Ch10_Marketing Channel_Group 9.ppt

Chapter 10 Marketing Channels

Delivering Customer Value

Dr. KaoGroup 9 M0345008 Zoe / M0345016 Jacky

Outline1. Explain why companies use marketing channels and discuss the

functions these channels perform.

2. Discuss how channel members interact and how they organize to perform the work of the channel.

3. Identify the major channel alternatives.

4. Explain how companies select, motivate, and evaluate channel members.

5. Discuss the nature and importance of marketing logistics and integrated supply chain management.

Producing a product or service and making it available to buyers requires building relationships not only with customers but also with key suppliers and resellers in the company’s supply chain.

Supply Chain

A network composed of the company, suppliers, distributors, and, ultimately, customers who partner to help the entire system deliver better customer value.

Value Delivery Network

Marketing channel (or distribution channel)--- a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.

The nature and important of Marketing Channel

A network composed of the company, suppliers, distributors, and, ultimately, customers who partner to help the entire system deliver better customer value.

How Channel member Add value?

How Channel member Add value?

Members of the marketing channel perform many key functions. Some help to complete transactions:

Marketing Channel’s Key Functions

Information Promotion Contact Negotiation

Other help to fulfill the completed transactions:

Marketing Channel’s Key Functions

Physical distribution Financing Risk taking

Number of Channel Levels

Channel levelsA layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.

Number of Channel Levels

Direct marketing channelA marketing channel that has no intermediary levels.

Number of Channel Levels

Indirect marketing channelA marketing channel containing one or more intermediary levels.

Channel Behavior and Organization

Channel Behavior and Organization

Channel Behavior and Organization

Horizontal conflictOccurs among firms at the same level of the channel.

Channel Behavior and Organization

Vertical conflictConflict between different levels of the same channel. (more common)

Vertical Marketing Systems

Conventional distribution channel

〕Vertical Marketing Systems

Vertical Marketingsystem(VMS)

2. Contractual VMS1. Corporate VMS

3. Administered VMS

〕Vertical Marketing Systems

Vertical Marketingsystem(VMS)

A vertical marketing system that combines successive stages of production and distribution under single ownership.

Corporate VMS

〕Vertical Marketing Systems

Vertical Marketingsystem(VMS)

A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts.

Contractual VMS

Contractual VMS

〕Vertical Marketing Systems

Vertical Marketingsystem(VMS)

A vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties.

Administered VMS

Horizontal Marketing Systems

A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.

Multichannel Distribution Systems

Changing Channel Organization

DisintermediationThe cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries.

Changing Channel Organization

DisintermediationThe cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries.

Changing Channel Organization

Analyzing Consumer NeedsEach channel member and level adds value for the customer. Thus, designing the marketing channel stars with finding out what target consumers want from the channel.

• Nearby locations?

• Buy in person?

• Value breadth of assortment?

• Want many add-on services?

Channel Design Decisions

Setting Channel ObjectivesCompanies should state their marketing channel objectives in terms of targeted levels of customer service.

Channel Design Decisions

Identifying Major Alternatives

Number of Marketing Intermediaries•Intensive distribution (ex: Toothpaste)•Exclusive distribution(ex: Bently)•Selective distribution(ex: Sony)

Types of Intermediaries•Company’s marketing group•Manufacturing or Agent•Distributor of industrial products

Responsibilities of Channel Members•The producer and the intermediaries need to agree on the terms and responsibilities of each channel member.

Channel Design Decisions

Evaluating the Major AlternativesSuppose a company has identified several channel alternatives and wants to select the one that will best satisfy its long-run objectives. Each alternative should be evaluated against economic, control, and adaptability criteria.

Channel Design Decisions

Channel Design Decisions

Designing International Distribution ChannelsInternational marketers face many additional complexities in designing their channels. Each country has its own unique distribution system that has evolved over time and changes very slowly.

Channel Management Decisions

Selecting Channel Members

Managing and Motivating Channel Members

Evaluating Channel Members

Public Policy and Distribution Decisions

Exclusive distribution

Exclusive dealing

Exclusive territorial agreements

Full-line forcing

Nature and Importance of Marketing logistics

Suppliers Company Resellers Customer

Inboundlogistics

Outboundlogistics

Reverse logistics

Marketing Logistics and Supply Chain Management

Benefit of the logistics System

• Gain a powerful competitive advantage

• Yield tremendous cost savings

• Easy to manage Variety of products

Marketing Logistics and Supply Chain Management

Marketing Logistics and Supply Chain Management

Goal of the logistics System

The goal of marketing logistics should be to provide a targeted level of customer service at the least cost.

Major Logistics Functions

• Warehousing

• Inventory Management

• Transportation

• Logistics Information Management

Marketing Logistics and Supply Chain Management

Integrated Logistics Management

• Cross-Functional Teamwork Inside the Company

• Building Logistics Partnership

• Third-Party Logistics

Marketing Logistics and Supply Chain Management

Thank for

listening