ADM 2320 Lecture Notes - Lecture 12: Logistics, Brand Management, Direct Market
3 May 2018
School
Department
Course
Professor
Chapter 12
Walmart Case Example
• Walmart’s success stems directly from their channel innovations
• Close co-operation with supplier partners is key
• Extensive information systems
• Constantly fine-turning efficiencies
The Importance of Distribution
• The third P: place
o Include all actives required to get the right product to the right customer when that
customer wants it
o Often overlooked or underestimated because it happens behind the scenes
o Adds cale for customer because they get products to customer efficiently, quickly
and at a low cost
• Good distribution is critical to marketing success
o Research of a new product is only half the battle
o You need to reach consumers by convincing retailers to distribute your product
▪ Convince retailers that your product will sell supported by advertising
Distribution Channels, Supply Chains & Logistics are Related
• Similar but different because these business practices are closely interrelated
• Distribution channel: focus on the companies or institutions that transfer the ownership
of goods from the producer to consumer at the point of consumption (wholesalers or
retailers)
o Institutions
• Supply chain management: focus on the sequence of firms required to create and
deliver goods to the final consumer
o Distribution channel and logistics management
• Logistics management: focus on the flow of raw materials & finished goods from point
of origin to final consumption
o Actives among and within institutions
Channel Functions
• Time utility: when they want it
• Place utility: where they want it
• Possession and ownership utility: the risk they want
• Break bulk: quantities they want
• Create assortments: variety they want
find more resources at oneclass.com
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• Facilitate truncations: easier, cheaper
• Functional specialization: skills and abilities
Fewer Transactions
• No intermediary: I.e. 25 transactions
• Using intermediary: I.e. 10 transactions
Channel Design Strategy
• Exclusive
o Selling through a single outlet in a reign
• Selective
o Selling through a limited number of outlets
• Intensive
o Selling through all suitable (and willing) outlets
Channel Dynamics and Conflict
• Consider concerns of
o Brand manager
o Field sales force
o National account manager
o Dealer network
• Potential conflict
o Goal incompatibility
o Unclear roles and responsibilities
Sources of Value
Content
↑
↓
Context
↑
↓
Infrastructure
Content
(Knowledge)
Context
(Environment)
Infrastructure
(Delivery or Backbone)
Market place -> Market space
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• Market Place
Consumers ->
Exchange ->
• Content
• Context
• Infrastructure
• Branding
• Market Space
Consumers ->
Exchange ->
Content
Context
Infrastructure
Branding
Retailing Mix
• Retail pricing
• Store location
• Retail communication
• Merchandise
Designing Distribution Channels
• Channel structure
o Direct distribution
o Indirect distribution
o Multichannel distribution
Direct and Indirect Distribution
• Direct distribution: cut down on expenses of middlemen or have to because they are
unable to secure shelf space
• Indirect distribution: consumer wil want to compare different products before purchasing
Examples of Different Level Channels
• Manufacture -> consumer
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Walmart case example: walmart"s success stems directly from their channel innovations, close co-operation with supplier partners is key, extensive information systems, constantly fine-turning efficiencies. The importance of distribution: the third p: place. Channel design strategy: exclusive, selling through a single outlet in a reign, selective, selling through a limited number of outlets. Intensive: selling through all suitable (and willing) outlets. Channel dynamics and conflict: consider concerns of, brand manager, field sales force, national account manager, dealer network, potential conflict, goal incompatibility, unclear roles and responsibilities. Market place -> market space: market place. Consumers -> exchange -: content, context, branding. Branding: retail pricing, store location, retail communication, merchandise. Designing distribution channels: channel structure, direct distribution, multichannel distribution. Direct and indirect distribution: direct distribution: cut down on expenses of middlemen or have to because they are unable to secure shelf space. Indirect distribution: consumer wil want to compare different products before purchasing.
