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Chapter 14: “Value Chain Management  and Logistics” Joel R. Evans  &  Barry Berman Marketing, 10e: Marketing in the 21st Century
Chapter Objectives ,[object Object],[object Object],[object Object],[object Object],[object Object]
The Distribution Process Value Delivery  Chain   Value Chain Total Delivered  Product Level of  Satisfaction Supplier/ Manufacturer  Goals   Distribution  Intermediary Goals Customer Goals
Key Points of the Distribution Process ,[object Object],[object Object],[object Object],[object Object],[object Object],Goals Satisfaction
Channel Functions Functions Performed in  a Channel  of Distribution Promotion Customer Services Buying Product Planning Marketing Research Distribution Pricing
Distribution and the Web ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Factors to Consider in Selecting a Distribution Channel ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
A Direct Distribution Channel Manufacturer 200,000 Customers In this  direct channel , an umbrella manufacturer sells directly to final consumers. It makes 200,000 separate transactions, one for each customer.
An Indirect Distribution Channel Manufacturer   Wholesaler  (East U.S.) Wholesaler  (South U.S.) Wholesaler  (North  U.S.) Wholesaler  (West  U.S.) 50 Retailers 50 Retailers  50 Retailers 50 Retailers 1,000   Customers per Retailer 1,000  Customers  per Retailer 1,000  Customers  per Retailer 1,000  Customers per Retailer In this  indirect channel , an umbrella maker has only 4 transactions. It sells to regional wholesalers, which resell to 50 retailers each. The retailers each sell to 1,000 final consumers.
Typical Indirect Channels of Distribution Manufacturer/ Service Provider Manufacturer/ Service Provider Manufacturer/ Service Provider Manufacturer/  Service Provider Retailer Final Consumer Final Consumer Organizational Consumer Retailer Wholesale r Merchant Wholesaler or Sales Agent Organizational Consumer Distributor Merchant Wholesaler  or Sales Agent 1 2 3 4
Pushing Versus Pulling Strategies Manufacturer/ Service Provider Distribution Intermediaries Consumers Consumers Distribution Intermediaries Manufacturer/ Service Provider Pushing Pulling
Intensity of Channel Coverage Exclusive Distribution Selective Distribution Intensive Distribution A firm severely limits the number of resellers in an area. It seeks a prestige image, channel control, and high profit margins and accepts lower total sales .   A firm employs a moderate number of resellers in an area. It tries to combine some channel control and a solid image with good sales volume and profits . A firm uses a large number of resellers in an area. Its goals are to have wide market coverage, channel acceptance, and high total sales and profits.  Per-unit profits are low.
International Distribution Planning ,[object Object],[object Object],[object Object],[object Object],[object Object]
Logistics ,[object Object],[object Object],[object Object]
Logistics and Other Functional Areas ,[object Object],[object Object],[object Object],[object Object],[object Object]
Selected Physical Distribution Activities Involved in a Typical Order Cycle Production  scheduled Inventory on hand checked Supplier receives  and enters order Customer places  an order Orders shipped  to individual customers Goods stored until enough orders are placed Goods packaged, sorted, tagged, and sent to local warehouse Insufficient goods in stock Sufficient goods in stock
An Illustration of the Total-Cost Approach in Distribution Carrier Air Rail Truck $1.6 mill. Annual freight  costs $100,000 Annual warehousing  costs Annual costs of lost sales due to being out of stock Costs $500,00 $1.5 mill  $300,000 $800,000  $300,000  $1.4mil. $1.2 mil. $500,000  $200,000
What Happens When a Firm Has Stock Shortages Most Desirable Action Least Desirable Action Wait until merchandise is available . Purchase a substitute product from the  same seller. Switch to a new seller while merchandise is not available. Permanently  switch to a new seller for all  purchases. When a firm runs out of stock, customers can
5 Transportation Forms for Shipping Next Day, Inc. ,[object Object],[object Object],[object Object],[object Object],[object Object]
Inventory Management ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Chapter Summary ,[object Object],[object Object],[object Object],[object Object],[object Object]

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Marketing Chapter 14

  • 1. Chapter 14: “Value Chain Management and Logistics” Joel R. Evans & Barry Berman Marketing, 10e: Marketing in the 21st Century
  • 2.
  • 3. The Distribution Process Value Delivery Chain Value Chain Total Delivered Product Level of Satisfaction Supplier/ Manufacturer Goals Distribution Intermediary Goals Customer Goals
  • 4.
  • 5. Channel Functions Functions Performed in a Channel of Distribution Promotion Customer Services Buying Product Planning Marketing Research Distribution Pricing
  • 6.
  • 7.
  • 8. A Direct Distribution Channel Manufacturer 200,000 Customers In this direct channel , an umbrella manufacturer sells directly to final consumers. It makes 200,000 separate transactions, one for each customer.
  • 9. An Indirect Distribution Channel Manufacturer Wholesaler (East U.S.) Wholesaler (South U.S.) Wholesaler (North U.S.) Wholesaler (West U.S.) 50 Retailers 50 Retailers 50 Retailers 50 Retailers 1,000 Customers per Retailer 1,000 Customers per Retailer 1,000 Customers per Retailer 1,000 Customers per Retailer In this indirect channel , an umbrella maker has only 4 transactions. It sells to regional wholesalers, which resell to 50 retailers each. The retailers each sell to 1,000 final consumers.
  • 10. Typical Indirect Channels of Distribution Manufacturer/ Service Provider Manufacturer/ Service Provider Manufacturer/ Service Provider Manufacturer/ Service Provider Retailer Final Consumer Final Consumer Organizational Consumer Retailer Wholesale r Merchant Wholesaler or Sales Agent Organizational Consumer Distributor Merchant Wholesaler or Sales Agent 1 2 3 4
  • 11. Pushing Versus Pulling Strategies Manufacturer/ Service Provider Distribution Intermediaries Consumers Consumers Distribution Intermediaries Manufacturer/ Service Provider Pushing Pulling
  • 12. Intensity of Channel Coverage Exclusive Distribution Selective Distribution Intensive Distribution A firm severely limits the number of resellers in an area. It seeks a prestige image, channel control, and high profit margins and accepts lower total sales . A firm employs a moderate number of resellers in an area. It tries to combine some channel control and a solid image with good sales volume and profits . A firm uses a large number of resellers in an area. Its goals are to have wide market coverage, channel acceptance, and high total sales and profits. Per-unit profits are low.
  • 13.
  • 14.
  • 15.
  • 16. Selected Physical Distribution Activities Involved in a Typical Order Cycle Production scheduled Inventory on hand checked Supplier receives and enters order Customer places an order Orders shipped to individual customers Goods stored until enough orders are placed Goods packaged, sorted, tagged, and sent to local warehouse Insufficient goods in stock Sufficient goods in stock
  • 17. An Illustration of the Total-Cost Approach in Distribution Carrier Air Rail Truck $1.6 mill. Annual freight costs $100,000 Annual warehousing costs Annual costs of lost sales due to being out of stock Costs $500,00 $1.5 mill $300,000 $800,000 $300,000 $1.4mil. $1.2 mil. $500,000 $200,000
  • 18. What Happens When a Firm Has Stock Shortages Most Desirable Action Least Desirable Action Wait until merchandise is available . Purchase a substitute product from the same seller. Switch to a new seller while merchandise is not available. Permanently switch to a new seller for all purchases. When a firm runs out of stock, customers can
  • 19.
  • 20.
  • 21.