T9.5-6: Channels and logistics

Channel management decisions and channel integration p.517- 531

Market logistics p.565-

Channel management p.517-520

Channel integration p.521-531

Channel modification to meet the changing marketing environment

Evaluation of channel partners

Developing partnerships

Horizontal marketing system - Unrelated companies combine to distribute to consumers

Integrated (multichannel) marketing system - using several channels to reach target segments

Vertical systems

Channel conflict p.528

Causes p.528

Solutions p.529

Goal incompatibility

Unclear roles and rights

Differences in perception

High dependence

Co-optation

Joint membership in trade associations

Exchange of persons

Diplomacy, mediations, arbitration

Superordinate goals

Moral and legal issues

Training and motivating channel members

Selecting channel members

Channel power

Define: the ability of a channel member to influence another channel member into doing something they would not otherwise have done

Bases of power p.517

Expert

Referrent

Legitimate

Reward

Coercive

Efficient consumer response (ECR) practises

Awareness is rising about the need to make channel members true partners for the benefit of all

  1. Supply side management (joint logistics and supply-chain activities)
  1. Enablers and integrators (joint IT and process improvements)
  1. Demand side management (joint marketing ventures)

Global channel considerations

Adapting to a different market

Protecting their home turf

Different environments in different markets

Conventional marketing channel

Producer, wholesaler, retailer

Traditional supply-chain partners in one system

None having significant control over other parties

Each aiming to maximise individual profits, not necessarily for the good of the overall chain

Vertical marketing system (VMS)

The Channel Captain has all the power and ensures others cooperated for the good of the overall chain

Types p.522

Similar players as above but working in a unified way

Corporate VMS

Administered VMS

Contractual VMS

Dual compensation

Strategic justification

Legal recourse

Other considerations

Image/Brand dilution

Cannibalisation

Legal and ethical issues

Objectives

Optimising customer service

Minimising cost

M = T + FW + VW + S

Decisions

Order processing - shorten the 'order-to-payment' cycle

Warehousing - store economically

Inventory - Reduce cash tied up in inventory (just-in-time)

Transportation

DEFINE: Planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from points of origin to points of use, to meet customer requirements at a profit. (p.566)

Integrated logistics systems (ILS)

Material flow systems

Physical distribution

Materials management

Supported by IT

VW = Variable Warehouse costs

S = total cost of lost Sales due to delivery time of proposed system

FW = Fixed Warehouse costs

T = Total freight cost

M = total Market-logistics cost of proposed system

NOTE: This formula has been removed from text newest edition

Aim - cheapest, fastest, most reliable

Mixed methods

Piggyback - rail & road

Fishyback - water & road

Trainship - rail & water

Airtruck - Air & Road