Marketing 450

Marketing Channel
Individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.
any intermediary between manufacturer and end user
Agent/ Broker
legal authority
sells to consumers
imprecise term
more imprecise
why intermediaries?
create value
Intermediaries’ functions
transactional, logistical, facilitating
transactional function
buying, selling, inventory risk taking
logistical function
assorting, storing, orting, transporting
facilitating function
financing, grading, marketing info/research
Antitrust act
trust busting, no monopolies, creates competition; Sherman and Clayton
dual distribution/vertical integration
not always illegal, maybe anticompetitive if manu. distributes its own products against wholesalers and retailers
exclusive dealing
supplier limits what other products can be sold by channel member
tying arrangements
must buy whole group of products
full-line forcing
channel member must carry full line
refusal to deal
may be illegal- choose partners
resale restrictions
supplier’s attempt to control distribution and reselling
legal restrictions
dual distribution/vertical integration; exclusive dealing; tying arrangements; full-line forcing; refusal to deal; resale restrictions; usually the standard is whether it is anticompetitive
supply chain
raw materials, supplier, manufacturing, distribution, customer, consumer
supply chain circle
distributor/reseller, manufacturer, supplier, retailer, logistics all surround the customer
Supply chain management
set of approaches and techniques firms employ to integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize system wide costs while satisfying the service levels that their customers require.
marketing channel vs logistic channel
the marketing channel consists of institutions, whereas logistics refer to activities among and within institutions. However, both are part of supply chain management.
reasons for supply chain
-adds value; Without supply chain management, firms would face significant complications in getting their goods to consumers where they want them.
-streamlines distribution; (reduces number of transactions, increases value for consumers, more efficient and effective) An efficient supply chain can lower overall inventory in the system because merchandise is delivered when it is needed (just-in-time). By having an efficient supply chain, the retailers stay in stock, and sales increase.
Supply chain mangement affects marketing
fulfilling delivery promises, meeting customer expectations, reliant on an efficient supply chain; Customers expect to have their goods delivered and services performed on time.
information flows
each step requires the collection and dissemination of information
Electronic Data interchange (EDI)
The growth of EDI systems has allowed for advanced tracking of information. Each system can seamlessly integrate with others, which creates value for both customers and the firm.
-Since EDI facilitates information, it makes it easier for retailers to plan their deliveries (advance shipping notice) and plan their inventories (CPFR). Other information is handled through EDI as well. The bottom line is the retailer has the merchandise the customer wants when he/she wants it, and in the quantities that are demanded.
EDI parts
advanced shipping notice, intranet, extranet, CPFR (Collaborative Planning, Forecasting, Replentishment), Vendor MAnaged inventory
Pull supply chain
Orders based on sales data
More accurate inventory
Better when demand is uncertain
Often new products
(new products and seasonal/ holiday products)
Push supply chain
Merchandise allocated based on forecast
Does not need sophisticated IS system
Good for steady demand items – ex. milk, eggs
advantages of distribution center
Distribution centers are not best if the retailer has few outlets and/or the stores are consolidated.
The following list are some advantages of having a distribution center:
more accurate sales forecasts due to many stores
lower inventory in each story therefore lower overall inventory costs
overstock and under-stock is less of a problem
it is less expensive to store in a remote warehouse then expensive retail location.
distribution center
management of inbound transportation; receiving and checking using UPC and RFID; storing and cross-docking; getting merchandise floor ready; preparing to ship; shipping to store
inbound transportation
Dispatcher coordinates deliveries
Manufacturer may pay transportation expenses or retailers may negotiate directly with trucking companies and pay expenses
-Buyers and planners are much more involved in coordinating the physical flow of merchandise to the stores.
receiving and checking
After goods arrive at their destination, the recipient must account for them. RFID has the potential of tracking merchandise throughout the supply chain. Items wouldn’t have to be physically checked. A distribution center or a store could know exactly where and how many of an item it has because each item has an RFID tag. Some are concerned, however, about consumer privacy—being able to track a consumer that is wearing apparel with and RFID tag.
storing and cross docking
Remind students that one of the most important functions of the supply chain is to hold merchandise until the next link in the chain is ready for it.
But many firms strive to hold merchandise a minimum amount of time because holding merchandise in a distribution center is expensive and the merchandise is not available for sale. So cross-docking distribution centers are part of just-in-time delivery systems;
cross-docking is best for minimizing inventory
Just in Time (JIT) inventory
Inventory management systems track goods throughout stores, warehouses, and DCs. As its name implies, just-in-time inventory management ensures goods get delivered only when they are needed.
-Because they use smaller but more frequent shipments, JIT systems reduce stock-out situations which in turn increases customer satisfaction.
managing supply hcian through strategic relationships
manual trust, open communication, common goals, credible commitments
What are the various supply chain links associated with each information flow step?
Flow 1 (Customer to Store) , Flow 2 (Store to Buyer), Flow 3 (Buyer to Manufacturer), Flow 4 (Store to Manufacturer) , Flow 5 (Store to Distribution Center), Flow 6 (Manufacturer to Distribution Center and Buyer )
What happens at each step of the merchandise flow in a typical supply chain?
The distribution center is responsible for coordinating inbound transportation; receiving, checking, storing, and cross-docking; getting merchandise “floor ready”; and coordinating outbound transportation.
types of vertical marketing systems
administered, contractual, corporate, independent or conventional

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