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T9.5-6: Channels and logistics (Market logistics p.565- (Decisions…
T9.5-6: Channels and logistics
Channel management decisions and channel integration p.517- 531
Channel management p.517-520
Channel modification to meet the changing marketing environment
Evaluation of channel partners
Developing partnerships
Efficient consumer response (ECR) practises
Supply side management (joint logistics and supply-chain activities)
Enablers and integrators (joint IT and process improvements)
Demand side management (joint marketing ventures)
Awareness is rising about the need to make channel members true partners for the benefit of all
Training and motivating 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
Selecting channel members
Global channel considerations
Adapting to a different market
Protecting their home turf
Different environments in different markets
Channel integration p.521-531
Horizontal marketing system
- Unrelated companies combine to distribute to consumers
Integrated (multichannel) marketing system
- using several channels to reach target segments
Vertical systems
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
Corporate VMS
Administered VMS
Contractual VMS
Similar players as above but working in a unified way
Channel conflict
p.528
Causes p.528
Goal incompatibility
Unclear roles and rights
Differences in perception
High dependence
Moral and legal issues
Solutions p.529
Co-optation
Joint membership in trade associations
Exchange of persons
Diplomacy, mediations, arbitration
Superordinate goals
Dual compensation
Strategic justification
Legal recourse
Other considerations
Image/Brand dilution
Cannibalisation
Legal and ethical issues
Market logistics p.565-
Objectives
Optimising customer service
Minimising cost
M = T + FW + VW + S
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
Decisions
Order processing - shorten the 'order-to-payment' cycle
Warehousing - store economically
Inventory - Reduce cash tied up in inventory (just-in-time)
Transportation
Aim - cheapest, fastest, most reliable
Mixed methods
Piggyback - rail & road
Fishyback - water & road
Trainship - rail & water
Airtruck - Air & Road
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