ulsLrlbuLlon Channels

and Supply Chaln ManagemenL

MC1232 lecLure 11b
122
Learnlng Coals
1 Lxplaln why companles use dlsLrlbuLlon channels and dlscuss
Lhe funcLlons LhaL Lhese channels perform
2 ulscuss how channel members lnLeracL and how Lhey
organlze Lo perform Lhe work of Lhe channel
3 ldenLlfy Lhe ma[or channel alLernaLlves open Lo a company
4 Lxplaln how companles selecL moLlvaLe and evaluaLe
channel members
3 ulscuss Lhe naLure and lmporLance of physlcal dlsLrlbuLlon
123
Learnlng Coals
1 Lxplaln why companles use dlsLrlbuLlon channels and dlscuss
Lhe funcLlons LhaL Lhese channels perform
2 ulscuss how channel members lnLeracL and how Lhey
organlze Lo perform Lhe work of Lhe channel
3 ldenLlfy Lhe ma[or channel alLernaLlves open Lo a company
4 Lxplaln how companles selecL moLlvaLe and evaluaLe
channel members
3 ulscuss Lhe naLure and lmporLance of physlcal dlsLrlbuLlon
124
Supply Chalns and Lhe value uellvery
neLwork
W A supply chaln conslsLs of upsLream and
downsLream parLners
W MarkeLers have LradlLlonally focused on Lhe
downsLream slde
Supply chaln makeandsell vlew
uemand chaln senseandrespondvlew
W value uellvery neLwork
1he neLwork made up of Lhe company suppllers
dlsLrlbuLors and ulLlmaLely cusLomers who parLner" wlLh
each oLher Lo lmprove Lhe performance of Lhe enLlre
sysLem
123
naLure lmporLance of ulsLrlbuLlon
Channels
W MarkeLlng channel
SeL of lnLerdependenL organlzaLlons lnvolved ln
Lhe process of maklng a producL or servlce
avallable for use or consumpLlon by Lhe consumer
or buslness user
126
W Channel cholces affecL oLher declslons ln Lhe
markeLlng mlx
rlclng markeLlng communlcaLlons
W A sLrong dlsLrlbuLlon sysLem can be a
compeLlLlve advanLage
W Channel declslons lnvolve longLerm
commlLmenLs Lo oLher flrms
naLure lmporLance of
MarkeLlng Channels
127
naLure lmporLance of
MarkeLlng Channels
W Pow Channel Members Add value
lewer conLacLs
MaLch producL assorLmenL demand wlLh supply
8rldge Llme place and possesslon gaps LhaL separaLe
producLs from users
128
naLure lmporLance of MarkeLlng
Channels
W number of Channel Levels
1he number of lnLermedlary levels lndlcaLes Lhe
lengLh of a markeLlng channel
W ulrecL Channels
W lndlrecL Channels
roducers lose more conLrol and face greaLer
channel complexlLy as addlLlonal channel levels
are added
129
Learnlng Coals
1 Lxplaln why companles use dlsLrlbuLlon channels and dlscuss
Lhe funcLlons LhaL Lhese channels perform
2 ulscuss how channel members lnLeracL and how Lhey
organlze Lo perform Lhe work of Lhe channel
3 ldenLlfy Lhe ma[or channel alLernaLlves open Lo a company
4 Lxplaln how companles selecL moLlvaLe and evaluaLe
channel members
3 ulscuss Lhe naLure and lmporLance of physlcal dlsLrlbuLlon
1210
W Channel ConfllcL
Cccurs when channel members dlsagree on roles
acLlvlLles or rewards
1ypes of ConfllcL
W PorlzonLal confllcL occurs among flrms aL Lhe same
channel level
W verLlcal confllcL occurs among flrms aL dlfferenL
channel levels
Channel 8ehavlour and CrganlzaLlon
1211
W ConvenLlonal ulsLrlbuLlon Channels
ConslsL of one or more lndependenL channel members
Lach seeklng Lo maxlmlze lLs own proflLs
CfLen resulL ln poor performance
W verLlcal MarkeLlng SysLems
roducers wholesalers and reLallers acL as a unlfled
sysLem
Cne channel member owns has conLracLs wlLh or has so
much power LhaL Lhey all cooperaLe
8eneflLs should lnclude greaLer conLrol less confllcL and
economles of scale due Lo Lhe slze of Lhe sysLem
Channel 8ehavlour and CrganlzaLlon
1212
Channel 8ehavlour and CrganlzaLlon
W verLlcal MarkeL SysLem
(vMS)
cotpotote vM5
coottoctool vM5
AJmlolsteteJ vM5
W lnLegraLes successlve sLages
of producLlon and
dlsLrlbuLlon under slngle
ownershlp channel
ownershlp ls esLabllshed
Lhrough common
ownershlp
W CoordlnaLlon and confllcL
Lhrough regular
organlzaLlonal channels
1213
Channel 8ehavlour and CrganlzaLlon
W verLlcal MarkeL SysLem
(vMS)
cotpotote vM5
coottoctool vM5
AJmlolsteteJ vM5
W lndlvldual flrms who [oln
Lhrough conLracLs
W lranchlse organlzaLlons
ManufacLurersponsored
reLaller franchlse sysLem
ManufacLurersponsored
wholesaler franchlse sysLem
Servlceflrmsponsored
reLaller franchlse sysLem
1214
Channel 8ehavlour and CrganlzaLlon
W verLlcal MarkeL SysLem
(vMS)
cotpotote vM5
coottoctool vM5
AJmlolsteteJ vM5
W Leadershlp Lhrough Lhe
slze and power of
domlnanL channel
members
W Leadershlp could be
manufacLurer or reLaller
1213
W PorlzonLal MarkeLlng SysLems
Companles aL Lhe same level work LogeLher wlLh channel
members
W MulLlchannel ulsLrlbuLlon SysLems
Also called hybrld markeLlng channels
Cccurs when a flrm uses Lwo or more markeLlng channels
W Changlng Channel CrganlzaLlon
ulslnLermedlaLlon
Channel 8ehavlour and CrganlzaLlon
1216
Learnlng Coals
1 Lxplaln why companles use dlsLrlbuLlon channels and dlscuss
Lhe funcLlons LhaL Lhese channels perform
2 ulscuss how channel members lnLeracL and how Lhey
organlze Lo perform Lhe work of Lhe channel
3 ldenLlfy Lhe ma[or channel alLernaLlves open Lo a company
4 Lxplaln how companles selecL moLlvaLe and evaluaLe
channel members
3 ulscuss Lhe naLure and lmporLance of physlcal dlsLrlbuLlon
1217
W SLep 1 Analyzlng Consumer needs
CosL and feaslblllLy of meeLlng needs musL be consldered
W SLep 2 SeLLlng Channel Cb[ecLlves
SeL channel ob[ecLlves ln Lerms of LargeLed level of
cusLomer servlce
Many facLors lnfluence channel ob[ecLlves
W naLure of Lhe company (slze/flnanclal poslLlon) and lLs producLs
W MarkeLlng lnLermedlarles
W CompeLlLlon
W MarkeLlng envlronmenL
Channel ueslgn ueclslons
1218
Channel ueslgn ueclslons
W SLep 3 ldenLlfylng Ma[or AlLernaLlves
1ypes of lnLermedlarles
W Company sales force manufacLurer's agency lndusLrlal
dlsLrlbuLors
number of markeLlng lnLermedlarles
W lnLenslve selecLlve and excluslve dlsLrlbuLlon
8esponslblllLles of channel members
1219
Channel ueslgn ueclslons
W SLep 4 LvaluaLlng Ma[or AlLernaLlves
Lconomlc crlLerla
ConLrol lssues
AdapLlve crlLerla
1220
Learnlng Coals
1 Lxplaln why companles use dlsLrlbuLlon channels and dlscuss
Lhe funcLlons LhaL Lhese channels perform
2 ulscuss how channel members lnLeracL and how Lhey
organlze Lo perform Lhe work of Lhe channel
3 ldenLlfy Lhe ma[or channel alLernaLlves open Lo a company
4 Lxplaln how companles selecL moLlvaLe and evaluaLe
channel members
3 ulscuss Lhe naLure and lmporLance of physlcal dlsLrlbuLlon
1221
Channel ManagemenL ueclslons
W 5electloq cboooel
membets
W Moooqloq ooJ
motlvotloq cboooel
membets
W volootloq cboooel
membets
W Jhlch characLerlsLlcs
are lmporLanL?
?ears ln buslness
Llnes carrled
CrowLh and proflL record
CooperaLlveness and
repuLaLlon
1ype of cusLomer
LocaLlon
1222
Channel ManagemenL ueclslons
W 5electloq cboooel
membets
W Moooqloq ooJ
motlvotloq cboooel
membets
W volootloq cboooel
membets
W arLner relaLlonshlp
managemenL (8M) for
longLerm parLnershlps
W SofLware avallable Lo
coordlnaLe members
1223
Channel ManagemenL ueclslons
W 5electloq cboooel
membets
W Moooqloq ooJ
motlvotloq cboooel
membets
W volootloq cboooel
membets
W Check channel
performance of
Sales
lnvenLory
CusLomer dellvery
romoLlon and Lralnlng
CusLomer servlce
1224
ubllc ollcy and
ulsLrlbuLlon ueclslons
W xcloslve Jeolloq Sellers cannoL demand excluslvlLy for
Lhelr producL from resellers lf lL can be proven LhaL lL wlll
lessen compeLlLlon or creaLe a monopoly
W xcloslve tettltotles Sellers may granL excluslve
LerrlLorles buL may have Lrouble demandlng LhaL
resellers deal only wlLhln LhaL excluslve LerrlLory
W @loq oqteemeots demandlng LhaL resellers buy and/or
sLock all producLs wlLhln a producL llne as a condlLlon of
dolng buslness noL lllegal buL a source of much channel
confllcL
1223
ubllc ollcy and
ulsLrlbuLlon ueclslons
W eolets tlqbts roducers are free Lo selecL dealers
buL are llmlLed ln Lhelr ablllLy Lo LermlnaLe dealers
Lhey musL show cause and cannoL drop dealers who
refuse Lo parLlclpaLe ln doubLful legal arrangemenLs
W 5ootces of soppl LLhlcal concerns over supply
sources from counLrles wlLh human rlghLs vlolaLlons
or use Lhe proceeds Lo fund armed confllcL
1226
Learnlng Coals
1 Lxplaln why companles use dlsLrlbuLlon channels and dlscuss
Lhe funcLlons LhaL Lhese channels perform
2 ulscuss how channel members lnLeracL and how Lhey
organlze Lo perform Lhe work of Lhe channel
3 ldenLlfy Lhe ma[or channel alLernaLlves open Lo a company
4 Lxplaln how companles selecL moLlvaLe and evaluaLe
channel members