Marketing Channels, Logistics & Supply Chain Management

Intro to Marketing Chapter 13

Marketing Channels (Distribution Channels)

System of marketing institutions that promote the physical flow of goods and services, along with ownership title, from producer to consumer or business user; also called distribution channel
Moving goods and services from producers to customers

Types of Channels
- Producer Consumer
o direct channel o by-passes marketing intermediaries o component of direct selling

- Producer-Retailer-Consumer - Producer-Wholesaler-Retailer-Consumer
o traditional channel

- Producer-Agent-Wholesaler-Retailer-Consumer

May substitute Consumer for Business User

Types of Channels
Producer Consumer

Producer

Retailer

Consumer

Producer

Wholesaler

Retailer
Retailer

Consumer Consumer

Producer Agent/Broker Wholesaler

Dual Distribution
Movement of products through two or more distribution channels to reach the same target market
IBM: An Example of a Firm That Uses Dual Distribution to Sell Its Personal Computers

Reverse Channels
Channels designed to return goods to their producers.

Channel Strategy Decisions

Determining Distribution Intensity

Intensive Distribution
- used for convenience goods - saturation coverage of the market

Selective Distribution
- a firm chooses only a limited number of retailer in a market area to handle its product. - cooperative advertising is frequently used

Exclusive Distribution
- specialty goods - one wholesaler or retailer in a geographic region.

Channel Management & Leadership

Historically, producers or wholesalers served as channel captains, over small retailers. However, many retailers increasingly are taking on the role of channel captain as large chains assume traditional wholesaling functions.

Logistics And Supply Chain Management

Process of coordinating the flow of information, goods, and services among members of the distribution channel. Physical Distribution Activities to achieve efficient movement of finished goods from the end of the production line to the consumer. Transportation is part of it.

RFID Radio Frequency Identification

Technology that uses a tiny chip with identification. Information can be read from a distance by a radio frequency scanner.

Physical Distribution
Includes: transportation, warehousing, materials handling, protective packaging, inventory control, order processing, and customer service.

Customer Service Standards

The quality of service that the firm provides its customers. Its a powerful tool for influencing buyers perception of overall quality.

Transportation
Transportation costs are the largest expense item in physical distribution and is a key in customer service.
40%-60% of distribution cost of business

What has Deregulation done to transportation?

Classes for Carriers

All forms of transportation.
Ex: trucks

Common carriers are for-hire carriers who serve the general public. Contract carriers contract to work for only specific customers and in only one industry. Private carriers are not-for-hire carriers who transport for only one specific firm.

Major Transportation Modes

Railroad most frequently used & most efficient for bulk commodities over long distances. Motor carriers fast and flexible Water carriers slow but inexpensive Pipelines low-maintenance, dependable, and efficient Air freight fastest but very expensive
Intermodal piggyback, fishyback, birdyback

Warehousing
Two types- Storage and Distribution
Automated warehouses Inventory control systems some firms utilize just-in-time management Order processing is another physical distribution function Protective packaging and materials handling.