LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 15, YOU SHOULD BE ABLE TO:
Explain what is meant by a marketing channel of distribution and why intermediaries are needed.
Distinguish among traditional marketing channels, electronic marketing channels, and different types of vertical marketing systems.
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McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.LO1Explain what is meant by a marketing channel of distribution and why intermediaries are needed.Distinguish among traditional marketing channels, electronic marketing channels, and different types of vertical marketing systems.LO2LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 15, YOU SHOULD BE ABLE TO:LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 15, YOU SHOULD BE ABLE TO:LO3Describe factors that marketing executives consider when selecting and managing a marketing channel.Explain what supply chain and logistics management are and how they relate to marketing strategy.LO4CALLAWAY GOLF: DESIGNING AND DELIVERING THE GOODS FOR GREAT GOLFFIGURE 15-1 The variety of terms usedfor marketing intermediaries that vary in specificity and use in consumer and business marketsNATURE AND IMPORTANCE OF MARKETING CHANNELSTHE VALUE CREATED BY INTERMEDIARIESLO1Marketing ChannelFunctions Performed by IntermediariesTransactional FunctionLogistical FunctionFacilitating FunctionUtilities Received by ConsumersFIGURE 15-2 Marketing channel intermediaries perform three functions,each consisting of different activitiesCHANNEL STRUCTURE & ORGANIZATIONMARKETING CHANNELS FORCONSUMER PRODUCTS AND SERVICESLO2Direct ChannelIndirect ChannelRetailersWholesalersRetailersAgentsWholesalersRetailersFIGURE 15-3 Common marketing channels for consumer products and services by the kind and number of intermediariesCHANNEL STRUCTURE & ORGANIZATIONMARKETING CHANNELS FORBUSINESS PRODUCTS AND SERVICESLO2Direct ChannelIndirect ChannelIndustrial DistributorAgentsAgentsIndustrial DistributorsFIGURE 15-4 Common marketing channels for business products and services by the kind and number of intermediariesCHANNEL STRUCTURE & ORGANIZATIONELECTRONIC & DIRECT MARKETING CHANNELS; MULTICHANNEL MARKETINGLO2Electronic Marketing ChannelsDirect Marketing ChannelsMultichannel MarketingFIGURE 15-5 Consumer electronic marketing channels are similar to those for consumer products and servicesCHANNEL STRUCTURE & ORGANIZATIONDUAL DISTRIBUTION &STRATEGIC CHANNEL ALLIANCESLO2Dual DistributionStrategic ChannelAlliancesHoney NutCherrios AdMARKETING MATTERSNestlé and General Mills—Cereal Partners WorldwideLO2FIGURE 15-6 Three types of vertical marketing systems: corporate, contractual (most popular), and administeredCHANNEL STRUCTURE & ORGANIZATIONVERICAL MARKETING SYSTEMSLO2Vertical Marketing SystemsCorporate SystemsWholesaler-Sponsored Voluntary ChainsContractual SystemsRetailer-Sponsored CooperativesForward IntegrationBackward IntegrationCHANNEL STRUCTURE & ORGANIZATIONVERICAL MARKETING SYSTEMSLO2Contractual SystemsFranchisingManufacturer-Sponsored Retail FranchisesManufacturer-Sponsored Wholesale FranchisesService-Sponsored Retail FranchisesService-Sponsored FranchisesAdministered SystemsCHANNEL CHOICE AND MANAGEMENTCHANNEL CHOICE CONSIDERATIONSLO3Target Market Coverage (Density)Intensive DistributionExclusive DistributionSelective DistributionGucciCHANNEL CHOICE AND MANAGEMENTCHANNEL CHOICE CONSIDERATIONSLO3InformationConvenienceVarietyPre- or Post-SaleServiceBuyer RequirementsProfitabilityJiffy Lube and PetcoWhat buyer requirements have been satisfied?LO3GOING ONLINEVisit an Apple Store toSee What All the Excitement is AboutLO3USING MARKETING DASHBOARDSChannel Sales and Profit atCharlesburg FurnitureLO3CHANNEL CHOICE AND MANAGEMENTCHANNEL RELATIONSHIPSLO3Sources of Channel ConflictVertical ConflictDisintermediationHorizontal ConflictCHANNEL CHOICE AND MANAGEMENTCHANNEL RELATIONSHIPSLO3Channel InfluenceEconomicExpertiseIdentificationLegitimate RightChannel CaptainCHANNEL CHOICE AND MANAGEMENTCHANNEL RELATIONSHIPSLO4Legal ConsiderationsDual DistributionVertical IntegrationExclusive DealingTying ArrangementsRefusal to DealResale RestrictionsFull-Line ForcingFIGURE 15-7 The Clayton Act and Sherman Act place legal restrictions on specific marketing channel strategies and practicesLOGISTICS & SUPPLY CHAIN MANAGEMENTKEY CONCEPTSLO4LogisticsLogisticsManagementCustomerRequirementsCustomer Service Supply ChainSupply ChainManagementCost-Effective FlowThe AutomotiveSupply ChainFIGURE 15-8 Relating logistics management and supply chain management to supplier networks and marketing channelsFIGURE 15-9 The automotive supply chain includes thousands of firms that provide the 5,000 or so parts in a typical carAligning a Supply Chain with Marketing StrategyUnderstand the CustomerUnderstand the Supply ChainHarmonize the Supply Chainwith the Marketing StrategyLOGISTICS & SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MGMT & MKT STRATEGYLO4MARKETING MATTERSIBM’s Integrated Supply Chain—Delivering a Total Solution for Its CustomersLO4LOGISTICS & SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MGMT & MKT STRATEGYLO4Dell: A Responsive Supply ChainWal-Mart: An Efficient Supply ChainCross-dockingTWO CONCEPTS OF LOGISTICS MANAGEMENT IN A SUPPLY CHAINLO4Total Logistics Cost ConceptCustomer Service ConceptFIGURE 15-10 Supply chain managers balance five total logistics cost factors against four customer service factorsTWO CONCEPTS OF LOGISTICS MANAGEMENT IN A SUPPLY CHAINLO4TimeLead TimeOrder Cycle TimeReplenishment TimeQuick ResponseEfficient Consumer ResponseTWO CONCEPTS OF LOGISTICS MANAGEMENT IN A SUPPLY CHAINLO4DependabilityCommunicationConvenienceVendor-Managed Inventory (VMI)CLOSING THE LOOP:REVERSE LOGISTICSLO4Reverse LogisticsUPS VideoMAKING RESPONSIBLE DECISIONSReverse Logistics and Green MarketingGo Together at Hewlett-Packard: Recycling e-WasteLO4AMAZON: DELIVERING THE GOODSMILLIONS OF TIMES A DAYVIDEO CASE 15VIDEO CASE 15AMAZON1. How do Amazon.com’s logistics and supply chain management activities help the company create value for its customers?VIDEO CASE 15AMAZON2. What systems did Amazon develop to improve the flow of products from suppliers to Amazon distribution centers? What systems improved the flow of orders from the distribution centers to customers? VIDEO CASE 15AMAZON3. Why will logistics and supply chain management play an important role in the future success of Amazon.com?Marketing ChannelA marketing channel consistsof Individuals and firms involvedin the process of making aproduct or service available for use or consumption by consumers or industrial users.Multichannel MarketingMultichannel marketing involvesthe blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.Dual DistributionDual distribution involves an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.Vertical Marketing SystemsVertical marketing systemsare professionally managed and centrally coordinated marketing channels designed to achieve channel economies andmaximum marketing impact.Intensive DistributionIntensive distribution is a level of distribution density whereby a firm tries to place its products and services in as many outlets as possible.Exclusive DistributionExclusive distribution is a level of distribution density whereby only one retailer in a specific geographical area carries the firm’s products.Selective DistributionSelective distribution is a level of distribution density whereby a firm selects a few retailers in a specific geographical area to carry its products.Channel ConflictChannel conflict arises whenone channel member believes another channel member is engaged in behavior thatprevents it from achieving its goals.DisintermediationDisintermediation involveschannel conflict that arises whena channel member bypasses another member and sells orbuys products direct.LogisticsLogistics consists of those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost.Supply ChainA supply chain consists of a sequence of firms that perform activities required to create and deliver a product or service to ultimate consumers or industrial users.Total Logistics CostTotal logistics cost consists of the expenses associated with transportation, materials handling and warehousing, inventory, stockouts (being out of inventory), order processing, and return goods handling.Customer ServiceCustomer service is the abilityof logistics management to satisfy users in terms of time, dependability, communication, and convenience.Vendor-Managed Inventory (VMI)Vendor-managed inventory (VMI) is an inventory-management system whereby the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items.Reverse LogisticsReverse logistics is a processof reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution,or disposal.