Вы находитесь на странице: 1из 103

Marketing Channels and Supply Chain Management

2012 Principles of Marketing: An Asian Perspective

Chapter 12 Outline
12.1
12.2
12.3
12.4
12.5
12.6

Supply Chains and the Value Delivery Network


Channel Behavior and Organization
Channel Design Decisions
Channel Management Decisions
Public Policy and Distribution Decisions
Marketing Logistics and Supply Chain Management

2012 Principles of Marketing: An Asian Perspective

Opening Case
Caterpillar: Working in Harmony to Bring Value to Customers

2012 Principles of Marketing: An Asian Perspective

12.1
Supply Chains and the Value Delivery Network

2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Supply chain
The supply chain consists of upstream and downstream partners.

2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Upstream activities
Upstream from the company is the set of firms that supply the raw
materials, components, parts, information, finances, and expertise
needed to create a product or service.

2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Downstream activities
Marketers have traditionally focused on the downstream side of the
supply chainon the marketing channels (or distribution channels)
that look forward toward the customer.

2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

The demand chain


A

better term would be demand chain because it suggests a senseand-respond view of the market.
Under

this view, planning starts with


the needs of target customers, to
which the company responds by
organizing a chain of resources and
activities with the goal of creating
customer value.

2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Value delivery network

A value delivery network is made up of the company, suppliers,


distributors, and ultimately customers who partner with each other
to improve the performance of the entire system.

2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Marketing Channels
Producers try to forge a marketing channel (or distribution
channel) which is a set of interdependent organizations that help
make a product or service available for use or consumption by the
consumer or business user.

10 2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Key issues in this chapter


There are four major questions concerning marketing channels:
1.What is the nature of marketing channels and why are they
important?
2.How do channel firms interact and organize to do the work of the
channel?
3.What problems do companies face in designing and managing their
channels?
4.What role do physical distribution and supply chain management
play in attracting and satisfying customers?

11 2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

The role of marketing intermediaries is to transform the assortments of


products made by producers into the assortments wanted by
consumers.
12 2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Functions of marketing channel members:


completing transactions
Informationgathering

and distributing marketing research and


intelligence information about actors and forces in the marketing
environment needed for planning and aiding exchange.
Promotiondeveloping

and spreading persuasive communications

about an offer.

13 2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Functions of marketing channel members:


completing transactions
Contactfinding

and communicating with prospective buyers.

Matchingshaping

and fitting the offer to the buyers needs, including


activities such as manufacturing, grading, assembling, and packaging.
Negotiationreaching

an agreement on price and other terms of the


offer so that ownership or possession can be transferred.

14 2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Role of intermediaries

15 2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Functions of marketing channel members:


facilitating the completion of transactions
Physical

distributiontransporting and storing goods.


Financingacquiring and using funds to cover the costs of the channel
work.
Risk takingassuming the risks of carrying out the channel work.

16 2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Reviewing the Key Concepts


Explain why companies use marketing channels and discuss the
functions these channels perform.

17 2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Number of channel levels


A

channel level is each layer of marketing intermediaries that


performs some work in bringing the product and its ownership closer
to the final buyer.
The

number of intermediary levels indicates the length of a channel.


(Figure 12.2)

18 2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Number of channel levels


A

direct marketing channel has no intermediary levels; the


company sells directly to consumers.
An

indirect marketing channel contains one or more


intermediaries.
From the producers point of view, a greater number of levels mean
less control and greater channel complexity.

19 2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Consumer and Business Marketing Channels

20 2012 Principles of Marketing: An Asian Perspective

12.1 Supply Chains and the Value Delivery Network

Direct marketing channels


A direct marketing channel, has no intermediary levels; the
company sells directly to consumers. For example, Avon and Amway
sell their products door to door, through home and office sales parties,
and on the Web.

21 2012 Principles of Marketing: An Asian Perspective

12.2
Channel Behavior and Organization

22 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization

Channel Behavior

A marketing channel consists of firms that have partnered for their


common good. Each channel member depends on the others.
Each channel member plays a specialized role in the channel. The
channel will be most effective when each member assumes the
tasks it can do best.
Disagreements over goals, roles, and rewards generate channel
conflict.

23 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization

Channel Cooperation

24 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization

Channel conflict

Horizontal conflict occurs among firms at the same level of the


channel.

Vertical conflict occurs between different levels of the same


channel.

25 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization

Channel conflict

26 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization


Comparison of conventional distribution with vertical
marketing system

27 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization

Conventional distribution channel

A conventional distribution channel consists of one or more


independent producers, wholesalers, and retailers.

Each is a separate business seeking to maximize its own profits,


perhaps even at the expense of the system as a whole.

28 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization

Vertical Marketing System (VMS)

A vertical marketing system (VMS) consists of producers,


wholesalers, and retailers acting as a unified system.

One channel member owns the others, has contracts with them, or
wields so much power that they must all cooperate. (Figure 12.3)

29 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization

Corporate VMS

30 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization

Corporate VMS
A

Corporate VMS integrates successive stages of production and distribution


under single ownership. Zara is an example:

Zara

has control over almost every aspect of the supply chain, from design and
production to its own worldwide distribution network.

Zara

makes 40 percent of its own fabrics and produces more than half of its
own clothes, rather than relying on a hodgepodge of slow-moving suppliers.

31 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization

Corporate VMS
New

designs feed into Zara manufacturing centers, which ship finished


products directly to Zara stores in 68 countries, saving time, eliminating the
need for warehouses, and keeping inventories low.

Effective

vertical integration makes Zara faster, more flexible, and more


efficient than its competitors.

32 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization

Contractual VMS
A contractual VMS consists of
independent firms at different
levels of production and
distribution who join together
through contracts to obtain
more economies or sales
impact than each could
achieve alone.

33 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization


Franchised VMS
The franchise organization
is the most common type of
contractual relationship. A
channel member called a
franchisor links several stages
in the production-distribution
process

34 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization


3 types of franchises:
The

manufacturer-sponsored retailer franchise systemfor example,


Toyota and its network of independent franchised dealers.
The manufacturer-sponsored wholesaler franchise systemCoca-Cola
licenses bottlers (wholesalers) in various markets who buy Coca-Cola
syrup concentrate and then bottle and sell the finished product to
retailers in local markets.
The service-firm-sponsored retailer franchise systemexamples are
found in the auto-rental business (Avis), the fast-food service
business (McDonalds), and the motel business (Hilton).

35 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization


Administered VMS
In an administered VMS,
leadership is assumed not
through common ownership or
contractual ties but through the
size and power of one or a few
dominant channel members.

36 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization


Horizontal System
Happens when two or more
companies at one level join
together to follow a new
marketing opportunity.

37 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization


Multichannel Distribution Systems
This occurs when a
single firm sets up
two or more
marketing channels
to reach one or more
customer segments.

38 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization


Multi-channel Systems

39 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization


Changing channel organizations

Disintermediation Besides selling tickets


through travel agents and from its
salespeople, Singapore Airlines also sells its
tickets through its Web site.
(www.singaporeair.com)
40 2012 Principles of Marketing: An Asian Perspective

Changes in technology and


the explosive growth of
direct and online marketing
have affected the nature and
design of marketing
channels. One major trend is
toward disintermediation.
Disintermediation occurs
when product or service
producers cut out
intermediaries and go
directly to final buyers, or
when radically new types of
channel intermediaries
displace traditional ones.
For example, companies
such as Dell and Singapore
Airlines sell directly to final
buyers, cutting retailers from
their marketing channels.

12.2 Channel Behavior and Organization


New forms of resellers

In other cases, new forms of


resellers are displacing
traditional intermediaries.
For example, online marketing
is taking business away from
traditional brick-and-mortar
retailers. Consumers can book
hotel rooms and airline tickets
from zuji.com and electronics
from Sonystyle.com.
Online music download
services such as iTunes are
threatening the existence of
traditional music store
retailers.

Online marketers such as zuji.com offer a


new form of reselling, replacing traditional
brick-and-mortar retailers.
41 2012 Principles of Marketing: An Asian Perspective

Amazon.com has a reputation


for strong service by letting
customers get what they want
without ever talking to an
employee.

12.2 Channel Behavior and Organization


Problems and opportunities of disintermediation
Disintermediation

presents problems and opportunities.

To

avoid being swept aside, traditional intermediaries must find new


ways to add value to the supply chain.
To

remain competitive, product and service producers must develop


new channel opportunities such as the Internet and other direct
channels.

42 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization


Problems and opportunities of disintermediation
However,

developing these new channels often brings them into


direct competition with their established channels, resulting in
conflict.

43 2012 Principles of Marketing: An Asian Perspective

12.2 Channel Behavior and Organization


Avoiding disintermediation problems

44 2012 Principles of Marketing: An Asian Perspective

Black & Decker knows that many customers


might prefer to buy its power tools and
outdoor power

equipment online.

But selling directly through its Web site


would create conflicts with its retail
partners.

So, although Black & Deckers Web site


provides detailed information about the
companys products, you cant buy them
there.

Instead, the Black & Decker site refers you


to resellers Web sites and stores.

Thus, Black & Deckers direct marketing


helps both the company and its channel
partners.

12.2 Channel Behavior and Organization


Reviewing the Key Concepts
Discuss how channel members interact and how they organize to
perform the work of the channel.

45 2012 Principles of Marketing: An Asian Perspective

12.3
Channel Design Decisions

46 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions

Channel Design

ANALYZE CONSUMER
NEEDS

SET CHANNEL
OBJECTIVES

IDENTIFY CHANNEL
ALTERNATIVES

EVALUATION

47 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions

Designing a channel system

48 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions


Analyze needs

The company must


balance consumer needs
not only against the
feasibility and costs of
meeting these needs but
also against customer
price preferences

49 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions


Analyze needs

Designing the marketing channel


Marketers need to know what target
consumers want from the channel, for
example, whether they prefer to buy in
person or online.

50 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions

Setting Channel objectives

Companies should state their marketing channel objectives in terms of targeted levels of customer
service.
The company should decide which segments to serve and the best channels to use in each case.
The companys channel objectives are influenced by the nature of the company, its products, its
marketing intermediaries, its competitors, and the environment.
Environmental factors such as economic conditions and legal constraints may affect channel
objectives and design.
51 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions

Identifying Major Alternatives


A.Types

of Intermediaries
A firm should identify the types of channel members available to
carry out its channel work.

B.Number

of Marketing Intermediaries
Companies must also determine the number of channel members
to use at each level.

52 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions

Number of intermediaries

Companies must also determine the number of channel members to


use at each level. Three strategies are available:

Few

Many
Number of
Outlets

EXCLUSIVE
53 2012 Principles of Marketing: An Asian Perspective

SELECTIVE

INTENSIVE

12.3 Channel Design Decisions

Intensive distribution

Intensive distributionideal for producers of convenience products


and common raw materials. It is a strategy in which they stock their
products in as many outlets as possible.

54 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions


Exclusive distribution

Exclusive distributionis when producers purposely limit the


number of intermediaries handling their products. The producer gives
only a limited number of dealers the exclusive right to distribute its
products in their territories.

55 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions


Exclusive distribution

56 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions


Selective distribution

Selective distributionis the use of more than one, but fewer than
all, of the intermediaries who are willing to carry a companys
products.

57 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions

Reviewing the Key Concepts


Identify the major channel alternatives open to a company.

58 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions

Responsibilities of channel members


The

producer and intermediaries need to


agree on the terms and responsibilities of
each channel member.
They

should agree on price policies,


conditions of sale, territorial rights, and
specific services to be performed by each
party.

59 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions

Evaluating the channel alternatives


Using

economic criteria, a company compares the likely sales, costs,


and profitability of different channel alternatives.
Control

issues must be considered. Using intermediaries means


giving them some control over the marketing of the product, and
some intermediaries take more control than others.
Adaptability

criteria must be applied. Companies want to keep the


channel flexible so that it can adapt to environmental changes.

60 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions

Designing international distribution channels


International marketers face many
additional complexities in designing
their channels.
Each country has its own unique
distribution system that has
evolved over time and changes very
slowly.
These channel systems can vary
widely from country to country.
Thus, global marketers must
usually adapt their channel
strategies to the existing structures
within each country.

61 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions

Designing international distribution channels


In some markets, the distribution
system is complex and hard to
penetrate, consisting of many
layers and large numbers of
intermediaries.
At the other extreme, distribution
systems in developing countries
may be scattered, inefficient, or
altogether lacking.
Sometimes customs or government
regulation can greatly restrict how
a company distributes products in
global markets.
62 2012 Principles of Marketing: An Asian Perspective

The Japanese distribution system


It has remained remarkably traditional.
A profusion of tiny retail shops are
supplied by a large number of small
wholesalers.

12.3 Channel Design Decisions

Designing international distribution channels

International
channel complexities
Barred from door-todoor selling in China,
Avon fell behind trying
to sell through retail
stores. Here, Chinese
consumers buy Avon
products from a
supermarket in
Shanghai. The Chinese
government has since
given Avon permission
to sell door to door.
63 2012 Principles of Marketing: An Asian Perspective

12.3 Channel Design Decisions

Channel Management Decision

Marketing channel management calls for selecting, managing, and


motivating individual channel members and evaluating their performance
over time.
64 2012 Principles of Marketing: An Asian Perspective

12.4
Channel Management Decisions

65 2012 Principles of Marketing: An Asian Perspective

12.4 Channel Management Decisions

Channel management decisions


A.Selecting

Channel Members
When selecting intermediaries, the company should determine
what characteristics distinguish the better ones.

B.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.

66 2012 Principles of Marketing: An Asian Perspective

12.4 Channel Management Decisions

Channel management decisions


C. Evaluating

Channel Members
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.
Finally, manufacturers must be sensitive to their dealers.

67 2012 Principles of Marketing: An Asian Perspective

12.4 Channel Management Decisions

Partner management

Samsung The
Samsung P3 creates
close partnerships with
key value-added
resellers (VARs)
channel members that
assemble IT solutions
for their own
customers using
products from
Samsung and other
manufacturers.

68 2012 Principles of Marketing: An Asian Perspective

12.4 Channel Management Decisions

Reviewing the Key Concepts

Explain how companies select, motivate, and evaluate channel


members.

69 2012 Principles of Marketing: An Asian Perspective

12.5
Public Policy and Distribution Decisions

70 2012 Principles of Marketing: An Asian Perspective

12.5 Public Policy and Distribution Decisions

Public policy and distribution

Exclusive distribution

Exclusive dealing

Exclusive territorial agreements

Tying agreements

71 2012 Principles of Marketing: An Asian Perspective

12.5 Public Policy and Distribution Decisions

Exclusive Distribution Arrangements

72 2012 Principles of Marketing: An Asian Perspective

12.5 Public Policy and Distribution Decisions

Public policy and distribution decisions

Exclusive distribution occurs when the seller allows only 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.

73 2012 Principles of Marketing: An Asian Perspective

12.5 Public Policy and Distribution Decisions

Public policy and distribution decisions

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.

74 2012 Principles of Marketing: An Asian Perspective

12.6
Marketing Logistics and Supply Chain Management

75 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Marketing logistics and supply chain management

76 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
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).

77 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Supply Chain Management

Marketing logistics involves the entire supply chain


managementmanaging upstream and downstream value-added
flows of materials, final goods, and related information among
suppliers, the company, resellers, and final consumers.

78 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Supply Chain Management

79 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Benefits of marketing logistics
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 firms environmental sustainability efforts.

80 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Goals of the Logistics System

The goal of marketing logistics should be to provide a targeted level


of customer service at the least cost.

81 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Goals of the Logistics System
Dell applied its direct model in
China where products are
made-to-order. This just-intime logistics system reduces
inventory holding costs.

82 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Logistics functions
Warehousing

Inventory

Management

Transportation

Information

Management

83 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Designing a Logistic system

84 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
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.

85 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
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.

86 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Inventory Management

Logistics technology RFID


or smart tag technology could
make the entire supply chain
intelligent and automated.

87 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Transportation modes

88 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Transportation modes

Railroads In Asia,
railroads are one of the
most cost-effective
modes of shipping large
amounts of bulk
products such as coal.

89 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Inter-modal transportation
Intermodal transportation means combining two or more modes of
transportation.

Piggybackrail and trucks

Fishybackwater and trucks

Trainshipwater and rail

Airtruckair and trucks

90 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Logistics Information management

91 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
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, is 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.

92 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
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.
Involves
1.
2.

two main aspects:


Cross-Functional Teamwork Inside the Company
Building Logistics Partnerships

93 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Integrated logistics management

Logistics management
Lower inventory levels
reduce inventorycarrying costs, but they
may also reduce
customer service and
increase costs from
stockouts, back orders,
and costly fast-freight
shipments.

94 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Cross-Functional Teamwork Inside the Company

The goal of integrated supply chain management is to harmonize


all of the companys 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.
Supply chain manager positions that link the logistics activities of
functional areas.
System-wide supply chain management software
95 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Building Logistics Partnerships
Companies

must do more than simply improve their own logistics.


They must also work with other channel partners to improve wholechannel distribution.
The members of a marketing channel are linked closely in creating
customer value and building customer relationships.
One companys distribution system is another companys supply
system.
The success of each channel member depends on the performance of
the entire supply chain.

96 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Building Logistics Partnerships

For example, IKEA can create its stylish but


affordable furniture and deliver the IKEA
lifestyle only if its entire supply chain
consisting of thousands of merchandise
designers and suppliers, transport companies,
warehouses, and service providersoperates at
maximum efficiency and customer-focused
effectiveness.
97 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Building Logistics Partnerships
Cross-functional, cross-company teamsfor
example, P&G employees work jointly with
their counterparts at Walmart to find ways to
squeeze costs out of their distribution system.
Similarly, Gap, Nike, and many global brands
that source production capacity from Asian
countries, particularly China, are investing
huge amounts of executive time and money in
their logistics systems to retain or improve
their competitive advantage as their
operations continue to grow.

98 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
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. (Also called outsourced logistics
or contract logistics.)
Companies use third-party logistics providers for several reasons:
These providers can often do it more efficiently and at a lower
cost.
Outsourcing logistics frees a company to focus more intensely on
its core business.
Integrated logistics companies understand increasingly complex
logistics environments.
99 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Third-Party Logistics

100 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Reviewing the Key Concepts
Discuss the nature and importance of marketing logistics and
integrated supply chain management.

101 2012 Principles of Marketing: An Asian Perspective

12.6 Marketing Logistics and Supply Chain


Management
Company Case
Zara: The Technology Giant of the Fashion Word

102 2012 Principles of Marketing: An Asian Perspective

Thank
you