Terms in this set (34)
Marketing channel or supply chain
A set of interdependent organizations that eases the transfer of ownership as products move form producer to business user or consumer
Marketing channel can be viewed as a large pipeline through which products, their ownership, communication, financing and payment, and accompanying risk flow to the consumer. The "place" element in the marketing mix.
The efficient and cost-effective forward and reverse flow and storage of goods, services, and related information, into through, and out of channel member companies.
Amazon in action video
-Robots make processes more efficient
-capacity expansion, more storage
- locate closer to customers
Supply chain management
A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value
- Customer Driven
- Multiple brands/partners act with one mission.
- Goal is to enhance customer value
Building a supply chain
Work directly with producers
integration is the key
Treating different customer and supplier groups differently - Providing more or less based on their needs and value
Reducing time and increasing effectiveness in order fulfillment
Increasing effectiveness and minimizing costs in manufacturing flow
In product development and commercialization
Using returns to enhance relationships
Benefits of supply chain management
Supply chain oriented companies commonly report :
-Lower inventory, transportation, warehousing, and packaging costs
-Greater supply chain flexibility
-Improved customer service
-Increased performance and profitability
Retailers - take title to goods
Merchant wholesalers - take title to goods
Agents and brokers - do not take title to goods
The most prominent difference separating intermediaries is whether or not they take title to the product.
Taking title means they own the merchandise and control the terms of the sale.
marketing channels for consumer products
Direct channel is used to sell products directly to consumers. No intermediaries are used. Examples are telemarketing, catalog shopping, on-line shopping, and television shopping networks.
At the other end of the spectrum, an agent/broker channel may be used in markets with small manufacturers/retailers that lack the resources to find each other. The agents or brokers bring the manufacturers and wholesalers together for negotiations, but they do not take title to merchandise.
Most consumer products are sold through distribution channels similar to the retailer channel and the wholesaler channel.
Channels for business and industrial products
Direct channels are typical in business and industrial markets. Manufacturers buy large quantities of raw materials, major equipment, processed materials, and supplies directly from other manufacturers, particularly if detailed technical specifications are required. The channel from producer to government is also a direct channel.
Companies selling standardized items of moderate/low value often rely on industrial distributors. Industrial distributors are wholesalers and channel members that buy and take title to products.
Channel Strategy Decisions
Before choosing a marketing channel, supply chain managers must analyze several factors, which often interact
Factors affecting channel choices
Market factors, product factors, producer factors
Level of distribution intensity
Intensive, selective, and exclusive distribution
Customer nuances (Target customer considerations) Who are the potential customers? What/where/when/how do they buy?
Consumer or industrial customer - more direct sales to industrial
Size of market - larger requires more intermediaries
Geographic location - central uses direct sales
Product complexity - more complex, more direct
Product price - higher price, more direct
Product customization - more direct
Product life cycle - earlier, more direct
Product delicacy - more direct
Producer resources - more resources, more direct
Number of product lines - more, more direct
Desire for channel control (avoid channels in which discount retailers are present.)
Levels of distribution factor
Intensive - achieve mass market selling, convenience goods. Many intermediaries
Selective - work with selected intermediaries, shopping and some specialty goods. Several number of intermediaries
Exclusive - work with single intermediary. Specialty goods and industrial equipment. One intermediary.
Logistical components of the supply chain
Supply chain team -> logistics information system:
Sourcing and procurement
Warehouse and Materials handling
The best supply chain teams move beyond the organization to include external participants, such as suppliers, transportation carriers, and third-party logistics suppliers.
Members of the supply chain communicate, coordinate, and cooperate extensively.
Distribution in Service organizations focuses on four areas
Minimizing wait times
Managing service capability
Improving service delivery
Standardizing services across regions (Establishing channel-wide network coherence)
All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use
Role of retailing
U.S. retailers employ nearly 25 million people
Retailers account for 11.6 percent of U.S. employment
Retailing accounts for 13 percent of U.S. businesses
Retailers ring up almost $4 trillion in sales—nearly 40 percent of the U.S. GDP
Industry is dominated by a few giant organizations, such as Wal-Mart
Retail Flight 001 website
Classification of retail operations
Level of service
Latter 3 variables used to position into competitive marketplace.
Classification of ownership
Owned by a single person or partnership and not part of a larger retail institution
Owned and operated as a group by a single organization
The right to operate a business
or to sell a product
With franchising, the advantages of both independent ownership and the chain store organization are combined.
Major types of retail operations
Department stores, specialty stores, supermarkets, drug stores, convenience stores, discount stores, restaurants
The use of machines to offer goods for sale
Vending is the most pervasive retail business in the United States, with 11.5 MILLION vending machines selling billions or dollars worth of goods annually.
Home sales parties
The sales of direct retailers, such as Avon and Tupperware, have suffered as more women have entered the workforce. Direct retailers are turning to direct mail, telephone, traditional retailing venues, and the Internet to reach more buyers.
Direct retailers are also exploring opportunities in other countries.
Top e-tailers by sales volume`
Amazon, staples, apple, dell, office depot, walmart, sears, libery media, office max, CDW
The #1 challenge e-tailers have to meet is keeping the shopping experience consistent across channels.
The retailing mix
Personnel - customer service and personal selling
Presentation - layout and atmosphere
Promotion - advertising, publicity, and public relations
Place (distribution) - location and hours
Product - width and depth of product assortment
New developments in retailing
Interactivity - consumers are involved in the retail experience. get customers involved in the process rather than just catching their eyes. Example: Build-a-Bear.
M-commerce - Purchasing goods through mobile devices. enables consumers using wireless mobile devices to connect to the Internet and shop. Examples: Coca-Cola and PepsiCo.