978-0134492513 Chapter 12 Lecture Notes Part 2

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Explain how companies select, motivate, and evaluate

channel members.

CHANNEL MANAGEMENT DECISIONS

Marketing channel management calls for selecting,

managing, and motivating individual channel members and

evaluating their performance over time.

Selecting Channel Members

When selecting intermediaries, the company should

determine which characteristics distinguish the better ones.

Managing and Motivating Channel Members

The company must sell not only through the intermediaries

but to and with them.

Most companies practice strong partner relationship

management (PRM) to forge long-term partnerships with

channel members.

Evaluating Channel Members

The company must check channel member performance

against standards such as sales quotas, average inventory

levels, customer delivery time, cooperation in company

promotion and training programs, and service to the

customer.

The company should recognize and reward intermediaries

who are performing well and adding good value for

consumers.

Those who are performing poorly should be assisted or, as a

last resort, replaced.

Learning Objective

4

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Key Term:

Marketing channel

management

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Ad: CVS

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Photo: Partner

relationship

management:

Amazon and P&G

Assignments, Resources

Use Online, Mobile, and Social Media Marketing

here

Use Real Marketing 12.2 here

Use Small Group Assignment 2 here

p. 351 PUBLIC POLICY AND DISTRIBUTION DECISIONS

Exclusive distribution occurs when the seller allows only

PPT 12-40

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certain outlets to carry its products.

Exclusive dealing occurs when the seller requires that these

dealers not handle competitors’ products.

Exclusive arrangements exclude other producers from

selling to these dealers. This brings exclusive dealing

contracts under the scope of the Clayton Act of 1914.

Exclusive territorial agreements occur when the producer

agrees not to sell to other dealers in a given area, or the

buyer may agree to sell only in its own territory.

Full-line forcing occurs when producers of a strong brand

sell only to dealers if they agree to take some or all of the

rest of the line. This is also known as a tying agreement.

In general, sellers can drop dealers “for cause.”

Review Learning Objective 4: Explain how companies

select, motivate, and evaluate channel members.

Assignments, Resources

Use Marketing Ethics here

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PPT 12-42

PPT 12-43

Discuss the nature and importance of marketing

logistics and integrated supply chain management.

MARKETING LOGISTICS AND SUPPLY CHAIN

MANAGEMENT

Nature and Importance of Marketing Logistics

Marketing logistics (also called physical distribution)

involves planning, implementing, and controlling the

physical flow of goods, services, and related information

from points of origin to points of consumption to meet

customer requirements at a profit.

Marketing logistics involves outbound distribution (moving

products from the factory to resellers and ultimately to

customers), inbound distribution (moving products and

materials from suppliers to the factory), and reverse

distribution (moving broken, unwanted, or excess products

returned by consumers or resellers).

Marketing logistics involves the entirety of supply chain

Learning Objective

5

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Key Terms:

Marketing logistics

(physical

distribution),

Supply chain

management

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Figure 12.5: Supply

Chain Management

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management—managing upstream and downstream

value-added flows of materials, final goods, and related

information among suppliers, the company, resellers, and

final consumers (Figure 12.5).

Companies today are placing greater emphasis on logistics

for several reasons:

1. Companies can gain a powerful competitive

advantage by using improved logistics to give

customers better service or lower prices.

2. Improved logistics can yield tremendous cost

savings to both the company and its customers.

3. The explosion in product variety has created a need

for improved logistics management.

4. Improvements in information technology have

created opportunities for major gains in distribution

efficiency.

5. More than almost any other marketing function,

logistics affects the environment and a firm’s

environmental sustainability efforts.

Sustainable Supply Chains

Companies have many reasons for reducing the

environmental impact of their supply chains. Many large

customers are demanding it. Consumers are demanding it.

It’s also the right thing to do. And they are good for a

company’s bottom line.

Goals of the Logistics System

The goal of marketing logistics should be to provide a

targeted level of customer service at the least cost.

Major Logistics Functions

Warehousing

A company must decide on how many and what types of

warehouses it needs and where they will be located.

Storage warehouses store goods for moderate to long

periods. Distribution centers are designed to move goods

rather than just store them.

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Photo: Logistics

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Key Term:

Distribution center

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Inventory Management

Just-in-time logistics systems: Producers and retailers carry

only small inventories of parts or merchandise, often only

enough for a few days of operations.

Transportation

Trucks have increased their share of transportation steadily

and now account for nearly 40 percent of total cargo

ton-miles in the United States.

Trucks are highly flexible in their routing and time

schedules, and they can usually offer faster service than

railroads.

They are efficient for short hauls of high-value

merchandise.

Railroads account for 37 percent of total cargo ton-miles

moved.

They are one of the most cost-effective modes for shipping

large amounts of bulk products—coal, sand, minerals, and

farm and forest products—over long distances.

Water carriers account for 5 percent of cargo ton-miles and

transport large amounts of goods by ships and barges on

U.S. coastal and inland waterways.

Although the cost of water transportation is very low for

shipping bulky, low-value, nonperishable products, it is the

slowest mode and may be affected by the weather.

Pipelines account for about 1 percent of cargo ton-miles.

They are a specialized means of shipping petroleum, natural

gas, and chemicals from sources to markets.

Air carriers transport less than 1 percent of the nation’s

goods. Airfreight rates are much higher than rail or truck

rates.

The Internet carries digital products from producer to

customer via satellite, cable, or phone wire.

Multimodal transportation means combining two or more

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Photo: Amazon

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Photo:

Transportation

modes

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Photo: Multimodal

transportation

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modes of transportation.

Piggyback—rail and trucks

Fishyback—water and trucks

Trainship—water and rail

Airtruck—air and trucks

Logistics Information Management

Electronic data interchange (EDI) is the computerized

exchange of data between organizations.

Vendor-managed inventory (VMI) systems or continuous

inventory replenishment systems involve the customer

sharing real-time data on sales and current inventory levels

with the supplier. The supplier then takes full responsibility

for managing inventories and deliveries.

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Key Term:

Multimodal

Transportation

Assignments, Resources

Use Critical Thinking Exercise 12-8 here

Use Discussion Question 12-5 here

Troubleshooting Tip

In marketing logistics, the concepts of inbound and

reverse logistics should be fully explained. Most

students, at this point in the chapter, will have no

problems with outbound logistics.

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Integrated Logistics Management

Integrated logistics management is a concept that

recognizes that providing better customer service and

trimming distribution costs require teamwork, both inside

the company and among all the marketing channel

organizations.

Cross-Functional Teamwork Inside the Company

The goal of integrated supply chain management is to

harmonize all of the company’s logistics decisions.

Close working relationships among departments can be

achieved in several ways.

Permanent logistics committees, made up of

managers responsible for different physical

distribution activities

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Key Term:

Integrated logistics

management

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Photo: Integrated

logistics

management;

Oracle

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Supply chain manager positions that link the

logistics activities of functional areas

System-wide supply chain management software

Building Logistics Partnerships

Cross-functional, cross-company teams—for example, P&G

employees work jointly with their counterparts at Walmart

to find ways to squeeze costs out of their distribution

system.

Shared projects—for example, Home Depot allows key

suppliers to use its stores as a testing ground for new

merchandising programs.

Third-Party Logistics

Third-party logistics (3PL) providers help clients tighten

up overstuffed supply chains, slash inventories, and get

products to customers more quickly and reliably. (3PL is

also called outsourced logistics or contract logistics.)

Companies use third-party logistics providers for several

reasons:

1. These providers can often do it more efficiently and

at a lower cost.

2. Outsourcing logistics frees a company to focus more

intensely on its core business.

3. Integrated logistics companies understand

increasingly complex logistics environments.

Review Learning Objective 5: Discuss the nature and

importance of marketing logistics and integrated

supply chain management.

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Key Term:

Third-party logistics

(3PL) provider

Assignments, Resources

Use Company Case here

Use Think-Pair-Share 6 here