Marketing unit 8
Retailing includes selling products or services directly to consumers for personal use.
Retailers are businesses whose sales come primarily from retailing.
Shopper Marketing focuses on turning shoppers into buyers at the point of sale.
Omni-channel retailing creates a seamless cross-channel buying experience.
Digital technologies have caused a shift in how and where people buy.
Retailers must adopt omni-channel retailing to integrate in-store, online, and mobile shopping.
Types of retailers include self-service, limited service, and full service.
Product line classifications include specialty stores, department stores, convenience stores, superstores, and category killers.
Relative price characteristics include discount stores, off-price retailers, factory outlets, and warehouse clubs.
Major types of retail organizations include corporate chains, voluntary chains, retailer cooperatives, and franchise organizations.
Corporate chains are commonly owned and controlled outlets that can buy in large quantities at lower prices.
Examples include Macy's and CVS.
Voluntary chains are wholesale-sponsored groups of independent retailers that engage in group buying and common merchandising.
Examples include IGA, Western Auto, and True Value.
Retailer cooperatives are a group of independent retailers that establish a joint-owned, central wholesale operation.
Examples include Ace Hardware and Associated Grocers.
Franchises are contractual associations between a franchisor and independent business people who buy the right to operate units in the franchise system.
Examples include McDonald's, Subway, and Pizza Hut.
Omni-channel retailing integrates channels for a seamless buying experience.
CarMax is an example of a company that uses omni-channel retailing.
Retail targeting and positioning involve defining and profiling the market.
Lush Fresh Handmade Cosmetics positions itself away from larger competitors by offering premium beauty products made by hand.
Major product variables include product assortment, services mix, and store atmosphere.
Adidas's flagship store in New York City focuses on offering customer experiences.
Price policy must fit the target market, competition, and economic factors.
High markup on lower volume and low markup on higher volume are pricing strategies.
Everyday low pricing (EDLP) involves charging constant, everyday low prices.
High-low pricing involves charging higher prices with frequent sales and promotions.
Promotion decisions include advertising, personal selling, sales promotion, public relations, and direct marketing.
Central business districts are located in cities and include department and specialty stores, banks, and movie theaters.
A shopping center is a group of retail businesses planned, developed, owned, and managed as a unit.
Discuss the major trends and developments in retailing.
Tighter Consumer spending
Changed consumer spending patterns
Some retailers benefit
Other retailers have tough times
Value positioning: T G I Friday offers Fridays 5, a selection of delicious drinks and appetizers, all for $5 each.
New Retail Forms, Shortening Retail Life Cycles, and Retail Convergence
Retail convergence involves the merging of consumers, producers, prices, and retailers, creating greater competition for retailers and greater difficulty differentiating offerings.
The Rise of Megaretailers
The rise of megaretailers involves the rise of mass merchandisers and specialty superstores, the formation of vertical marketing systems, and a rash of retail mergers and acquisitions.
Superior information systems
Buying power
Large selection
Growing Importance of Retail Technology
Retail technology provides better forecasts, inventory control, electronic ordering, transfer of information, scanning, online transaction processing, improved merchandise handling systems, and the ability to connect with customers.
Retail technology: "If you want to glimpse the future of retail, check out an Amazon Go store."
Green Retailing Environmentally Sustainable Practices
Store design, construction, operations
Product assortment
Recycling made easier
Package and distribution
Global Expansion of Major Retailers
Retailers with unique formats and strong brands in other countries
U.S. behind Asian and European companies in global expansion
Challenges in meeting needs of local markets
Explain the major types of wholesalers and their marketing decisions.
Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use.
Selling and promoting
Buying and assortment building
Bulk breaking
Warehousing
Transportation
Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use.
Financing
Risk bearing
Market information
Management services and advice
Selling and promoting involves the wholesaler's sales force helping the manufacturer reach many small customers at a low cost.
Buying and assortment building involves the selection of items and building of assortments needed by customers, saving the customers work.
Bulk breaking involves the wholesaler buying in large quantities and breaking into smaller lots for customers.
Warehousing involves the wholesaler holding inventory, reducing its customers' inventory cost and risk.
Transportation involves the wholesaler providing quick delivery due to its proximity to the buyer.
Financing involves the wholesaler providing credit and financing suppliers by ordering early and paying on time.
Risk bearing involves the wholesaler absorbing risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.
Market information involves the wholesaler providing information to suppliers and customers about competitors, new products, and price developments.
Management services and advice involves wholesalers helping retailers train their sales clerks, improve store layouts, and set up accounting and inventory control systems.
Wholesaling: Many of the nation's largest and most important wholesalers—like Grainger—are largely unknown to final consumers. But they are very well known and much valued by the business customers they serve.
Types of Wholesalers
Merchant wholesalers
Brokers and agents
Manufacturers' and retailers' branches and offices
Types of Wholesalers
Merchant wholesalers are the largest group of wholesalers and include:
Full-service wholesalers that provide a full set of services
Limited service wholesalers that provide few services and specialized functions
Types of Wholesalers
Brokers and agents do not take title, perform a few functions, and specialize by product line or customer type.
Brokers bring buyers and sellers together and assist in negotiations.
Agents represent buyers or sellers.
Types of Wholesalers
Manufacturers' and retailers' branches and offices are a form of wholesaling by sellers or buyers themselves, rather than through independent wholesalers.
Figure 13.2 Wholesaler Marketing Strategies
Wholesaler Marketing Decisions
Segmentation, targeting, differentiation, positioning decisions:
Size of customer
Type of customer
Need for service
Wholesaler Marketing Decisions
Marketing mix decisions
Product
Price
Promotion
Place
Trends In Wholesaling
Need for greater efficiency
Value-adding customer relationships
Increase in customer demand for services
Increase in use of technology to boost productivity
Netflix has innovated its way to the top in the distribution of video entertainment.
Netflix must keep the distribution innovation pedal to the metal.
Netflix's innovative distribution strategy: From DVDs by mail to Watch Instantly to streaming on almost any device and creating original content.
What's next?
Learning Objectives:
Explain why companies use marketing channels and discuss the functions these channels perform.
Discuss how channel members interact and how they organize to perform the work of the channel.
Identify the major channel alternatives open to a company.
Explain how companies select, motivate, and evaluate channel members.
Discuss the nature and importance of marketing logistics and integrated supply chain management.
Learning Objective:
Explain why companies use marketing channels and discuss the functions these channels perform.
Supply Chains and Value Delivery Networks (1 of 3):
Upstream partners are firms that supply raw materials, components, parts, information, finances, and expertise needed to create a product or service.
Downstream partners include the marketing channels or distribution channels that look toward the customer, including retailers and wholesalers.
Supply Chains and Value Delivery Networks (2 of 3):
Supply chain "make and sell" view includes the firm's raw materials, productive inputs, and factory capacity.
Demand chain "sense and respond" view suggests that planning starts with the needs of the target customer.
Supply Chains and Value Delivery Networks (3 of 3):
Value delivery network is composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system.
Example: In making and marketing its lines of cars, Toyota manages a huge network of people within the company plus thousands of outside suppliers, dealers, and marketing service firms that work together to deliver the brand's "Let's Go Places" and "Let's Go Beyond" promises.
The Nature and Importance of Marketing Channels (1 of 7):
Marketing channel (distribution channel) is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.
The Nature and Importance of Marketing Channels (2 of 7):
How Channel Members Add Value:
Transform the assortment of products into assortments wanted by consumers.
Bridge the major time, place, and possession gaps that separate goods and services from users.
The Nature and Importance of Marketing Channels (3 of 7):
Figure 12.1 How a Distributor Reduces the Number of Channel Transactions
The Nature and Importance of Marketing Channels (4 of 7):
How Channel Members Add Value:
Information
Promotion
Contact
Matching
Negotiation
Physical distribution
Financing
Risk taking
The Nature and Importance of Marketing Channels (5 of 7):
Number of Channel Levels:
Channel level is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.
Direct marketing channel is a marketing channel that has no intermediary levels.
Indirect marketing channel is a marketing channel containing one or more intermediary levels.
The Nature and Importance of Marketing Channels (6 of 7):
Figure 12.2 Consumer and Business Marketing Channels
The Nature and Importance of Marketing Channels (7 of 7):
Number of Channel Levels:
Channel members are connected by several types of flows:
Physical flow of products
Flow of ownership
Payment flow
Information flow
Promotion flow
Learning Objective:
Discuss how channel members interact and how they organize to perform the work of the channel.
Channel Behavior and Organization (1 of 13):
Channel Behavior:
Marketing channels consist of firms that have partnered for their common good with each member playing a specialized role.
Channel Behavior and Organization (2 of 13):
Channel Behavior:
Channel conflict refers to disagreement among channel members over goals, roles, and rewards.
Horizontal conflict
Vertical conflict
Channel Behavior and Organization (3 of 13):
Figure 12.3 Comparison of Conventional Distribution Channel with Vertical Marketing System
Channel Behavior and Organization (4 of 13):
Vertical Marketing Systems:
Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers, each separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole.
Channel Behavior and Organization (5 of 13):
Vertical Marketing Systems:
Vertical marketing systems (VMSs) provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system.
Corporate marketing systems
Contractual marketing systems
Administered marketing systems
Channel Behavior and Organization (6 of 13):
Vertical Marketing Systems:
Corporate vertical marketing systems combine successive stages of production and distribution under single ownership.
Channel Behavior and Organization (7 of 13):
Vertical Marketing Systems:
Contractual vertical marketing systems consist of independent firms at different levels of production and distribution who join together through contracts.
Channel Behavior and Organization (8 of 13):
Vertical Marketing Systems:
Franchise organization is a contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process.
Example: Through franchising, Sports Clips—where you can "Get your hair in the game"—has rapidly grown to more than 1,700 locations.
Channel Behavior and Organization (9 of 13):
Vertical Marketing Systems:
An administered vertical marketing system is a VMS that coordinates successive stages of production and distribution through the size and power of one of the parties.
Channel Behavior and Organization (10 of 13):
Horizontal Marketing Systems:
Horizontal marketing system is a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
Example: Target partners with CVS Health, who operates stores-within-stores to the benefit of all – Target, CVS, and their mutual customers.
Channel Behavior and Organization (11 of 13):
Figure 12.4 Multichannel Distribution System
Channel Behavior and Organization (12 of 13):
Multichannel Distribution Systems:
Multichannel distribution systems are systems in which a single firm sets up two or more marketing channels to reach one or more customer segments.
Channel Behavior and Organization (13 of 13):
Changing Channel Organization:
Disintermediation is the cutting out of marketing channel intermediaries by producers or the displacement of traditional resellers by new intermediaries.
Example: Toys"R"Us pioneered the superstore format that once made it the go-to place for buying toys. But after falling victim to shifts in toy market sales to big discounters like Walmart and online merchants like Amazon, the retail giant was forced to close down operations and shutter its stores.
Learning Objective: Identify the major channel alternatives open to a company.
Channel Design Decisions (1 of 8)
Designing effective marketing channels by:
Analyzing customer needs
Setting channel objectives
Identifying major channel alternatives
Evaluating those alternatives
Channel Design Decisions (2 of 8)
Steps in channel design decisions:
Analyzing consumer needs
Setting channel objectives
Identifying channel alternatives
Evaluating channel alternatives
Channel Design Decisions (3 of 8)
Analyzing Consumer Needs:
Find out what target consumers want from the channel
Identify market segments
Determine the best channels to use
Minimize the cost of meeting customer service requirements
Channel Design Decisions (4 of 8)
Setting Channel Objectives:
Determine targeted levels of customer service
Balance consumer needs against costs and customer price preferences
Channel Design Decisions (5 of 8)
Identifying Major Alternatives:
Types of intermediaries refers to channel members available to carry out channel work
Most companies face many channel member choices
Channel Design Decisions (6 of 8)
Identifying Major Alternatives:
Number of Marketing Intermediaries:
Intensive distribution
Exclusive distribution
Selective distribution
Channel Design Decisions (7 of 8)
Identifying Major Alternatives:
Responsibilities of Channel Members:
A producer and the intermediaries need to agree on:
Price policies
Conditions of sale
Territory rights
Specific services
Channel Design Decisions (8 of 8)
Evaluating Major Alternatives:
Economic criteria
Control issues
Adaptability criteria
Learning Objective: Explain how companies select, motivate, and evaluate channel members.
Channel Management Decision:
Selecting channel members
Managing channel members
Motivating channel members
Evaluating channel members
Exclusive distribution: producer gives only a limited number of dealers the exclusive right to distribute its products in their territories
Exclusive dealing: seller requires that the exclusive distribution sellers not handle competitor’s products
Exclusive territorial agreements: producer or seller limit territory
Tying agreements: dealer must take most or all of the line
Learning Objective: Discuss the nature and importance of marketing logistics and integrated supply chain management.
Marketing Logistics and Supply Chain Management (1 of 5)
Nature and Importance of Marketing Logistics:
Marketing logistics (physical distribution) involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet consumer requirements at a profit
Importance of logistics: G M has hundreds of millions of tons of finished vehicles and parts in transit, running up an annual logistics bill of about $8 billion
Marketing Logistics and Supply Chain Management (2 of 5)
Figure 12.5 Supply Chain Management
Marketing Logistics and Supply Chain Management (3 of 5)
Nature and Importance of Marketing Logistics:
Supply chain management involves managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
Goal of marketing logistics should be to provide a targeted level of customer service at the least cost
Marketing Logistics and Supply Chain Management (4 of 5)
Major Logistics Functions:
Warehousing
Inventory management
Transportation
Logistics information management
Marketing Logistics and Supply Chain Management (5 of 5)
Integrated Logistics Management:
Recognition that providing customer service and trimming distribution costs requires teamwork internally and externally
Oracle’s supply chain management software solutions help companies to “gain sustainable advantage and drive innovation by transformi
Retailing includes selling products or services directly to consumers for personal use.
Retailers are businesses whose sales come primarily from retailing.
Shopper Marketing focuses on turning shoppers into buyers at the point of sale.
Omni-channel retailing creates a seamless cross-channel buying experience.
Digital technologies have caused a shift in how and where people buy.
Retailers must adopt omni-channel retailing to integrate in-store, online, and mobile shopping.
Types of retailers include self-service, limited service, and full service.
Product line classifications include specialty stores, department stores, convenience stores, superstores, and category killers.
Relative price characteristics include discount stores, off-price retailers, factory outlets, and warehouse clubs.
Major types of retail organizations include corporate chains, voluntary chains, retailer cooperatives, and franchise organizations.
Corporate chains are commonly owned and controlled outlets that can buy in large quantities at lower prices.
Examples include Macy's and CVS.
Voluntary chains are wholesale-sponsored groups of independent retailers that engage in group buying and common merchandising.
Examples include IGA, Western Auto, and True Value.
Retailer cooperatives are a group of independent retailers that establish a joint-owned, central wholesale operation.
Examples include Ace Hardware and Associated Grocers.
Franchises are contractual associations between a franchisor and independent business people who buy the right to operate units in the franchise system.
Examples include McDonald's, Subway, and Pizza Hut.
Omni-channel retailing integrates channels for a seamless buying experience.
CarMax is an example of a company that uses omni-channel retailing.
Retail targeting and positioning involve defining and profiling the market.
Lush Fresh Handmade Cosmetics positions itself away from larger competitors by offering premium beauty products made by hand.
Major product variables include product assortment, services mix, and store atmosphere.
Adidas's flagship store in New York City focuses on offering customer experiences.
Price policy must fit the target market, competition, and economic factors.
High markup on lower volume and low markup on higher volume are pricing strategies.
Everyday low pricing (EDLP) involves charging constant, everyday low prices.
High-low pricing involves charging higher prices with frequent sales and promotions.
Promotion decisions include advertising, personal selling, sales promotion, public relations, and direct marketing.
Central business districts are located in cities and include department and specialty stores, banks, and movie theaters.
A shopping center is a group of retail businesses planned, developed, owned, and managed as a unit.
Discuss the major trends and developments in retailing.
Tighter Consumer spending
Changed consumer spending patterns
Some retailers benefit
Other retailers have tough times
Value positioning: T G I Friday offers Fridays 5, a selection of delicious drinks and appetizers, all for $5 each.
New Retail Forms, Shortening Retail Life Cycles, and Retail Convergence
Retail convergence involves the merging of consumers, producers, prices, and retailers, creating greater competition for retailers and greater difficulty differentiating offerings.
The Rise of Megaretailers
The rise of megaretailers involves the rise of mass merchandisers and specialty superstores, the formation of vertical marketing systems, and a rash of retail mergers and acquisitions.
Superior information systems
Buying power
Large selection
Growing Importance of Retail Technology
Retail technology provides better forecasts, inventory control, electronic ordering, transfer of information, scanning, online transaction processing, improved merchandise handling systems, and the ability to connect with customers.
Retail technology: "If you want to glimpse the future of retail, check out an Amazon Go store."
Green Retailing Environmentally Sustainable Practices
Store design, construction, operations
Product assortment
Recycling made easier
Package and distribution
Global Expansion of Major Retailers
Retailers with unique formats and strong brands in other countries
U.S. behind Asian and European companies in global expansion
Challenges in meeting needs of local markets
Explain the major types of wholesalers and their marketing decisions.
Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use.
Selling and promoting
Buying and assortment building
Bulk breaking
Warehousing
Transportation
Wholesaling includes all activities involved in selling goods and services to those buying for resale or business use.
Financing
Risk bearing
Market information
Management services and advice
Selling and promoting involves the wholesaler's sales force helping the manufacturer reach many small customers at a low cost.
Buying and assortment building involves the selection of items and building of assortments needed by customers, saving the customers work.
Bulk breaking involves the wholesaler buying in large quantities and breaking into smaller lots for customers.
Warehousing involves the wholesaler holding inventory, reducing its customers' inventory cost and risk.
Transportation involves the wholesaler providing quick delivery due to its proximity to the buyer.
Financing involves the wholesaler providing credit and financing suppliers by ordering early and paying on time.
Risk bearing involves the wholesaler absorbing risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.
Market information involves the wholesaler providing information to suppliers and customers about competitors, new products, and price developments.
Management services and advice involves wholesalers helping retailers train their sales clerks, improve store layouts, and set up accounting and inventory control systems.
Wholesaling: Many of the nation's largest and most important wholesalers—like Grainger—are largely unknown to final consumers. But they are very well known and much valued by the business customers they serve.
Types of Wholesalers
Merchant wholesalers
Brokers and agents
Manufacturers' and retailers' branches and offices
Types of Wholesalers
Merchant wholesalers are the largest group of wholesalers and include:
Full-service wholesalers that provide a full set of services
Limited service wholesalers that provide few services and specialized functions
Types of Wholesalers
Brokers and agents do not take title, perform a few functions, and specialize by product line or customer type.
Brokers bring buyers and sellers together and assist in negotiations.
Agents represent buyers or sellers.
Types of Wholesalers
Manufacturers' and retailers' branches and offices are a form of wholesaling by sellers or buyers themselves, rather than through independent wholesalers.
Figure 13.2 Wholesaler Marketing Strategies
Wholesaler Marketing Decisions
Segmentation, targeting, differentiation, positioning decisions:
Size of customer
Type of customer
Need for service
Wholesaler Marketing Decisions
Marketing mix decisions
Product
Price
Promotion
Place
Trends In Wholesaling
Need for greater efficiency
Value-adding customer relationships
Increase in customer demand for services
Increase in use of technology to boost productivity
Netflix has innovated its way to the top in the distribution of video entertainment.
Netflix must keep the distribution innovation pedal to the metal.
Netflix's innovative distribution strategy: From DVDs by mail to Watch Instantly to streaming on almost any device and creating original content.
What's next?
Learning Objectives:
Explain why companies use marketing channels and discuss the functions these channels perform.
Discuss how channel members interact and how they organize to perform the work of the channel.
Identify the major channel alternatives open to a company.
Explain how companies select, motivate, and evaluate channel members.
Discuss the nature and importance of marketing logistics and integrated supply chain management.
Learning Objective:
Explain why companies use marketing channels and discuss the functions these channels perform.
Supply Chains and Value Delivery Networks (1 of 3):
Upstream partners are firms that supply raw materials, components, parts, information, finances, and expertise needed to create a product or service.
Downstream partners include the marketing channels or distribution channels that look toward the customer, including retailers and wholesalers.
Supply Chains and Value Delivery Networks (2 of 3):
Supply chain "make and sell" view includes the firm's raw materials, productive inputs, and factory capacity.
Demand chain "sense and respond" view suggests that planning starts with the needs of the target customer.
Supply Chains and Value Delivery Networks (3 of 3):
Value delivery network is composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system.
Example: In making and marketing its lines of cars, Toyota manages a huge network of people within the company plus thousands of outside suppliers, dealers, and marketing service firms that work together to deliver the brand's "Let's Go Places" and "Let's Go Beyond" promises.
The Nature and Importance of Marketing Channels (1 of 7):
Marketing channel (distribution channel) is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.
The Nature and Importance of Marketing Channels (2 of 7):
How Channel Members Add Value:
Transform the assortment of products into assortments wanted by consumers.
Bridge the major time, place, and possession gaps that separate goods and services from users.
The Nature and Importance of Marketing Channels (3 of 7):
Figure 12.1 How a Distributor Reduces the Number of Channel Transactions
The Nature and Importance of Marketing Channels (4 of 7):
How Channel Members Add Value:
Information
Promotion
Contact
Matching
Negotiation
Physical distribution
Financing
Risk taking
The Nature and Importance of Marketing Channels (5 of 7):
Number of Channel Levels:
Channel level is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.
Direct marketing channel is a marketing channel that has no intermediary levels.
Indirect marketing channel is a marketing channel containing one or more intermediary levels.
The Nature and Importance of Marketing Channels (6 of 7):
Figure 12.2 Consumer and Business Marketing Channels
The Nature and Importance of Marketing Channels (7 of 7):
Number of Channel Levels:
Channel members are connected by several types of flows:
Physical flow of products
Flow of ownership
Payment flow
Information flow
Promotion flow
Learning Objective:
Discuss how channel members interact and how they organize to perform the work of the channel.
Channel Behavior and Organization (1 of 13):
Channel Behavior:
Marketing channels consist of firms that have partnered for their common good with each member playing a specialized role.
Channel Behavior and Organization (2 of 13):
Channel Behavior:
Channel conflict refers to disagreement among channel members over goals, roles, and rewards.
Horizontal conflict
Vertical conflict
Channel Behavior and Organization (3 of 13):
Figure 12.3 Comparison of Conventional Distribution Channel with Vertical Marketing System
Channel Behavior and Organization (4 of 13):
Vertical Marketing Systems:
Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers, each separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole.
Channel Behavior and Organization (5 of 13):
Vertical Marketing Systems:
Vertical marketing systems (VMSs) provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system.
Corporate marketing systems
Contractual marketing systems
Administered marketing systems
Channel Behavior and Organization (6 of 13):
Vertical Marketing Systems:
Corporate vertical marketing systems combine successive stages of production and distribution under single ownership.
Channel Behavior and Organization (7 of 13):
Vertical Marketing Systems:
Contractual vertical marketing systems consist of independent firms at different levels of production and distribution who join together through contracts.
Channel Behavior and Organization (8 of 13):
Vertical Marketing Systems:
Franchise organization is a contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process.
Example: Through franchising, Sports Clips—where you can "Get your hair in the game"—has rapidly grown to more than 1,700 locations.
Channel Behavior and Organization (9 of 13):
Vertical Marketing Systems:
An administered vertical marketing system is a VMS that coordinates successive stages of production and distribution through the size and power of one of the parties.
Channel Behavior and Organization (10 of 13):
Horizontal Marketing Systems:
Horizontal marketing system is a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
Example: Target partners with CVS Health, who operates stores-within-stores to the benefit of all – Target, CVS, and their mutual customers.
Channel Behavior and Organization (11 of 13):
Figure 12.4 Multichannel Distribution System
Channel Behavior and Organization (12 of 13):
Multichannel Distribution Systems:
Multichannel distribution systems are systems in which a single firm sets up two or more marketing channels to reach one or more customer segments.
Channel Behavior and Organization (13 of 13):
Changing Channel Organization:
Disintermediation is the cutting out of marketing channel intermediaries by producers or the displacement of traditional resellers by new intermediaries.
Example: Toys"R"Us pioneered the superstore format that once made it the go-to place for buying toys. But after falling victim to shifts in toy market sales to big discounters like Walmart and online merchants like Amazon, the retail giant was forced to close down operations and shutter its stores.
Learning Objective: Identify the major channel alternatives open to a company.
Channel Design Decisions (1 of 8)
Designing effective marketing channels by:
Analyzing customer needs
Setting channel objectives
Identifying major channel alternatives
Evaluating those alternatives
Channel Design Decisions (2 of 8)
Steps in channel design decisions:
Analyzing consumer needs
Setting channel objectives
Identifying channel alternatives
Evaluating channel alternatives
Channel Design Decisions (3 of 8)
Analyzing Consumer Needs:
Find out what target consumers want from the channel
Identify market segments
Determine the best channels to use
Minimize the cost of meeting customer service requirements
Channel Design Decisions (4 of 8)
Setting Channel Objectives:
Determine targeted levels of customer service
Balance consumer needs against costs and customer price preferences
Channel Design Decisions (5 of 8)
Identifying Major Alternatives:
Types of intermediaries refers to channel members available to carry out channel work
Most companies face many channel member choices
Channel Design Decisions (6 of 8)
Identifying Major Alternatives:
Number of Marketing Intermediaries:
Intensive distribution
Exclusive distribution
Selective distribution
Channel Design Decisions (7 of 8)
Identifying Major Alternatives:
Responsibilities of Channel Members:
A producer and the intermediaries need to agree on:
Price policies
Conditions of sale
Territory rights
Specific services
Channel Design Decisions (8 of 8)
Evaluating Major Alternatives:
Economic criteria
Control issues
Adaptability criteria
Learning Objective: Explain how companies select, motivate, and evaluate channel members.
Channel Management Decision:
Selecting channel members
Managing channel members
Motivating channel members
Evaluating channel members
Exclusive distribution: producer gives only a limited number of dealers the exclusive right to distribute its products in their territories
Exclusive dealing: seller requires that the exclusive distribution sellers not handle competitor’s products
Exclusive territorial agreements: producer or seller limit territory
Tying agreements: dealer must take most or all of the line
Learning Objective: Discuss the nature and importance of marketing logistics and integrated supply chain management.
Marketing Logistics and Supply Chain Management (1 of 5)
Nature and Importance of Marketing Logistics:
Marketing logistics (physical distribution) involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet consumer requirements at a profit
Importance of logistics: G M has hundreds of millions of tons of finished vehicles and parts in transit, running up an annual logistics bill of about $8 billion
Marketing Logistics and Supply Chain Management (2 of 5)
Figure 12.5 Supply Chain Management
Marketing Logistics and Supply Chain Management (3 of 5)
Nature and Importance of Marketing Logistics:
Supply chain management involves managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
Goal of marketing logistics should be to provide a targeted level of customer service at the least cost
Marketing Logistics and Supply Chain Management (4 of 5)
Major Logistics Functions:
Warehousing
Inventory management
Transportation
Logistics information management
Marketing Logistics and Supply Chain Management (5 of 5)
Integrated Logistics Management:
Recognition that providing customer service and trimming distribution costs requires teamwork internally and externally
Oracle’s supply chain management software solutions help companies to “gain sustainable advantage and drive innovation by transformi
