Distribution Management
DISTRIBUTION MANAGEMENT
CH1: MARKETING CHANNEL CONCEPTS Growing Importance of Marketing Channels: 1. Explosion of IT and E-commerce 2. Harder to gain sustainable competitive advantage through other P’s 3. Growing power of distributors (esp. retailers who act as gatekeepers of consumer markets – agents of consumers not producers) 4. Need to reduce distribution costs
MC Definition: The external contactual organisation that management operates to achieve its distribution objectives (from view of mgmt. Definition will differ for each stakeholder) External – not part of firm. Contactual organisation – those firms involved in negotiatory functions (buying, selling, transferring title) as a product moves from producer to ultimate user. Operates – implies management involvement in developing MC. Distribution objectives – MC exists as a means of reaching these.
Distribution involves: 1. Channel strategy – broader, the entire process of setting up and operating the MC 2. Logistics management – narrower, providing product availability at time and place in MC
Flows in MCs: · Product flow physical movement of product (top down) · Negotiation flow buying/selling functions (top down – 2 way for WS-R and R-C) · Ownership flow movement of title (top down – 2 way for WS-R and R-C) · Information flow encompasses all players · Promotion flow including advertising, promotions etc involves all players.
Why Use Intermediaries? 1. They are more specialised at distribution functions (therefore more efficient) 2. Contactual efficiency, wholesalers eliminate the need for direct contact with R/C, thus reducing the number of contacts needed. (See pg. 19)
MC structures: see pg. 20 Ancillary Structure The group of institutions
CH1: MARKETING CHANNEL CONCEPTS Growing Importance of Marketing Channels: 1. Explosion of IT and E-commerce 2. Harder to gain sustainable competitive advantage through other P’s 3. Growing power of distributors (esp. retailers who act as gatekeepers of consumer markets – agents of consumers not producers) 4. Need to reduce distribution costs
MC Definition: The external contactual organisation that management operates to achieve its distribution objectives (from view of mgmt. Definition will differ for each stakeholder) External – not part of firm. Contactual organisation – those firms involved in negotiatory functions (buying, selling, transferring title) as a product moves from producer to ultimate user. Operates – implies management involvement in developing MC. Distribution objectives – MC exists as a means of reaching these.
Distribution involves: 1. Channel strategy – broader, the entire process of setting up and operating the MC 2. Logistics management – narrower, providing product availability at time and place in MC
Flows in MCs: · Product flow physical movement of product (top down) · Negotiation flow buying/selling functions (top down – 2 way for WS-R and R-C) · Ownership flow movement of title (top down – 2 way for WS-R and R-C) · Information flow encompasses all players · Promotion flow including advertising, promotions etc involves all players.
Why Use Intermediaries? 1. They are more specialised at distribution functions (therefore more efficient) 2. Contactual efficiency, wholesalers eliminate the need for direct contact with R/C, thus reducing the number of contacts needed. (See pg. 19)
MC structures: see pg. 20 Ancillary Structure The group of institutions