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
- Supply side management (joint logistics and supply-chain activities)
- Enablers and integrators (joint IT and process improvements)
- 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