Marketing Channels, Logistics & Supply Chain Management

Intro to Marketing

Chapter 13

Marketing Channels(Distribution Channels)• System of marketing institutions that

promote the physical flow of goods and services, along with ownership title, from producer to consumer or business user; also called distribution channel• Moving goods and services from

producers to customers

Types of Channels

- Producer – Consumerodirect channeloby-passes marketing intermediaries ocomponent of direct selling

- Producer-Retailer-Consumer- Producer-Wholesaler-Retailer-Consumer

otraditional channel- Producer-Agent-Wholesaler-Retailer-Consumer

May substitute Consumer for Business User

Types of Channels

Producer Consumer

Producer

Producer

Consumer

Consumer

Retailer

RetailerWholesaler

Producer ConsumerRetailerWholesalerAgent/Broker

Dual Distribution• Movement of products through

two or more distribution channels to reach the same target market

IBM: An Example of a Firm That Uses Dual Distribution to Sell Its Personal Computers

Reverse Channels

• Channels designed to return goods to their producers.

Channel Strategy Decisions

Determining Distribution Intensity• Intensive Distribution

- used for convenience goods- saturation coverage of the market

• Selective Distribution- a firm chooses only a limited number of

retailer in a market area to handle its product.

- cooperative advertising is frequently used

• Exclusive Distribution- specialty goods- one wholesaler or retailer in a geographic

region.

Channel Management & Leadership

• Historically, producers or wholesalers served as channel captains, over small retailers. However, many retailers increasingly are taking on the role of channel captain as large chains assume traditional wholesaling functions.

Logistics And Supply Chain Management• Process of coordinating the flow of

information, goods, and services among members of the distribution channel.

• Physical Distribution• Activities to achieve efficient

movement of finished goods from the end of the production line to the consumer. Transportation is part of it.

RFID – Radio Frequency Identification

• Technology that uses a tiny chip with identification.

• Information can be read from a distance by a radio frequency scanner.

Physical Distribution

• Includes: transportation, warehousing, materials handling, protective packaging, inventory control, order processing, and customer service.

Customer Service Standards• The quality of service

that the firm provides its customers.

• It’s a powerful tool for influencing buyers perception of overall quality.

Transportation

• Transportation costs are the largest expense item in physical distribution and is a key in customer service.

• 40%-60% of distribution cost of business

• What has Deregulation done to transportation?

Classes for Carriers

• All forms of transportation.• Ex: trucks

• Common carriers are for-hire carriers who serve the general public.

• Contract carriers contract to work for only specific customers and in only one industry.

• Private carriers are not-for-hire carriers who transport for only one specific firm.

Major Transportation Modes• Railroad – most frequently used & most

efficient for bulk commodities over long distances.

• Motor carriers – fast and flexible• Water carriers – slow but inexpensive• Pipelines – low-maintenance, dependable,

and efficient• Air freight – fastest but very expensive

• Intermodal – piggyback, fishyback, birdyback

Warehousing• Two types- Storage and Distribution

• Automated warehouses• Inventory control systems – some firms utilize

just-in-time management• Order processing is another physical distribution

function• Protective packaging and materials handling.