channels of marketing
TRANSCRIPT
Chapter 12 Version 6e 1©2002 South-Western
chapter
Marketing Channels andMarketing Channels andSupply Chain ManagementSupply Chain Management
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Prepared byPrepared byDeborah BakerDeborah Baker
Texas Christian UniversityTexas Christian University
Chapter 12 Version 6e 2©2002 South-Western
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Learning ObjectivesLearning Objectives
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1.1. Explain what a marketing channel is and Explain what a marketing channel is and why intermediaries are needed.why intermediaries are needed.
2. 2. Define the types of channel intermediaries Define the types of channel intermediaries and describe their functions and activities.and describe their functions and activities.
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Learning Objectives (continued)Learning Objectives (continued)
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3. Describe the channel structures for 3. Describe the channel structures for consumer and business-to-business consumer and business-to-business products and discuss alternative channel products and discuss alternative channel arrangements.arrangements.
4.4. Define supply chain management and Define supply chain management and discuss its benefits.discuss its benefits.
5. 5. Discuss the issues that influence channel Discuss the issues that influence channel strategy.strategy.
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Learning Objectives (continued)Learning Objectives (continued)
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6. 6. Explain channel leadership, conflict, and Explain channel leadership, conflict, and partnering.partnering.
7.7. Describe the logistical components of the Describe the logistical components of the supply chain.supply chain.
8.8. Discuss the concept of balancing logistics Discuss the concept of balancing logistics service and cost.service and cost.
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Learning Objectives (continued)Learning Objectives (continued)
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9.9. Discuss new technology and emerging Discuss new technology and emerging trends in supply chain management.trends in supply chain management.
10.10. Discuss channels and distribution Discuss channels and distribution decisions in global markets.decisions in global markets.
11.11. Identify the special problems and Identify the special problems and opportunities associated with distribution opportunities associated with distribution in service organizations.in service organizations.
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Learning Objective Learning Objective 11
Explain what a marketing channel Explain what a marketing channel is and why intermediaries are needed.is and why intermediaries are needed.
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Marketing ChannelsMarketing Channels11
MarketingChannel
MarketingChannel
SupplyChain
SupplyChain
A set of interdependent organizations that ease the transfer of ownership as
products move from producer to business user or consumer.
A set of interdependent organizations that ease the transfer of ownership as
products move from producer to business user or consumer.
The connected chain of all the business entities, both internal and external to the
company, that perform or support the logistics function.
The connected chain of all the business entities, both internal and external to the
company, that perform or support the logistics function.
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Marketing Channel FunctionsMarketing Channel Functions
Specialization andDivision of Labor
Specialization andDivision of Labor
ChannelsFulfillThree
ImportantFunctions
ChannelsFulfillThree
ImportantFunctions
OvercomingDiscrepanciesOvercoming
Discrepancies
Providing ContactEfficiency
Providing ContactEfficiency
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Specialization and Specialization and Division of LaborDivision of Labor
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Provides economies of scale
Aids producers who lack resources to market directly
Builds good relationships with customers
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Overcoming DiscrepanciesOvercoming Discrepancies
Discrepancyof
Quantity
Discrepancyof
Quantity
Discrepancyof
Assortment
Discrepancyof
Assortment
The difference between the amount of product produced and the
amount an end user wants to buy.
The difference between the amount of product produced and the
amount an end user wants to buy.
The lack of all the items a customer needs to receive full satisfaction from a product or
products.
The lack of all the items a customer needs to receive full satisfaction from a product or
products.
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Overcoming DiscrepanciesOvercoming Discrepancies
TemporalDiscrepancy
TemporalDiscrepancy
SpatialDiscrepancy
SpatialDiscrepancy
A situation that occurs when a product is produced but a
customer is not ready to buy it.
A situation that occurs when a product is produced but a
customer is not ready to buy it.
The difference between the location of a producer and the
location of widely scattered markets.
The difference between the location of a producer and the
location of widely scattered markets.
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Contact EfficiencyContact EfficiencyZenithZenith SonySony RCARCA ToshibaToshiba
ZenithZenith SonySony RCARCA ToshibaToshiba
Circuit CityCircuit CityCircuit CityCircuit City
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Learning Objective Learning Objective 22
Define the types of channel Define the types of channel intermediaries and describe their intermediaries and describe their
functions and activities.functions and activities.
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Channel IntermediariesChannel Intermediaries
RetailerRetailer
MerchantWholesalerMerchant
Wholesaler
Agents andBrokers
Agents andBrokers
A channel intermediary that sells mainly to customers.
A channel intermediary that sells mainly to customers.
An institution that buys goods from manufacturers, takes title
to goods, stores them, and resells and ships them.
An institution that buys goods from manufacturers, takes title
to goods, stores them, and resells and ships them.
Wholesaling intermediaries who facilitate the sale of a product by representing channel member.
Wholesaling intermediaries who facilitate the sale of a product by representing channel member.
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Channel IntermediariesChannel Intermediaries
RetailersRetailersRetailersRetailers
Merchant Merchant WholesalersWholesalersMerchant Merchant
WholesalersWholesalers
Agents Agents andand
BrokersBrokers
Agents Agents andand
BrokersBrokers
Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods
Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods
Do NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to Goods
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Channel Functions Channel Functions Performed by IntermediariesPerformed by Intermediaries
Contacting/Promotion
Negotiating
Risk Taking
FacilitatingFunction
FacilitatingFunction
TransactionalFunctions
TransactionalFunctions
Logistical Functions
Logistical Functions
Researching
Financing
Physically distributing
Storing
Sorting
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LogisticsLogistics
The process of strategically
managing the efficient flow
and storage of raw
materials, in-process
inventory, and finished
goods from point of origin
to point of consumption.
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Learning Objective Learning Objective
Describe the channel structures Describe the channel structures for consumer and for consumer and
business-to-business products business-to-business products and discuss alternative and discuss alternative channel arrangements.channel arrangements.
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Direct ChannelDirect Channel
A distribution channel in
which producers sell
directly to consumers.
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Channels for Consumer ProductsChannels for Consumer Products
Producer Producer Producer Producer
Consumers Consumers Consumers Consumers
Retailers Retailers Retailers
Wholesalers Wholesalers
Agents orBrokers
WholesalerWholesalerChannelChannel
RetailerRetailerChannelChannel
DirectDirectChannelChannel
Agent/BrokerAgent/BrokerChannelChannel
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Channels for Business-to-Channels for Business-to-Business ProductsBusiness Products
Producer Producer Producer Producer
IndustrialUser
IndustrialUser
IndustrialUser
IndustrialUser
IndustrialDistributor
IndustrialDistributor
Agents orBrokers
Agents orBrokers
Agent/BrokerAgent/BrokerChannelChannel
IndustrialIndustrialDistributorDistributor
DirectDirectChannelChannel
Producer
GovernmentBuyer
DirectDirectChannelChannel
Agent/BrokerAgent/BrokerIndustrialIndustrialChannelChannel
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Alternative Channel ArrangementsAlternative Channel Arrangements
DifferentDifferentChannelsChannels
May be Used May be Used
Multiple Channels
Adaptive Channels
Strategic ChannelAlliances
NontraditionalChannels
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Learning Objective Learning Objective
Define supply chain management Define supply chain management and discuss its benefits.and discuss its benefits.
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Supply Chain ManagementSupply Chain Management
A management system that
coordinates and integrates
all of the activities
performed by supply chain
members into a seamless
process, from the source to
the point of consumption.
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Supply Chain ManagementSupply Chain Management
ResultsResultsofof
Supply ChainSupply ChainManagementManagement
ResultsResultsofof
Supply ChainSupply ChainManagementManagement
Focus on Innovative SolutionsFocus on Innovative Solutions
Competitive with focus onCustomer Satisfaction
Competitive with focus onCustomer Satisfaction
Synchronized FlowSynchronized Flow
Customer ValueCustomer Value
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Physical flow process that engineers the
movement of goods
Physical flow process that engineers the
movement of goods
Communicator of customer demand frompoint of sale to supplier
Communicator of customer demand frompoint of sale to supplier
Role of Role of Supply ChainSupply ChainManagementManagement
Role of Role of Supply ChainSupply ChainManagementManagement
Role of Supply Chain ManagementRole of Supply Chain Management44
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Supply Chain Management Supply Chain Management ActivitiesActivities
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Manage relationships in the supply chain
Manage relationships in the supply chain
Manage the logistical components of the supply chain
Manage the logistical components of the supply chain
Determine channel strategy and level of distribution intensity
Determine channel strategy and level of distribution intensity
Balance the costs of the supply chainwith the service level demanded by customer
Balance the costs of the supply chainwith the service level demanded by customer
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Benefits of Benefits of Supply Chain ManagementSupply Chain Management
Common BenefitsCommon Benefitsof Supply Chainof Supply Chain
ManagementManagement
Common BenefitsCommon Benefitsof Supply Chainof Supply Chain
ManagementManagement
Reduced Costs Reduced Costs
Improved ServiceImproved Service
Enhanced RevenuesEnhanced Revenues
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Learning Objective Learning Objective
Discuss the issues that Discuss the issues that influence channel strategy.influence channel strategy.
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Channel Strategy DecisionsChannel Strategy DecisionsIssues that Influence
Channel StrategyIssues that Influence
Channel Strategy
Producer FactorsProducer Factors
Product FactorsProduct Factors
Market FactorsMarket Factors
Factors Factors Affecting Affecting Channel Channel ChoiceChoice
Factors Factors Affecting Affecting Channel Channel ChoiceChoice
Exclusive DistributionExclusive Distribution
Selective DistributionSelective Distribution
Intensive DistributionIntensive Distribution
Levels ofLevels ofDistributionDistribution
IntensityIntensity
Levels ofLevels ofDistributionDistribution
IntensityIntensity
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Market FactorsMarket Factors
Market FactorsMarket FactorsThat Affect That Affect
ChannelChannelChoicesChoices
Market FactorsMarket FactorsThat Affect That Affect
ChannelChannelChoicesChoices
Customer ProfilesCustomer Profiles
Consumer or IndustrialCustomer
Consumer or IndustrialCustomer
Size of MarketSize of Market
Geographic Location
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Product FactorsProduct Factors
Product FactorsProduct FactorsThat Affect That Affect
ChannelChannelChoicesChoices
Product FactorsProduct FactorsThat Affect That Affect
ChannelChannelChoicesChoices
Product Complexity Product Complexity
Product PriceProduct Price
Product Life CycleProduct Life Cycle
Product DelicacyProduct Delicacy
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Producer FactorsProducer Factors
Producer FactorsProducer FactorsThat Affect That Affect
ChannelChannelChoicesChoices
Producer FactorsProducer FactorsThat Affect That Affect
ChannelChannelChoicesChoices
Producer Resources Producer Resources
Number of Product LinesNumber of Product Lines
Desire for Channel ControlDesire for Channel Control
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Levels of Distribution IntensityLevels of Distribution Intensity55
Intensity LevelIntensity LevelIntensity LevelIntensity Level ObjectiveObjectiveObjectiveObjective Number of Number of IntermediariesIntermediaries
Number of Number of IntermediariesIntermediaries
IntensiveIntensive
SelectiveSelective
ExclusiveExclusive
Achieve mass marketselling.
Convenience goods.
Achieve mass marketselling.
Convenience goods.
Work with selected intermediaries.
Shopping and some specialty goods.
Work with selected intermediaries.
Shopping and some specialty goods.
Work with singleintermediary. Specialty
goods and industrial equipment.
Work with singleintermediary. Specialty
goods and industrial equipment.
ManyMany
SeveralSeveral
OneOne
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Learning Objective Learning Objective 66
Explain channel leadership, Explain channel leadership, conflict, and partnering.conflict, and partnering.
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Managing Channel RelationshipsManaging Channel Relationships
Channel PartneringChannel Partnering
Channel ConflictChannel Conflict
Channel LeadershipChannel Leadership
Channel ControlChannel Control
Channel PowerChannel Power
Social Social Dimensions Dimensions of Channelsof Channels
Social Social Dimensions Dimensions of Channelsof Channels
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Channel Power, Channel Power, Control, and LeadershipControl, and Leadership
ChannelPower
ChannelPower
ChannelControl
ChannelControl
Channel Leader
Channel Leader
A channel member’s capacity to control or influence the behavior
of other channel members
A channel member’s capacity to control or influence the behavior
of other channel members
A situation that occurs when one marketing channel member intentionally affects another
member’s behavior.
A situation that occurs when one marketing channel member intentionally affects another
member’s behavior.
A member of a marketing channelthat exercises authority/power over
the activities of other members.
A member of a marketing channelthat exercises authority/power over
the activities of other members.
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Channel ConflictChannel Conflict
A clash of goals and methods between
distribution channel members.
HorizontalConflict
HorizontalConflict
Occurs among channel members on the same level
Occurs among channel members on the same level
VerticalConflictVerticalConflict
Occurs among channel members at different levels
Occurs among channel members at different levels
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Channel PartneringChannel Partnering
The joint effort of all
channel members to create
a supply chain that serves
customers and creates a
competitive advantage.
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Transaction- vs. Transaction- vs. Partnership-Based FirmsPartnership-Based Firms
Transaction-Based Transaction-Based Transaction-Based Transaction-Based
Short-term relationshipsShort-term relationships
Multiple suppliersMultiple suppliers
Adversarial relationshipsAdversarial relationships
Price dominatesPrice dominates
Minimal supplier investmentMinimal supplier investment
Minimal information sharingMinimal information sharing
Firms are independent Firms are independent
Minimal functional area interaction Minimal functional area interaction
Partnership-Based Partnership-Based Partnership-Based Partnership-Based
Long-term relationshipsLong-term relationships
Few suppliersFew suppliers
Cooperative partnerships Cooperative partnerships
Value-added services dominateValue-added services dominate
High supplier/buyer investmentHigh supplier/buyer investment
Extensive information sharingExtensive information sharing
Firms are interdependent Firms are interdependent
Extensive functionalarea interactionExtensive functionalarea interaction
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Learning Objective Learning Objective
Describe the logistical components Describe the logistical components of the supply chain.of the supply chain.
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Integrated Logistical Integrated Logistical Components of the Supply ChainComponents of the Supply Chain
Sourcing & ProcurementSourcing & Procurement
Production SchedulingProduction Scheduling
Order Processing & Customer ServiceOrder Processing & Customer Service
Inventory ControlInventory Control
SupplySupplyChainChainTeamTeam
SupplySupplyChainChainTeamTeam
Warehouse & Materials HandlingWarehouse & Materials Handling
TransportationTransportation
Lo
gis
tics
Info
rma
tio
n S
yste
mL
og
isti
cs In
form
ati
on
Sys
tem
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Sourcing and ProcurementSourcing and Procurement
NegotiateService Levels
NegotiateService Levels
NegotiatePrice
NegotiatePrice
SelectSuppliers
SelectSuppliers
DevelopSpecifications
DevelopSpecifications
Plan Purchasing Strategies
Plan Purchasing Strategies
Role ofRole ofPurchasingPurchasing
DepartmentsDepartments
Role ofRole ofPurchasingPurchasing
DepartmentsDepartments
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Production SchedulingProduction Scheduling
Push/Pull Strategy Push/Pull Strategy
Traditional FocusTraditional Focus Traditional FocusTraditional Focus
PushPush
Start of ProductionStart of Production
ManufacturingManufacturing
Inventory-BasedInventory-Based
Mass ProductionMass Production
Customer FocusCustomer Focus Customer FocusCustomer Focus
PullPull
Customer-Order Based
Customer-Order Based
Mass CustomizationMass Customization
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Just-in-Time ManufacturingJust-in-Time Manufacturing77
A process that redefines
and simplifies
manufacturing by reducing
inventory levels and
delivering raw materials
just when they are needed
on the production line.
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Benefits of JITBenefits of JIT
Reduces raw material inventories
Shortens lead times
Creates better supplier relationships
Reduces production and storeroom costs
Reduces paperwork
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Electronic Data InterchangeElectronic Data Interchange77
Information technology
that replaces paper
documents that accompany
business transactions.
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Inventory Control SystemInventory Control System77
A method of developing
and maintaining an
adequate assortment of
materials or products to
meet a manufacturer’s or a
customer’s demand.
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Warehouse and Warehouse and Materials-HandlingMaterials-Handling
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FunctionsFunctionsofof
Materials Materials HandlingHandling
Receive goods into warehouse
Dispatch the goods totemporary storage
Recall, select, or pick the goods for shipment
Identify, sort and label goods
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TransportationTransportation
CostCost
Transit TimeTransit Time
ReliabilityReliability
CapabilityCapability
AccessibilityAccessibility
TraceabilityTraceability
Criteria Criteria forfor
Transportation Transportation ModeMode
ChoiceChoice
Criteria Criteria forfor
Transportation Transportation ModeMode
ChoiceChoice
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Criteria for RankingCriteria for RankingModes of TransportationModes of Transportation
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Relative Cost
TransitTime
Reliability
Capability
Accessibility
Traceability
HighestHighest LowestLowest
Air WaterPipeRailTruck
Water Rail Pipe Truck Air
Pipe Truck Rail Air Water
Water
Truck
Rail Truck Air Pipe
Rail Air Water Pipe
Air Truck Rail Water Pipe
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Learning Objective Learning Objective
Discuss the concept of Discuss the concept of balancing logistics service and cost.balancing logistics service and cost.
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Logistics ServiceLogistics Service
Interrelated activities
performed by a member
of the supply chain to ensure
that the right product is in the
right
place at the right time.
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Logistical CompetenciesLogistical Competencies88
Devise logistics service strategies as a means of competitive differentiation
Integrate members of supply chain to achieve operating excellence
Respond quickly to changing logistical requirements
Constantly monitor all aspects of the supply chain
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Learning Objective Learning Objective
Discuss new technology Discuss new technology and emerging trends in and emerging trends in
supply chain management.supply chain management.
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Trends in Trends in Supply Chain ManagementSupply Chain Management
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Electronic DistributionElectronic Distribution
Outsourcing ofLogistics Functions
Outsourcing ofLogistics Functions
AdvancedComputer Technology
AdvancedComputer Technology
Trends Trends Affecting the Affecting the
Logistics Logistics IndustryIndustry
Trends Trends Affecting the Affecting the
Logistics Logistics IndustryIndustry
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Learning Objective Learning Objective
Discuss channels and distribution Discuss channels and distribution decisions in global markets.decisions in global markets.
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Channels and Distribution Channels and Distribution Decisions for Global MarketsDecisions for Global Markets
Channel structure differs
Channel types differ
“Gray” marketing channels
Global Channel Global Channel DevelopmentDevelopment
Global Channel Global Channel DevelopmentDevelopment
Global SupplyGlobal SupplyChain ManagementChain Management
Global SupplyGlobal SupplyChain ManagementChain Management
Awareness of trade legalities
Transportation Infrastructure
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Learning ObjectiveLearning Objective1111
Identify the special problems and Identify the special problems and opportunities associated with opportunities associated with
distribution in service organizations.distribution in service organizations.
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Channels and DistributionChannels and DistributionDecisions for ServicesDecisions for Services
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Areas of Focus Areas of Focus forfor
Service DistributionService Distribution
Areas of Focus Areas of Focus forfor
Service DistributionService Distribution
Minimizing wait times Minimizing wait times
Managing service capacityManaging service capacity
Improving delivery through new channels
Improving delivery through new channels