
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Logistics L i ti
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The management process that integrates the activities of all companies to ensure an efficient flow of goods through the supply chain
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Warehousing
Warehouses are used to store goods until they are sold Distribution centers are designed to efficiently receive goods from suppliers and then fill orders for i di id l stores individual t or customers t
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Transportation
the method or mode a company should utilize when moving products through domestic and global channels; the most common modes of transportation are rail, water, truck, air, pipeline and internet
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Inventory Control
Important since firms need to maintain enough inventory to meet customer demand without incurring unneeded costs for carrying excess inventory Just-in-time (JIT) production Vendor-managed inventory (VMI)
Transportation
Channel Strategy analyzing each transportation mode to determine which one, or combination of modes, will be most effective and efficient in a given situation 12-34
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Transportation Modes
Federal government deregulation of transportation i industry i d (1980) led l d to new breed of transportation companies which are multimodal, lti d l providing idi cradle dl to t grave service i or total transportation -- piggyback -- fishyback fi h b k -- birdyback
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Transportation Modes
Make or buy alternatives: private carrier - owned & operated by individual organization contract - independent organization that agrees to transport products according to contractual arrangement p transportation p facilities common - operates on scheduled basis between predetermined points