Chapter 13 & 14- Channels and SCM “P3”-Distribution

Marketing Channel: a set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer.

Marketing Channel Functions:
Specialization and division of labor
Overcoming logistical discrepancies
Providing contact efficiency

Marketing Channels reduce the # of transactions required

Overcoming discrepancies
Discrepancy of Quantity: The difference between the amount of product produced and the amount an end user wants to buy
Discrepancy of Assortment: The lack of all the items a customer needs to receive full satisfaction from a product or products
Temporal Discrepancy: A situation that occurs when a product is produced but a customer is not ready to buy it
Spatial Discrepancy: The difference between the location of a producer and the location of widely scattered markets

Channel Intermediaries
Retailer: Sells mainly to customers, takes title to goods
Merchant Wholesaler: Buys goods from manufacturers, takes title, stores them, resells and ships them
Agents/Brokers: Facilitate the sale of product by representing channel members. Do not take title to goods.

Marketing Channels
Direct Channel: Producer  Consumers
Retailer Channel: Producer  Retailers  Consumers
Wholesaler Channel: Producer  Wholesalers  Retailers  Consumers
Agent/Broker Channel: Agents/Brokers  Wholesalers  Retailers  Consumers
Creston Vineyards:
Direct Channels: Online and Wine clubs
Retailer: Trader Joes
Wholesaler: Locally in California
Agent/Broker: Union Liquor Company in Chicago

Factors Suggesting Type of Intermediary to Use
Merchant Wholesaler: Standard, Simple, High, Frequent
Agent/Broker: Custom, Complex, Low, Infrequent

Channel Functions:
Transactional Functions: Contacting/Promotion, Negotiating, Risk Tasking
Logistical Functions: Physically distributing, storing, sorting
Facilitating Functions: Researching, Financing
Service Functions: Repairing, Warranty

Channels for Business and Industrial Products
Direct: Producer Industrial User
Direct: Producer Government Buyer
Industrial distributer: Producer Industrial distributer industrial user
Agent/Broker Channel: Producer Agent/Broker Industrial User
Agent/Broker industrial distributer: Producer Agent/Broker industrial distributerindustrial user

Channel Strategy Decisions:
Factors Affecting Channel Choice: Market Factors, Product Factors, Producer Factors
Level of Distribution Intensity: Intensive Distribution, Selective Distribution, Exclusive Distribution

Levels of Distribution Intensity
Intensive
Selective
Exclusive

Supply Chains:
Supply Chain Management: Management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption.
Resulting in enhanced customer and economic value

Benefit of Supple Chain management:
Lower inventory, transportation, warehousing, and packaging costs
Greater supply chain flexibility
Improved customer service
Higher revenues
Increased performance and profitability
Means of differentiation- through service, assortment or cost

Responsibility of Supply Chain Managers:
Channel Strategy Decisions
Sourcing and procurement of raw materials
Production schedules
Order processing
Inventory management
Finished goods/supplies transportation and storage
Customer service coordination
Supply chain information flow management
Partner relationships

Logistics: The process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption

Just-in-Time Manufacturing: Process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials at the precise time they are needed on the production line.

Logistical Components of the