Marketing Management

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Marketing Management

• Distribution Strategy

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Final Exam

• Date Thursday August 12th, 2004
• Time 700 AM - 1000 PM
• Location TBC
• Conflicts?
• Come see me separately or contact the MBA office

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Why Use Mktg Intermediaries?

• Create greater efficiencies/Economies of scale
• Transform producers narrow product assortment
  into broad assortment wanted by consumers
• Match supply with demand
• Whether it is products or services Mktg
  Intermediaries help bring them to market

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Distribution Channel Functions

• Information
• Promotion
• Contact
• Matching offer
• Negotiation
• Physical distribution
• Financing
• Risk taking

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Number of Channel Levels

• Channel Level
• A layer of intermediaries that performs some work
  in bringing the product and its ownership closer
  to the final buyer
• Producer and Final Consumer in every channel
• Flows between channel levels
• Physical
• Ownership
• Payment
• Information
• Promotion

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Number of Channel Levels

• Direct Marketing Channel
• Company sells directly to consumers and has NO
  intermediaries
• Indirect Marketing Channels
• Company sells through one or more intermediaries
• More levels increase customer contacts
• Fewer levels - more control and less complex

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Conventional Channels of Distribution of Consumer
Goods
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Conventional Channels of Distribution of
Organizational Goods
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Channel Behaviour

• Channels are complex behavioural systems
• Channels should be managed so they deliver on the
  needs and wants of the end consumer
• Interaction between people and companies to
  achieve their own goals
• All members interdependent
• Each member a specialist
• Conflict is inevitable
• Horizontal and vertical
• Good conflict resolution can occur as each
  members role and goals are clearly defined

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Conventional vs. Vertical Marketing
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Marketing SystemsVertical and Horizontal
Vertical Marketing
Horizontal Marketing
Systems
Systems
Corporate VMS
Contractual VMS
Wholesaler-sponsored
voluntary chains
Retailer cooperative
Franchise organizations
Administered VMS
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Hybrid Marketing Channel
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Changing Channel Organization

• Disintermediation
• Bypassing and going direct
• Radical new channels
• Traditional intermediaries dropping by wayside
• Need to add value
• Causes channel conflict

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Channel Design Decisions

• Analyzing consumer characteristics/service needs
• Analyzing product characteristics
• Intermediary characteristics
• Competitor characteristics
• Company characteristics
• Environmental characteristics
• Also
• Distribution coverage required
• Degree of control desired
• Total distribution costs
• Channel flexibility

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Channel ManagementSelecting Channel Members

• What makes the best?
• Years in business
• Other lines carried
• Growth and profit record
• Cooperation and reputation
• Potential for long-term relationship
• Sales force size and quality
• Retail customers, location, and growth potential

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Channel ManagementMotivating Channel Members

• First sell intermediaries
• Why is your product the best so they can go out
  an sell it accordingly
• Use positive motivation
• Incentives if they sell effectively
• May use negative motivation
• Threatening not a common practice
• Long-term partnerships
• Are the key to managing the business and keeping
  informed

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Channel ManagementEvaluating Channel Members

• Measure Performance Against Standards
• Sales quotas, Average inventory levels, Customer
  delivery time, Treatment of damaged or lost
  goods, Cooperation on promotion and training,
  Customer service levels
• Recognize and reward performers
• Motivate the ones you can
• Help the ones in trouble
• Replace those with issues

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Nature and Importance of Physical Distribution
and Mktg Logistics

• Planning, implementing, and controlling the flow
  from origin to consumption meeting customer
  requirements at a profit
• Right product, right customer, right place, right
  time
• Market logistics thinking
• Manage supply and demand chains
• Logistics System Goals
• Provide targeted level of service at least cost
• Research customer importance of services
• Set service levels for each segment
• Profit objective over sales (?? Is this really
  true??)

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Major Logistics Functions

• Order processing
• Warehousing
• Storage warehouses, distribution centres,
  automated warehouses
• Inventory management
• When and how much?
• Just-in-time (JIT)
• Transportation of goods
• Anything I have missed???

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Integrated Logistics Management

• Cross-functional teamwork inside the company
• Build channel partnerships
• Cross-functional, cross-company teams
• Shared projects
• Information sharing
• Continuous inventory replenishment systems
• Response-based distribution systems

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Integrated Logistics Management

• Third party logistics
• Often do it more efficiently and at lower cost
• Frees company to focus on core business
• Increasingly complex environment

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Retailing

• All activities involved in selling goods or
  services directly to final consumers for their
  personal, non-business use
• Most via retail stores
• Non-store continuing to grow

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Store Retailing Classifications
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Store Retailing Classifications Retail
Organizations
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Store Retailing Classifications Retail
Organizations
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Retailer Marketing Decisions
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The Future of Retailing

• New retail forms and shortening retail life
  cycles
• Wheel of retailing
• Growth of non-store retailing
• Canadian retailers slow to e-tail
• Not a threat, Lack of senior commitment, Order
  fulfillment challenge, Lack of resources,
  Measuring performance
• Increasing intertype competition
• Rise of mega-retailers
• Growing importance of retail technology
• Retail stores as communities centrals, return
  to more personal interaction

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Wholesaling

• All activities involved in selling goods and
  services to those buying for resale or business
  use
• Better at performing one of the channel functions

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Wholesaler Marketing Decisions
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Trends in Wholesaling

• Fierce resistance to price increases
• Improve services and reduce costs
• Competition
• Consolidation
• More services
• Blurred distinction between large and small