Marketing Channels and Supply Marketing Channels and Supply Chain ManagementChain Managementbyby

KOTLER ON MARKETING

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Establish channels for different target markets and aim for efficiency, control, and adaptability.

INTRODUCTIONFirms rarely work alone in

creating value for customers and building profitable customer relationships.

Individual firm’s success depends not only on how well it performs but also on how well its entire distribution channel competes with competitors channels.

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SUPPLY CHAIN

Supply chain consists of “upstream” and “downstream” partners.

Upstreamset of firms that supply

the raw materials , components, parts , information, finances , expertise

DownstreamWholesalers, retailers

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MARKETING CHANNELS (DISTRIBUTION CHANNELS)

Set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.

Distribution channel decision often involve long term commitments to other firms (other elements can be changed

How channel members add value Through their contacts, experience,

specialization and scale of operation, intermediaries usually offer the firm more than it can achieve on its own.

Role of marketing intermediaries is to transform the assortments of products may by producers into assortments wanted by consumers.

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How a Distributor Effects an Economy of Effort

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As more retailers develop a web As more retailers develop a web presence, they often move from a presence, they often move from a “brick-and-mortar” to a “click-and-“brick-and-mortar” to a “click-and-mortar” business model where mortar” business model where customers expect channel integration. customers expect channel integration. Can you identify any potential problems Can you identify any potential problems for these companies? Can you identify for these companies? Can you identify any unique marketing opportunities any unique marketing opportunities that such a change would that such a change would offer these companies?offer these companies?

CHANNEL LEVELS AND BEHAVIOUR

Channel LevelsZero-level channel (a.k.a.

direct-marketing channel)One-level channelTwo-level channelThree-level channels

Channel BehaviorHorizontal Conflict (among

distributors)Vertical Conflict (when using

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Channel DynamicsVertical Marketing Systems

Conventional marketing channelVertical marketing systems (VMS)

Multichannel Distribution Systems

With each new channel, the company expands its sales and market coverage and gains opportunities to tailor its products and services.

But it also creates vertical and horizontal conflicts

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Marketing Logistics and Supply Chain Management

LogisticsPhysical distribution of goodsInvolves not only outbound

distributions but also inbound and reverse distribution

Companies are placing greater emphasis on logistics for several reasonsCan get competitive advantage by

using improved logistics to give customer better service or lower prices.

Can yield tremendous cost savings Explosion in product variety has

created a need for improved logistics management

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MAJOR LOGISTICS FUNCTIONS

Warehousing

Inventory Management

Transportation

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