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Marketing Channels, Logistics &

Supply Chain Management

Intro to Marketing

Chapter 13

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Marketing Channels

(Distribution Channels) System of marketing institutions that

promote the physical flow of goodsand services, along with ownershiptitle, from producer to consumer orbusiness user; also called distribution

channel Moving goods and services from producers

to customers

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Types of Channels

- Producer Consumero direct channelo by-passes marketing intermediarieso component of direct selling

- Producer-Retailer-Consumer- Producer-Wholesaler-Retailer-Consumer

o traditional channel

- Producer-Agent-Wholesaler-Retailer-Consumer

May substitute Consumerfor Business User

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Types of Channels

Producer Consumer

Producer

Producer

Consumer

Consumer

Retailer

RetailerWholesaler

Producer ConsumerRetailerWholesalerAgent/Broker

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Dual Distribution

Movement of products throughtwo or more distribution channelsto reach the same target market

IBM: An Exampleof a Firm That

Uses DualDistribution to SellIts PersonalComputers

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Reverse Channels

Channels designed to return goods totheir producers.

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Channel Strategy Decisions

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Determining Distribution Intensity Intensive Distribution

- used for convenience goods- saturation coverage of the market

Selective Distribution- a firm chooses only a limited number of

retailer in a market area to handle itsproduct.

- cooperative advertising is frequently used

Exclusive Distribution- specialty goods- one wholesaler or retailer in a geographic

region.

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Channel Management & Leadership

Historically, producers orwholesalers served as channelcaptains, over small retailers.

However, many retailers increasinglyare taking on the role of channelcaptain as large chains assume

traditional wholesaling functions.

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Logistics And Supply Chain Management

Process of coordinating the flow ofinformation, goods, and servicesamong members of the distributionchannel.

Physical Distribution

Activities to achieve efficientmovement of finished goods from theend of the production line to theconsumer. Transportation is part of it.

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RFID

Radio FrequencyIdentification

Technology that uses a tiny chip with

identification. Information can be read from a distance

by a radio frequency scanner.

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Physical Distribution

Includes: transportation, warehousing,materials handling, protectivepackaging, inventory control, order

processing, and customer service.

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Customer Service

Standards

The quality of servicethat the firm provides

its customers. Its a powerful tool for

influencing buyers

perception of overallquality.

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Transportation costs are the largest expenseitem in physical distribution and is a key incustomer service.

40%-60% of distribution cost of business What has Deregulation done to transportation?

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Classes for Carriers

All forms of transportation. Ex: trucks

Common carriers are for-hire carriers who servethe general public.

Contract carriers contract to work for onlyspecific customers and in only one industry.

Private carriers are not-for-hire carriers who

transport for only one specific firm.

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Major

Transportation

Modes

Railroad most frequently used & mostefficient for bulk commodities over long

distances. Motor carriers fast and flexible Water carriers slow but inexpensive Pipelines low-maintenance, dependable,

and efficient Air freight fastest but very expensive

Intermodal piggyback, fishyback, birdyback

W h i

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Warehousing Two types- Storage and Distribution

Automated warehouses

Inventory control systems some firms utilizejust-in-time management

Order processing is another physical distribution

function Protective packaging and materials handling.