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1、Chapter 10Marketing Channels and Supply Chain ManagementPreviewing the Concepts: Chapter ObjectivesExplain why companies use distribution channels and discuss the functions these channels perform.1. Discuss how channel members interact and how they organize to perform the work of the channel.2. Iden

2、tify the major channel alternatives open to a company.3. Explain how companies select, motivate, and evaluate channel members.4. Discuss the nature and importance of marketing logistics and integrated supply chain management.Just the BasicsChapter OverviewThis chapter covers the important topic of s

3、upply chain management. Supply chains consist of both upstream and downstream partners, including suppliers, intermediaries, and even intermediary customers. The term value delivery network expands on the limited nature of supply chain., It consists of the company, suppliers, distributors, and ultim

4、ately customers who partner with each other to improve the performance of the entire system.The chapter focuses on marketing channels一the downstream side of the value delivery network. A companys channel decisions directly affect every other marketing decision. And because distribution channel decis

5、ions often involve long-term commitments to other firms, management must define its channels carefully, with an eye on tomorrows likely selling environment as well as todays.Channel members add value by bridging the major time, place, and possession gaps that separate goods and services from those w

6、ho would use them. Members of the marketing channel perform many key functions, such as gathering and distributing marketing information; promoting products; contacting prospective buyers; matching supply with demand; negotiating final prices; and performing the physical distribution of the goods, f

7、inancing large purchases, and taking the risk of selling the product.For channels to work properly, each channel members role must be specified and conflict must be managed. Conventional distribution systems typically lacked a strong leader; vertical marketing systems (VMS) have evolved to provide t

8、hat channel leadership. The three major types of VMSs include corporate, contractual, and administered.Evaluating the Mqior AlternativesEach alternative should be evaluated against economic, control, and adaptive criteria.1. Using economic criteria, a company compares the likely sales, costs, and pr

9、ofitability of different channel alternatives.2. The company must also consider control issues. Using intermediaries usually means giving them some control over the marketing of the product, and some intermediaries take more control than others.3. The company must also apply adaptive criteria. Chann

10、els often involve long-term commitments, yet the company wants to keep the channel flexible so that it can adapt to environmental changes.Designing International Distribution Channelsj.International marketers face many additional complexities in designing their channels.k.Each country has its own un

11、ique distribution system that has evolved over time and changes very slowly.1. In some markets, the distribution system is complex and hard to penetrate, consisting of many layers and large numbers of intermediaries (e.g., Japan).2. At the other extreme, distribution systems in developing countries

12、may be scattered and inefficient, or altogether lacking (e.g., China and India).Use Chapter Objective 3 here.5. Channel Management DecisionsOnce the company has reviewed its channel alternatives and decided on the best channel design, it must implement and manage the chosen channel.a. Channel manage

13、ment calls for selecting, managing, and motivating individual channel members and evaluating their performance over time.Selecting Channel MembersProducers vary in their ability to attract qualified marketing intermediaries.b. When selecting intermediaries, the company should determine what characte

14、ristics distinguish the better ones. It will want to evaluate each channel members years in business, other lines carried, growth and profit record, coopcrativcncss, and reputation.Managing and Motivating Channel MembersOnce selected, channel members must be continuously managed and motivated to do

15、their best.1. The company must sell not only through the intermediaries but to and with them.2. They practice strong partner relationship management (PRM) to forge long-term partnerships with channel members.c. In managing its channels, a company must convince distributors that they can succeed bett

16、er by working together as a part of a cohesive value delivery system.1. Many companies are now installing integrated high-tech partner relationship management systems to coordinate their wholechannel marketing efforts.2. Companies now use PRM and supply chain management (SCM) software to help recrui

17、t, organize, manage, motivate, and evaluate relationships with channel partners.Evaluating Channel MembersThe producer must regularly check channel member performance against standards such as sales quotas, average inventory levels, customer delivery time, treatment of damaged and lost goods, cooper

18、ation in company promotion and training programs, and services to the customer.d. The company should recognize and reward intermediaries who are performing well and adding good value for consumers. Those who are performing poorly should be assisted or replaced.Use Linking the Concepts here.Use Chapt

19、er Objective 4 here.Use Discussing the Issues 5 here.6. Public Policy and Distribution DecisionsFor the most part, companies are legally free to develop whatever channel arrangements suit them.a. Laws affecting channels seek to prevent the exclusionary tactics of some companies that might keep anoth

20、er company from using a desired channel.Exclusive DealingExclusive distribution occurs when the seller allows only certain outlets to carry its products. When the seller requires that these dealers not handle competitors products, its strategy is called exclusive dealing.1. Both parties can benefit

21、from exclusive arrangements.2. But exclusive arrangements also exclude other producers from selling to these dealers.e. This brings exclusive dealing contracts under the scope of the Clayton Act of 1914.i. They are legal as long as they do not substantially lessen competition or tend to create a mon

22、opoly, and as long as both parties enter into the agreement voluntarily.3. Exclusive dealing often includes exclusive territorial agreements.d.Producers of a strong brand sometimes sell it to dealers only if the dealers will take some or all of the rest of the line. This is called full-line forcing.

23、1. These tying arrangements may not be illegal, but if they lessen competition substantially, they do come under the Clayton Act.e. Producers are free to select their dealers, but their right to terminate dealers is somewhat restricted.1. Sellers can drop dealers for cause.”They cannot drop dealers

24、if, for example, the dealers refuse to cooperate in a doubtful legal arrangement.Use Focus on Ethics here.7. Marketing Logistics and Supply Chain ManagementCompanies must decide on the best way to store, handle, and move their products and services so that they are available to customers in the righ

25、t assortments, at the right time, and in the right place.a. Physical distribution and logistics effectiveness has a major impact on both customer satisfaction and company costs.Use Key Term Marketing Logistics (or Physical Distribution) here.Nature and Inmortance of Marketing LogisticsMarketing logi

26、stics, also called 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 customer requirements at a profit. It involves getting the right product to the right custom

27、er in the right place at the right time.b. Marketing logistics addresses not only outbound distribution (moving products from the factory to resellers and ultimately to customers) but also inbound distribution (moving products and materials from suppliers to the factory) and reverse distribution (mo

28、ving broken, unwanted, or excess products returned by customers or resellers).c. It involves entire supply chain managementmanaging upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers. See Figure 10

29、-5.Use Key Term Supply Chain Management here.Use Figure 10-5 here.d. The logistics managers task is to coordinate activities of suppliers, purchasing agents, marketers, channel members, and customers.e. Companies can gain a powerful competitive advantage by pursuing improved logistics to give custom

30、ers better service or lower prices.1. Improved logistics can yield tremendous cost savings to both the company and its customers. As much as 20% of an average produces price is accounted for by shipping and transportation alone.2. The explosion in product variety has created a need for improved logi

31、stics management.3. Improvements in information technology have created opportunities for major gains in distribution efficiency.Goals of the Logistics SystemNo logistics system can both maximize customer service and minimize distribution costs.1. Maximum customer service implies rapid delivery, lar

32、ge inventories, flexible assortments, liberal return policies, and other ser-vices一all of which raise distribution costs.2. Minimum distribution costs imply slower delivery, smaller inventories, and larger shipping lots, which represent a lower level of overall customer service.f. The goal of market

33、ing logistics should be to provide a targeted level of customer service at the least cost.1. A company must first research the importance of various distribution services to customers and then set desired service levels for each segment.2. The objective is to maximize profits, not sales.Major Logist

34、ics FunctionsThe major logistics functions include warehousing, inventory management, transportation, and logistics information management.g. A company must decide on how many and what types of warehouses it needs and where they will be located.1. A storage warehouse stores goods for moderate to lon

35、g periods.2. Distribution centers are designed to move goods rather than to store them. They are large and highly automated warehouses designed to receive goods from various plants and suppliers, take orders, fill those orders efficiently, and deliver goods to customers as quickly as possible.3. New

36、, single-storied automated warehouses have advanced, computer-controlled materials-handling systems requiring few employees. Computers and scanners read orders and direct lift trucks, electric hoists, or robots to gather goods, move them to loading docks, and issue invoices.Use Key Term Distribution

37、 Center here.h. Inventory management also affects customer satisfaction. Here, managers must maintain the delicate balance between carrying too little inventory and carrying too much.1. Just-in-time logistics systems carry only small inventories of parts or merchandise, often for only a few days of

38、operation. New stock arrives exactly when needed, rather than being stored in inventory until being used.i. The choice of transportation carriers affects the pricing of products, delivery performance, and condition of the goods when they arrive.1. Trucks have increased their share of transportation

39、steadily and now account for 32% of total cargo ton-miles (more than 58% of actual tonnage). They account for the largest portion of transportation within cities as opposed to between cities.2. Railroads account for 28% of total cargo ton-miles moved. They are one of the most cost-effective modes fo

40、r shipping large amounts of bulk products.3. Water carriers, which account for about 16% of cargo ton-milcs, transport large amounts of goods by ships and barges on U.S. coastal and inland waterways. Although the cost of water transportation is very low for shipping bulky, low-value, nonperishable p

41、roducts, water transportation is the slowest mode and may be affected by the weather.4. Pipelines are a specialized means of shipping petroleum, natural gas, and chemicals from sources to markets.5. Although air carriers transport less than 1% of the nations goods, they arc an important transportati

42、on mode. Airfreight rates arc much higher than rail or truck rates, but airfreight is ideal when speed is needed or distant markets have to be reached.6. The Internet carries digital products from producer to customer via satellite, cable modem, or telephone wire.7. Intermodal transportation is comb

43、ining two or more modes of transportation.i. Piggyback describes the use of rail and trucks.ii. Fishyback is combining water and trucks.iii. Trainship combines water and rail.iv. Airtruck combines air and trucks.j. Companies manage their supply chains through information. Channel partners often link

44、 up to share information and to make better joint decisions.1. Information can be shared and managed by mail or telephone, through salespeople, or through traditional or Internet-based electronic data interchange (EDI), the computerized exchange of data between organizations.2. Suppliers might be as

45、ked to generate orders and arrange deliveries for their customers. Many retailers set up vendor-managed inventory systems (VMI) or continuous inventory replenishment systems. Such systems require close cooperation between buyer and seller.Use Key Term Intermodal Transportation here.Use Discussing th

46、e Issues 6 here.Applying the ConceptHow are automobiles shipped to the United States from Japan? How are they distributed within the United States?Integrated Logistics ManagementIntegrated logistics management recognizes that providing better customer service and trimming distribution costs require

47、teamwork, both inside the company and among all the marketing channel organizations.Use Key Term Integrated Logistics Management here.k. The goal of integrated supply chain management is to harmonize all of the companys logistics decisions.1. Some companies have created permanent logistics committee

48、s made up of managers responsible for different physical distribution activities.2. Companies can also create management positions that link the logistics activities of functional areas.3. Companies can employ sophisticated, systemwide supply chain management software.l. The members of a distributio

49、n channel are linked closely in delivering customer satisfaction and value as well as building customer relationships.1. Smart companies coordinate their logistics strategies and forge strong partnerships with suppliers and customers to improve customer service and reduce channel costs.2. Many compa

50、nies have created cross-functional, cross-company teams.3. Other companies partner through shared projects.Integrated logistics companies, called third-party logistics (3PL) providers, perform any or all of the functions required to get their clients product to market.1. Companies use third-party lo

51、gistics providers for many reasons.i. Getting the product to market is the focus of the logistics provider, so these providers can often do it more efficiently and at lower cost.ii. Outsourcing logistics frees a company to focus more intensely on its core business.iii. Integrated logistics companies

52、 understand increasingly complex logistics environments. This can be helpful to companies attempting to expand their global market coverage.Use Key Term Third-Party Logistics (3PL) Provider here.Use Chapter Objective 5 here.Use Marketing at Work 10-2 here.Travel LogDiscussing the Issues1. Discuss th

53、e differences between a conventional distribution channel, a corporate VMS, a contractual VMS, and an administered VMS. Give one example of each.A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers. A corporate VMS integrates successive stages

54、 of production and distribution under single ownership. Coordination and conflict management are attained through regular organizational channels (Luxottica). A contractual VMS consists of independent firms at different levels of production and distribution who join together through contracts to obt

55、ain more economies or sales impact than each could achieve alone (Holiday Inn). In an administered VMS, leadership is assumed not through common ownership or contractual ties hut through the size and power of one or a few dominant channel members (Home Depot).2. What is a horizontal marketing system

56、? Think of a real world horizontal marketing system not discussed in the chapter. How does the partnership benefit the companies involved? How does it benefit the consumer?In a horizontal marketing system, two or more companies at one level join together to follow a new marketing opportunity. By wor

57、king together, companies can combine their financial, production, or marketing resources to accomplish more than any one company could alone.3. Define disintermediation. List three industries for which changes in channel systems have resulted in disintermediation.Disintermediation occurs when produc

58、t or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones. Companies such as Dell and American Airlines sell directly to final buyers, cutting retailers from their marketing channels altogether. In a

59、ddition, consumers can buy flowers from Calyx & Corolla (); clothes from or ; and books, videos, toys, jewelry, consumer electronics, and almost anything else from A all without ever stepping into a traditional retail store. Online music download services such as iTunes and Musicmatch are threatenin

60、g the very existence of traditional music-store retailers.4. Discuss the conditions under which a manufacturer might want its distribution to be exclusive, selective, or intensive. List two products or brands that are currently distributed at each level. Do you think any of these products might be m

61、ore profitable if distributed through a different number of intermediaries?Producers of convenience products and common raw materials typically seek intensive distributiona strategy in which they stock their products in as many outlets as possible. These products must be available where and when con

62、sumers want them. For example, toothpaste, candy, and other similar items are sold in millions of outlets to provide maximum brand exposure and consumer convenience. With exclusive distribution, the producer gives only a limited number of dealers the exclusive right to distribute its products in the

63、ir territories. Exclusive distribution is often found in the distribution of luxury automobiles and prestige women clothing. Between intensive and exclusive distribution lies selective distribution一the use of more than one, but fewer than all, of the intermediaries who are willing to carry a company

64、s products. Most television, furniture, and home appliance brands are distributed in this manner.5. What is partner relationship management (PRM) and why is it important? How does PRM impact customer relationship management?Once selected, channel members must be continuously managed and motivated to

65、 do their best. The company must sell not only through the intermediaries but to and with them. Most companies see their intermediaries as first-line customers and partners. They practice strong partner relationship management (PRM) to forge long-term partnerships with channel members. This creates a marketing system that meets the needs of both the company and its marketing partners. The channel members a company works with in some cases work directly with customers. Good partner