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Lecture

Lecture

36 Pages
93 Views
Summer 2011

Department
Marketing
Course Code
MKT 100
Professor
Chris Gibbs

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MKT100
Module 10
Distribution
Figure M10.2 Physical Distribution QFD
The key to distribution, customer service, and cost control is to create a distribution management process
that manages each of the above four processes together and improves the entire system of processes rather
than improves them individually. Any improvement in one of these four must involve consideration of the
effect of the improvement on the other three processes. The growth of new global supply-chains and
distribution channels has increased the importance of such holistic process thinking.
www.notesolution.com
MKT100
Module 10
Distribution
www.notesolution.com
1. Basic Channel Functions
In Module 1, we learned about how distribution innovations have enabled new foreign competition to enter
both mature and developing markets around the world and how retailers and distributors around the world
are searching for new sources of interesting new products, higher quality products and lower cost existing
products. The world is becoming a flatter playing field. In the Margin Analysis worksheet in M10
Distribution.xls we learn about distribution margins and the need to carefully analyze what value you get
for the margin you give that adds to the ultimate price of your product. In Module 5 you learned about how
important distribution channel or contact segmentation is in focusing on reaching and serving your
customers. In this module we study the supply-chain process in detail and again we discover the
importance of process innovation.
Time and again, distribution process innovation has shaped the prosperity of nations and companies. The
first major cities were sea and river ports because it was far less expensive (less than one tenth the cost).
[1] to move cargo by boat rather than by camel, mule or ox trains. They naturally became trade hubs, the
first major centres of trade and capitalism. And the most cleverly designed cities such as Venice and
Amsterdam were far ahead of their time in that their innovative canal systems enabled incoming ships and
barges to unload directly into a merchants warehouse and then directly load outgoing ships and barges that
took the cargo to other ports or up river systems. It cut handling costs, breakage, and theft by roughly half
because the cargo did not need to be loaded from boat to wagon and then wagon to warehouse in-bound,
and then warehouse to wagon and wagon to boat out-bound. These cities enabled their merchants to be far
more efficient. They were the giant Wal-Mart distribution centres of their time.
The invention of the steam engine, steamships, and railway systems greatly advanced the distribution of
agricultural products (particularly perishables) and raw materials in large quantities, thus opening up huge
markets. It led to the formation of the first large global trading corporations that replaced the government
sponsored monopolies such as the Dutch East India Company.
In distribution channels, traditional trading practices, such as this is the way we do things here” thinking
rather than that’s a great idea” thinking, often frustrates introducing innovation and is a serious obstacle to
change management. This is called channel evolutionary rigidity. Such cautious change can be seen best in
the recent, but long-delayed, computerization of stock-trading. What took them so long! The e-learning
systems are replacing the textbook. In turn these systems are breaking the rigidity of current textbook
distribution through university and college book stores and the associated reselling of used textbooks at
high prices. If you are reading this then you are part of an effort to break the evolutionary rigidity of text-
book distribution.
Over the past decade, advances in physical distributions, communications (especially via the Internet), and
other information processing technologies have radically reduced the need of some of the customary
www.notesolution.com

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Description
MKT100 Module 10 Distribution Figure M10.2 Physical Distribution QFD The key to distribution, customer service, and cost control is to create a distribution management process that manages each of the above four processes together and improves the entire system of processes rather effect of the improvement on the other three processes. The growth of new global supply-chains andf the distribution channels has increased the importance of such holistic process thinking. www.notesolution.comMKT100 Module 10 Distribution www.notesolution.com1. Basic Channel Functions In Module 1, we learned about how distribution innovations have enabled new foreign competition to enter both mature and developing markets around the world and how retailers and distributors around the world are searching for new sources of interesting new products, higher quality products and lower cost existing products. The world is becoming a flatter playing field. In the Margin Analysis worksheet in M10 Distribution.xls we learn about distribution margins and the need to carefully analyze what value you get for the margin you give that adds to the ultimate price of your product. In Module 5 you learned about how important distribution channel or contact segmentation is in focusing on reaching and serving your customers. In this module we study the supply-chain process in detail and again we discover the importance of process innovation. Time and again, distribution process innovation has shaped the prosperity of nations and companies. The first major cities were sea and river ports because it was far less expensive (less than one tenth the cost). [1] to move cargo by boat rather than by camel, mule or ox trains. They naturally became trade hubs, the first major centres of trade and capitalism. And the most cleverly designed cities such as Venice and Amsterdam were far ahead of their time in that their innovative canal systems enabled incoming ships and barges to unload directly into a merchants warehouse and then directly load outgoing ships and barges that took the cargo to other ports or up river systems. It cut handling costs, breakage, and theft by roughly half because the cargo did not need to be loaded from boat to wagon and then wagon to warehouse in-bound, and then warehouse to wagon and wagon to boat out-bound. These cities enabled their merchants to be far more efficient. They were the giant Wal-Mart distribution centres of their time. The invention of the steam engine, steamships, and railway systems greatly advanced the distribution of agricultural products (particularly perishables) and raw materials in large quantities, thus opening up huge markets. It led to the formation of the first large global trading corporations that replaced the government sponsored monopolies such as the Dutch East India Company. In distribution channels, traditional trading practices, such as this is the way we do things here thinking rather than thats a great idea thinking, often frustrates introducing innovation and is a serious obstacle to change management. This is called channel evolutionary rigidity. Such cautious change can be seen best in the recent, but long-delayed, computerization of stock-trading. What took them so long! The e-learning systems are replacing the textbook. In turn these systems are breaking the rigidity of current textbook distribution through university and college book stores and the associated reselling of used textbooks at high prices. If you are reading this then you are part of an effort to break the evolutionary rigidity of text- book distribution. Over the past decade, advances in physical distributions, communications (especially via the Internet), and other information processing technologies have radically reduced the need of some of the customary www.notesolution.com
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