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Chapter 13

Marketing - Chapter 13.docx

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Dave Ashberry

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Chapter 13 – Marketing Channels: Distribution Strategy Distribution Channel – the institutions that transfer ownership of and move goods from the point of production to the point of consumption Supply Chain Management – refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time Zara employs a completely integrated supply chain because the company owns or at least has considerable control over each phase. As a result, it is able to conceive of, design, manufacture, transport, and ultimately sell high-fashion apparel much more quickly and efficiently than any of its major competitors. A simplified supply chain would be one where manufacturers make products and sell them to intermediaries such as retailers or wholesalers. Wholesalers – those firms engaged in buying, taking title to, often storing, and physically handling goods in large quantities, then reselling the goods (usually in smaller quantities) to retailers or industrial or business users Retailers – sell products directly to consumers Logistics Management – the integration of two or more activities for the purpose of planning, implementing, and controlling the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption Designing Distribution Channels Distribution channels are composed of various entities that are buying, such as retailers or wholesalers; selling, such as manufacturers or wholesalers; or helping facilitate the exchange, such as transportation companies. These relationships can range from close working partnerships to one-time arrangements. Each channel member performs a specialized role. If one member believes that another isn’t doing its job correctly or efficiently, it usually can replace that member. Distribution channels perform a variety of transactional, logistical and facilitating functions: Transactional Functions - Buying – purchase goods for resale to other intermediaries or consumers - Risk Taking – ownership of inventory that can become outdated - Promotion – promote products to attract consumers - Selling – transact with potential customers Logistical Function - Physical Distribution – transport goods to point of purchase - Storing – maintain inventory and protect goods Facilitating Function - Gather Information – share competitive intelligence about customers or other channel members - Financing – extend credit and other financial services to consumers Distribution Channel Structure a) Direct Distribution – allows manufacturers to deal directly with consumers Manufacturer  Consumer b) Indirect Distribution – one or more intermediaries work with manufacturers to provide goods and services to consumers Manufacturer  Wholesaler  Retailer  Consumer (varies) c) Multichannel Distribution – use a combination of both direct and indirect distribution channels Sony sells via its own branded stores in some areas and in others it sells indirectly through retailers like Best Buy and Future Shop. Marketing Channel – the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption; consists of all the institutions and marketing activities in the marketing process Distribution Intensity – the number of supply chain members to use at each level of the supply chain a) Intensive Distribution – a strategy designed to get products into as many outlets as possible b) Exclusive Distribution – strategy of granting exclusive rights to sell to one or very few
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