Ch 10 - Marketing Channels: Delivering Customer Value

Intro to Marketing - Rutgers

supply chains

upstream partners supply the raw materials, components, parts, info, finances, and expertise needed to create a product or service

downstream partners serve as distribution channels that link the firm and its customers

value delivery network

network composed of the company, suppliers, distributors, and ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value

marketing/distribution channel

interdependent organizations that help make a product or service available for use or consumption

how distributor reduces the number of channel transactions

By consolidating inventory and enabling bulk purchasing

key functions performed by channel members

help to complete transactions

help to fulfill completed transactions

channel level

layer of intermediaries that performs work in bringing the product and its ownership closer to final buyer

types of flows that connect institutions in channels

physical flow of products

flow of ownership

payment flow

information flow

promotion flow

consumer and business marketing channels

The systems through which products flow from producers to consumers and businesses. These channels include direct and indirect pathways that facilitate the exchange of goods and services

channel conflict

disagreements among marketing channel members of goals, roles, and rewards

comparison of conventional distribution channel with vertical marketing system

A comparison highlights the differences in efficiency and coordination. Conventional channels involve multiple independent entities, while vertical marketing systems integrate producers, wholesalers, and retailers to enhance synergy and reduce conflict.

vertical marketing system (VMS)

consists of producers, wholesalers, and retailers acting as a unified system

types of VMS

corporate

contractual

administered

horizontal marketing system

two or more companies at one level join together to follow a new marketing opportunity

multichannel distribution system

a single firm sets up two or more marketing channels to reach customer segments

advantages of multichannel distribution systems

expansion of sales and marketing coverage

tailor-made products and services for the specific needs of customer segments

disadvantages of multichannel distribution systems

harder to control

generates conflict

disintermediation

occurs when product or service producers cut out marketing channel intermediaries or when radically new types of channel intermediaries displace traditional ones

marketing channel design

involves designing effective marketing channels by

analyzing customer needs

setting channel objectives

identifying major channel alternatives

evaluating the alternatives

marketing logistics/physical distribution

planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to consumption

customer-centered logistics

marketplace backwards to the factory or sources of supply

outbound logistics

inbound logistics

reverse logistics

supply chain management

the management of the flow of goods and services, including all processes that transform raw materials into final products

logistics functions

warehousing

inventory management

transportation

logistics information management

warehousing

storage warehouses store goods for moderate to long periods

distribution centers

large, highly automated warehouses that receive goods, take orders, fill them, and deliver goods to customers

transportation

in shipping goods to their warehouses, dealers, and customers, companies can choose among many transportation modes, including truck, rail, water, pipeline, and air

factors affected by choice of transportation

pricing of products

delivery performance

condition of goods

customer satisfaction

modes of transportation

trucks

railroads

water carriers

pipelines

air carriers

internet

multimodal transportation

combining two or more modes of transportation

piggyback, fishyback, trainship, air truck

logistics information can be shared and managed through

electronic data interchance - EDI

vendor-managed inventory - VMI