Slide 20.1

Place

Managing marketing channels

Chapter 20

Slide 20.2

Managing the marketing channels

• Firms are increasingly paying greater attention to how they manage their marketing channels, so that products and services are delivered at the right time, right place and the right price.

Det vill säga ett flertal värdekedjor kopplas samman • The marketing channel participants are vital partners in the value delivery network.

Slide 20.3

Supply chains and the value delivery network

•

Upstream partners

are the suppliers of raw materials, components, parts, information, finance and expertise to the organisation.

•

Downstream partners

are the wholesalers and retailers who connect the firm with the customer.

Slide 20.4

The nature and importance of marketing channels

• The marketing or distribution channel is comprised of a set of interdependent organisations involved in the process of making a product or service available for use or consumption by the consumer or an industrial user.

• The new forms of marketing channels have evolved based on robust partnerships, with long-term commitment to each other and the customer.

Slide 20.5

How channel members add value

• • •

Transactional value

: – Risk moves to the intermediary, who also gets to know the specialist market.

Logistical value

: – Intermediaries assemble an assortment that is compatible with the needs of the ultimate customers.

Facilitating value

: – Intermediaries often offer credit to customers, may offer training in the use of products, and collect and deliver marketing information.

Slide 20.6

Channel interactions

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Figure 20.1

How a marketing intermediary reduces the number of channel transactions and raises economy of effort

Slide 20.7

Key value adding functions

• Information • Promotion • Contact with prospective buyers • Matching the offer to meet the needs of the customer • Negotiation • Physical distribution • Financing • Risk taking

Slide 20.8

Figure 20.2

Consumer and business marketing channels

Slide 20.9

Channel behaviour

• All participants dependent upon each other.

• Each channel member has a specialised role • Co-operation to achieve overall channel objectives may sometimes conflict with internal organisational goals and objectives, resulting in

channel conflict

.

–

Horizontal conflict

• Conflict with firms at the same level of the channel.

–

Vertical conflict

• Conflict at different levels e.g. between wholesaler and retailer.

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Slide 20.10

Channel organisation

– Historically channels have followed the

conventional distribution channel

format: • comprised of independent producers, wholesalers and retailers, with separate businesses and seeking to maximise their own profit individually, even at the expense of the entire channel.

– Modern channel management has evolved to develop

vertical marketing systems (VMS)

that provide channel leadership.

Slide 20.11

Figure 20.3

system A conventional marketing channel versus a vertical marketing

Slide 20.12

Vertical marketing systems

•

Vertical marketing systems (VMS) are structured, interdependent producers, wholesalers and retailers that act as a unified system.

•

There are also different constructs of VMS for various types of industries.

Slide 20.13

Statoil Ikea Små Icabutiker går ihop Coop BMW Coca-Cola

Figure 20.4

Main types of vertical marketing system McDonalds

Slide 20.14

Corporate VMS

–Combines successive stages of production and distribution under single ownership.

–Breweries and petrol stations are examples.

Slide 20.15

Contractual VMS

Independent firms at different levels join contractually to create efficiencies and economies of scale that could not be achieved alone. 3 types: »

Wholesaler-sponsored voluntary chains

of independent retailers organised to help compete against large organisations.

»

Retailer co-operatives

»

Franchise

Slide 20.16

Franchise VMS

» Reduced set-up costs » Contractual relationship » Proven system and established brand name » Centralised buying power » Expertise in operational, managerial, legal matters » Forfeit some control » Performance against exacting standards » Aggressive targets

Slide 20.17

Administered VMS

VMS that co-ordinates successive stages of production and distribution through the size and power of one of the parties.

Slide 20.18

Other channel variations

• • •

Horizontal marketing systems

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

Hybrid marketing systems

– Multi channel distribution targeting different market segments.

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Changing channel organisation

– Major trend to disintermediation through elimination of intermediaries and traditional sellers and replacement by radically new types of intermediaries.

Slide 20.19

Table 20.1

Major types of wholesalers

Slide 20.20

Table 20.1

Major types of wholesalers (continued)

Slide 20.21

Designing international distribution channels

• Additional complexities due to regional dynamics and demands • Multiple intermediaries • Need greater logistical management

Slide 20.22

Logistics

• “The process of strategically managing the movement and storage of materials, parts and finished inventory from suppliers, through the firm and on to the customers.”

Bowersox, D (1978), Logistics Management, Macmillan

Slide 20.23

Logistics versus distribution management

• Logistics differs from physical distribution management because it is concerned with treating the problem of the movement and storage of materials as a whole, where physical distribution is only concerned with movement and storage of materials from producer to customer.

Slide 20.24

Major logistics considerations

• • •

Warehousing

– How many?

– What type?

Inventory management

–

JIT ‘Just in Time’

logistics management.

Transportation

– Road – Rail – Water – Pipeline – Air – Internet

Slide 20.25

Integrated logistics management

• Efficient and effective management of the logistics is based upon the following: • Manage through information • Electronic data interchange • Cross-functional teamwork • Build logistics partnerships • Third party logistics:

Outsourcing

Slide 20.26

The total logistics cost concept

»

Order processing and administration

»

Inventory control

»

Transportation

»

Warehousing

»

Materials handling

Slide 20.27

Channel retailing trends

• •

New retail forms and shortening of the retail life cycles

–

‘Wheel of retailing’

, new types of retailer, usually begin as low-margin, low-price, low-status operations but later evolve to higher priced, higher service operations and eventually become like the conventional retailers that they replaced

Growth of non-store retailing

–

‘

click and brick’ retailers – Retail convergence – Rise of mega-retailers – Growing importance of retail technology – Global expansion of retailers

Slide 20.28

Channel wholesaling trends

• Face considerable challenges • Formation of hybrid operators such as the cash and carry concepts.

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