Management and Organizational Studies 2320A/B Study Guide - Disintermediation, Third-Party Logistics, Exclusive Dealing

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Marketing Channels 3/29/2012 5:04:00 PM
Supply Chains and the Value Delivery Network
Supply chain partners
o Upstream partners include raw material suppliers,
components, parts, information, finances and expertise to
create a product or service
o Downstream partners the marketing channels that look
toward the customer
Supply chain views
o Supply chain “make and sell” – includes the firm’s raw
material, productive inputs and factory capacity
o Demand chain “sense and response” – suggests that planning
starts with the needs of the target customer and the firm
responds to these needs by organizing a chain of resources
and activities with the goal of creating customer value
Value delivery network the firm’s suppliers, distributors and
ultimately customers who partner with each other to improve the
performance of the entire system
The Importance of Marketing Channels
Marketing (distribution) channels sets of independent
organizations that help make a product or service available for use
of consumption by the consumer or business user
Intermediaries offer producers greater efficiency in making goods
available to target markets through their contracts, experience,
specialization and scale of operations, help firm achieve more than
it could on its own
From an economic view, intermediaries transform the assortment of
products into assortments wanted by consumers
Channel members add value by bridging the major time, place and
possession gaps that separate goods and services from those who
would use them
How channel markets add value:
o Information gathering and distributing marketing research
and intelligence information about actors and forces in the
marketing environment needed for planning and aiding
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o Promotion developing and spreading persuasive
communications about an offer
o Contact finding and communicating with prospective buyers
o Matching shaping and fitting the offer to the buyer’s needs,
including activities such as manufacturing, grading,
assembling and packaging
o Negotiation reaching an agreement on price and other
terms of the offer so that ownership or possession can be
o Physical distribution transporting and storing goods
o Financing acquiring and using funds to cover the costs of
the channel work
o Risk taking assuming the risks of carrying out the channel
Number of channel levels
o Channel levels layers of intermediaries that perform some
work in bringing product and its ownership closer to the final
o Direct marketing channel refers to a marketing channel that
has no intermediary levels
o Indirect marketing channels contain one or more
intermediary levels
Connected by types of flows:
o Physical flow of products
o Flow of ownership
o Payment flow
o Information flow
o Promotion flow
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