Fluent Essays

This activity/assignment will help students understand “channels of distribution” and “supply chain logistics.”Activity I: Review Figures 10.2 (Manufacturers Direct to Consumers) and Figure 10.3 (Manufacturers through a Channel) in chapter 10, discuss the pros and cons of each scenarioThe assignment is to answer the question provided above in essay form. This is to be in narrative form and should be as thorough as possible. Bullet points should not to be used. The paper should be at least 1.5 - 2 pages in length, Times New Roman 12-pt font, double-spaced, 1 inch margins and utilizing at least one outside scholarly or professional source related to marketing management. The textbook should also be utilized. Do not insert excess line spacing. APA formatting and citation should be used.Required Text(s): Iacobucci, D. (2018). Marketing management. 5 th ed. Cengage Learning. Other cases, articles, and readings as assigned by course professor. chapter_10._channels_of_distribution.pptx Unformatted Attachment Preview © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. © 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 1 10 Channels of Distribution © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 2 Marketing Framework © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 3 Discussion Questions #1 • Apple introduced the Apple retail store in 2001 when it had less than 3\% of the computer market—prior to its introduction of the iPod. Previously, Apple computers were sold through local computer retailers. 1. What do you think prompted the idea for Apple’s new retail strategy? 2. What were the risks associated with this strategy? © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 4 Place • The market realigns discrepancies between buyers and sellers • Sellers have large quantities; Buyers want a few • Breaking bulk • Making goods available in smaller batches © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 5 Distribution Channels • Distribution channel • A network of firms that are interconnected in their quest to provide sellers a means of infusing the marketplace with their goods, and buyers a means of purchasing those goods • The goal is to do this efficiently and profitably • Channel members include • Manufacturers, wholesalers, retailers, consumers, etc. © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 6 Functions of a Channel • Activities that are • Customer-oriented (e.g., ordering) • Product-oriented (e.g., storage) • Marketing-centric (e.g., promotion) • Logistics • Coordinating flow of goods, services, and information throughout channel © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 7 Channel Tension • All channel functions must be done by someone, the question is … • What is the most effective and efficient way to distribute the product? • Tension in channels can be created by each channel member • Does member provide more benefit than cost? • The make-or-buy decision © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 8 Channel Questions #1 • Which of these is more efficient? Why? © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 9 Channels and Supply Chains • Supply chain • Upstream partners • Channel members • Downstream partners © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 10 Channel Questions #2 1. Who is in Amazon’s supply chain? 2. Who is in Pixar’s channel? 3. How is Dell’s distribution different from the others? © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 11 The What, Why, & How of Channels • The “what” of channels • Network of suppliers and providers • The “why” of channels • Effectiveness and efficiency • The “how” of channels • Designing effective and efficient channels © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 12 How to Design Channels (slide 1 of 4) • Intensive distribution: widely distributed • Drugstores, supermarkets, discount stores, convenience stores, etc. • Usually for simple, inexpensive, easily transported products • e.g., Snack food, shampoo, newspapers • Pull strategy: promote directly to end consumers to pull through channel © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 13 How to Design Channels (slide 2 of 4) • Selective distribution: limited distribution • Usually for complex and/or expensive products that require assistance • e.g., Most cars, computers, appliances • Push strategy: promote to distribution partners to push goods to consumer • Manufacturer has more control due to fewer relationships to manage © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 14 How to Design Channels (slide 3 of 4) • Exclusive distribution: extremely selective • e.g., Ferrari and Rolex • Manufacturers have the most control • May become monopolistic © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 15 How to Design Channels (slide 4 of 4) • How much distribution? • Design needs to be consistent with other marketing elements • Wide distribution – Usually goes with heavy promotion, lower prices, and average or lower-quality products • Exclusive distribution – Usually goes with less promotion, higher prices, and higher-quality products © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 16 Push vs. Pull Strategies (slide 1 of 2) • Push strategy • Incentives are offered to distribution partners to push products through the channel • Pull strategy • Incentives are offered to consumers to pull products through the channel © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 17 Push vs. Pull Strategies (slide 2 of 2) © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 18 Power and Conflict in Channels • Conflict arises in distribution channels • Some conflict can be healthy • Some conflict can end a partnership • Power • Power is usually defined by size • Power can be used to win conflict • Exerting power over distribution partners can lead to resentment and lack of cooperation © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 19 Transaction Cost Analysis (TCA) • Model that considers channel members’ production costs & governance costs • Goal is to minimize both costs • Production cost • Cost of producing/bringing product to market • Governance cost • Cost involved with relational issues incurred by coordinating enterprise and controlling one’s partners © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 20 Transaction Value Analysis • Perspective that emphasizes the benefits a company brings to its partners • Goes beyond cost reductions • Uses human relationship terms • Communication enhances trust • Trust is the willingness and ability to deliver on promises © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 21 Ways to Resolve Conflict • • • • Communicate Exchange personnel Sponsor joint research projects Mediation • Negotiate through a third party that determines the two parties’ utility functions • Arbitration • The third party makes a binding decision for the two parties © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 22 Revenue Sharing (slide 1 of 2) • Double marginalization: the problem • The manufacturer wants a markup • The retailer wants a second markup © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 23 Revenue Sharing (slide 2 of 2) • Double marginalization: solutions © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 24 Discussion Question #2 • Why wouldn’t the manufacturer just avoid the double marginalization problem entirely and go directly to the consumer? © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 25 Integration (slide 1 of 3) • All functions within a channel need to be completed • Revisit make-or-buy decision • Make: complete a function yourself • Buy: outsource a function © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 26 Integration (slide 2 of 3) • Vertical integration • Moving backward or forward in a channel • Forward integration • Moving forward in a distribution channel • e.g., Manufacturer opens its own retail stores • Backward integration • Moving backward in a distribution channel • e.g., Manufacturer controls raw materials or retailer sets up private label © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 27 Integration (slide 3 of 3) • Private label • Type of backward integration • Advantages • Gives retailer negotiating power with manufacturers • Offers significant margins • Helps differentiate retailer from other retailers – e.g., Great Value oatmeal is only at Walmart © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 28 Global Channels • Channels can be complicated © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 29 Discussion Questions #3 1. How might Anheuser-Busch engage in forward integration? 2. How might Google engage in backward integration? © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 30 Retailing & Retail Classifications • Retailers have been gaining power and momentum over the past 10–20 years • Retailers are classified by ownership, level of service, and product assortment • Management’s level of ownership • Independent retailers • Branded store chains • Franchises © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 31 Retailing Classifications • Level of service provided • Usually related to price points • Product assortment carried • Specialty: carry depth not much breadth – e.g., Toy stores • General merchandise: carry breadth but not much depth – e.g., Department stores © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 32 Retailing Employees • Retail employees are important • Connect the retailer and its customers • Retailers should hire selectively, train well, and pay fairly • Dissatisfied employees can lead to dissatisfied customers and employee turnover • Employee turnover leads to new associates who cause further customer dissatisfaction © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 33 Retailing Operations • Retailing is a service • Retailers should flowchart operations • Front-stage: elements customers see • Backstage: elements customers do not see • Must be run efficiently to support front-stage • The goal is to create effective and efficient processes • Self-service is a way to streamline © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 34 Retailing Location • Location is important • Determine appropriate success factors for your specific business; analyze locations to pick ideal sites • e.g., Population densities, income and social class distributions, median ages, household composition © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 35 Retailing Growth Strategies • • • • Provide additional services Target additional segments Open multiple stores Expand internationally • e.g., Exporting, joint ventures, direct foreign investment, and license agreements • Global outsourcing • e.g., India & technology, China & manufacturing © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 36 Franchising • Unique format of multisite expansion • Company can retain some control without complete ownership or capital expenditure • Benefits • Franchisor: receives capital, scales of economy, committed people, less risk, can focus on core functions • Franchisee: well-known brand and some market awareness, supplier relationships, templates for training, central support © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 37 Types of Franchising • Product franchising • Supplier authorizes a distributor in a territory to carry its products, use its brand name, benefit from its advertising, etc. • e.g., Ford dealers, Coca-Cola bottlers • Business format franchising • Company offers a proven system to conduct business, marketing support, brand name, advertising, etc., to the franchisee • e.g., McDonald’s, Holiday Inn © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 38 E-Commerce • The Internet is an important channel • Online retail sales are about $180 billion, growing about 10\% a year • Still only 11\% of total retail sales • Customers are younger and more affluent • Customer characteristics are changing to match customers in general markets • United States dominates but not by much © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 39 Asian Internet Penetration Percentages © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 40 Discussion Question #4 • How do you see the future for the distribution of entertainment programs? © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 41 Catalog Sales • Top 10 catalogers are B2B companies • e.g., Dell, Staples, etc. • 80 of the top 100 catalogers continue to see sales growth • Internet is well-suited for a search while catalogs still dominate browsing • Catalogs often complement not compete with Internet © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 42 Sales Force (slide 1 of 3) • Utilized extensively with a push strategy • Important with undifferentiated products • Issues • How many? • How to compensate them? • Usually salary plus bonuses • Tie compensation to performance evaluation • Sales force evaluation factors • e.g., Sales, time with clients, expertise © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 43 Sales Force (slide 2 of 3) • Sales force size • Estimate workload • 100,000 stores • 12 visits each per year for 30 minutes • 50 weeks per year × 40 hours a week = 2,000 hours • 500 of these hours will be spent on travel and administrative duties • (100,000 accounts × 12 visits per year × 0.5 hour)/1,500 hours = 400 salespeople © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 44 Sales Force (slide 3 of 3) • B2B customers’ biggest complaints about salespeople • The salesperson isn’t following my company’s buying process • They don’t listen to my needs • They didn’t bother to follow up © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 45 Discussion Questions #5 1. What criteria would you utilize to evaluate a car salesperson? 2. How would you tie compensation to this evaluation? © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 46 Integrated Marketing Channels • As the number of channels proliferates, increasing care must be taken to coordinate and integrate across them • Companies must understand customer behavior in order to design effective distribution channels and to allocate resources across channel options • Know your customer! © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 47 Managerial Recap (slide 1 of 2) • Distribution channels are the link from the manufacturer to the customer • Numerous thoughtful decisions must be made in designing channels © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 48 Managerial Recap (slide 2 of 2) • Channel entities are independent yet interdependent organizations; thus, conflicts may arise • Conflicts are best addressed by employing good communication and trust, revenue sharing, or greater vertical integration © 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. 49 ... Purchase answer to see full attachment