12-Principles of marketing.ppt (735Kb)
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Chapter
12 Chapter
12 Distribution Channels and Logistics Management PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstong
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What is a Distribution Channel?
What is a Distribution Channel?
- A set of interdependent organizations (intermediaries) involved in the process of
making a product or service available for
use or consumption by the consumer or
business user. - Channel decisions are among the most important decisions that management faces and will directly affect every other marketing decision.
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Why are Marketing Intermediaries Why are Marketing Intermediaries
Used? Used?
- Greater efficiency in making goods available to target markets.
- Offer the firm more than it can achieve on it’s own through the intermediaries:
- – Contacts
- – Experience
- – Specialization
- – Scale of operation
- Match supply and demand.
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Distribution Channel Functions Distribution Channel Functions
All Use Up Scarce Resources
- • All May Often Be Performed Better Through Specialization • All Can Often Be Shifted Among Channel Members
Risk Taking Risk Taking Information Information Financing
Promotion Financing
Promotion Physical Physical
Contact Contact Distribution Distribution Matching Negotiation Matching Negotiation
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Consumer Marketing Channels & Levels Consumer Marketing Channels & Levels
Direct
Indirect
M
Channel Level - A Layer of Intermediaries that Perform Some Work in
Bringing the Product and it’s Ownership Closer to the Buyer.Channel 1 Channel 2 Channel 3 Channel 4
Direct Indirect
J
M
M
W
C
C
M
M
C
C
R
R
M
J
C
C
W
R
W
W
M
M
C
C
R
R
R
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Channel Behavior & Conflict Channel Behavior & Conflict
- The channel will be most effective when:
each member is assigned tasks it can do best. –
- – all members cooperate to attain overall channel goals and satisfy the target market.
- When this doesn’t happen, conflict occurs:
- – Horizontal Conflict occurs among firms at the same level
Horizontal Conflict of the channel
Vertical Conflict occurs between different levels of the – Vertical Conflict same channel.
- For the channel to perform well, conflict must be managed.
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Types of Vertical Marketing Systems Types of Vertical Marketing Systems
Corporate Common Ownership at Different Levels of the Channel Corporate Common Ownership at Different Levels of the Channel Contractual Contractual Agreement Among Channel Members Contractual Contractual Agreement Among Channel Members Administered Leadership is Assumed by One or a Few Dominant Members Administered Leadership is Assumed by One or a Few Dominant Members Greater Lesser Degree of Direct Control Degree of Direct Control
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Vertical Marketing Systems Vertical Marketing Systems
Vertical Marketing Systems (VMS) Vertical Marketing Systems (VMS) Corporate
Corporate
Franchise Organizations
Manufacturer- Sponsored Retailer Franchise System
Manufacturer- Sponsored Retailer Franchise System
Manufacturer- Sponsored Wholesaler Franchise System
Manufacturer- Sponsored Wholesaler Franchise System
Service-Firm- Sponsored Franchise System
Service-Firm- Sponsored Franchise System
Wholesaler Sponsored Voluntary Chain
Wholesaler Sponsored Voluntary Chain
Franchise Organizations
Retailer Cooperatives
VMS
VMS
VMS
Administered
VMS
Administered
VMS
Contractual
VMS
Contractual
Retailer Cooperatives
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Innovations in Marketing Systems Innovations in Marketing Systems
Horizontal Marketing Horizontal Marketing System System Horizontal Marketing Horizontal Marketing System System Hybrid Marketing Hybrid Marketing System System Hybrid Marketing Hybrid Marketing System System Two or More Companies at One Channel Level Join Together to Follow a New Marketing Opportunity. Example: Banks in Grocery Stores A Single Firm Sets Up Two or More Marketing Channels to Reach One or More Customer Segments. Example: Retailers, Catalogs, and Sales Force
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Channel Design Decisions Channel Design Decisions
Analyzing Consumer Service Needs
Analyzing Consumer Service Needs
Setting Channel Objectives & Constraints
Setting Channel Objectives & Constraints
Exclusive Distribution
Exclusive Distribution
Selective Distribution
Selective Distribution
Intensive Distribution
Intensive Distribution
Identifying Major Alternatives
Identifying Major Alternatives
Evaluating the Major Alternatives
Evaluating the Major Alternatives
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Channel Management Decisions Channel Management Decisions
Selecting Selecting
K C A B D Motivating Motivating E E F Evaluating Evaluating
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Nature and Importance of Marketing Nature and Importance of Marketing
Logistics Logistics
- Involves getting the right product to the right customers in the right place at the right time.
- Companies today place greater emphasis on logistics because:
- – effective logistics is becoming a key to winning and keeping customers.
- – logistics is a major cost element for most companies.
- – the explosion in product variety has created a need for improved logistics management.
- – information technology has created opportunities for major gains in distribution efficiency.
Goals of the Logistics System Goals of the Logistics System
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- Provide a Targeted Level of Customer Service at the Least Cost.
- Maximize Profits, Not Sales.
Higher Distribution Costs/ Higher Customer Service Levels Lower Distribution Costs/ Lower Customer Service Levels
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Logistics Systems Logistics Systems
Order Processing Costs
Order Processing Costs
Submitted Minimize Costs of Submitted
Minimize Costs of
Processed Attaining Logistics Processed
Attaining Logistics
Shipped Objectives Shipped
Objectives Logistics Functions Transportation
Storage Water, Truck, Storage Distribution Rail,
Distribution Pipeline & Air
Inventory Inventory
When to order When to order How much to order How much to order Just-in-time Just-in-time
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Nation’s largest carrier, cost-effective for shipping bulk products, piggyback
Nation’s largest carrier, cost-effective for shipping bulk products, piggyback
Flexible in routing & time schedules, efficient for short-hauls of high value goods
Flexible in routing & time schedules, efficient for short-hauls of high value goods
Low cost for shipping bulky, low-value goods, slowest form
Ship petroleum, natural gas, and chemicals from sources to markets
Ship petroleum, natural gas, and chemicals from sources to markets
Air High cost, ideal when speed is needed or to ship high-value, low-bulk items
Air
Transportation Modes Transportation Modes
Pipeline
Pipeline
Water
Water
Low cost for shipping bulky, low-value
goods, slowest form
Truck
Truck
Rail
Rail
High cost, ideal when speed is needed or to ship high-value, low-bulk items
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Choosing Transportation Choosing Transportation
Modes Modes
Checklist for Choosing Transportation Modes
1. Speed.
2. Dependability.
3. Capability.
4. Availability.
5. Cost.
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Integrated Logistics Management Integrated Logistics Management
Concept Recognizes that Providing Better Customer Service and Trimming Distribution Costs Requires Teamwork Teamwork, Both Inside the Company and Among All the Marketing Channel Organizations. Cross-Functional Teamwork inside the Company
Cross-Functional Teamwork inside
the Company
Building Channel Partnerships
Building Channel Partnerships
Third-Party LogisticsThird-Party Logistics