Connected chain of all the business entities, both internal and external to the company, that perform or support the logistics function
Supply chain management
Management system that integrates all the activities performed by supply chain members into a seamless process, from the source to the point of consumption.
Reduced costs in inventory management, transportation, warehousing and packaging.
Improved service (time based delivery, make to order)
Higher product availability, more customized products.
Intensive - having a product available in every outlet where someone might want to buy
Selective - screening dealers to eliminate all but a few in a single area
Exclusive - established one or a few dealers w/in a given area.
Channel structures (consumer)
Direct channel - producers sell directly to consumers
Agent/channel broker - used in markets w/ many small manufacturers and retailers that lack resources to find one another. Agents bring them together for negotiations.
Retailer channel - common when retailer is large and can buy in lg. quantities directly from manufacturer
Wholesaler channel - commonly used for low-cost items frequently purchased such as candy, cigarettes and magazines.
Alternate channel arrangements
Multiple channels / Dual distribution - use of 2+ channels to dist. the same product to target market
Nontraditional channels - internet, mail order or informercials
Strategic channel alliances - cooperative agreement btwn businesses to use other's already est. distribution channel
Factors affecting channel choice
Target customer considerations
Geographic location and size
lg markets = more intermediaries
concentrated target = direct selling
More complex and expensive products need shorter/more direct channels
Sell better through direct sales. Ex, pharmaceuticals,, airplanes, etc.
Product's life cycle
Delicacy of product - perishables have short life span
Large financial/marketing resources better able to use direct channels
Can hire own sales force, warehouse, etc
Quantity - diff. btwn the amt of product produced and the amount an end user wants to buy
Assortment - lack of all the items a customer needs to receive full satisfaction from a product.
Temporal - when a product is produced but a customer isnt ready to buy it. Ex - christmas decorations
Special discrepancy - diff. btwn the location of a producer and location of widely scattered markets
Channel power - Capacity of a particular marketing channel member to control or influence the behavior of others
Channel control - When one marketing channel member intentionally affects another's behavior.
A member of a marketing channel that exercises authority and opwer over the activities of others
Horizontal conflict - channel conflict that occurs among members on the same level Vertical conflict - occurs btwn diff. levels in a marketing channel, most typically btwn the manufacturer and wholesaler/retailer.
Strategically managing the efficient flow of storage and raw mtls, in-process inventory, and finished goods from point of origin to point of consumption.
Sourcing and procurement of raw mtls/supplies
Warehousing and mtls handling
For the manufacturer - means that raw mtls arrive at the assembly line in guaranteed working order just in time to be installed. Finished products generally shipped to the customer after completion.
For the supplier - means supplying customer w/ products in just a few days rather than weeks For the consumer - lower costs, shorter lead times, and products that more closely meet consumer's needs
Types of transportation, trade-offs
Air - most expensive, low reliability, but fastest transit time and highest tracability
Truck - highly accessible, lower transit times, more expensive
Rail - higher transit time, middle of the road every where else
Pipe - lower cost, most reliable, but very low capacity/accessibility/traceability.
Water - lowest cost, lowest reliability/transit time, but very capable.
Manufacturers use of an independent third party to manage an entire function of the logistics system, such as transportation, warehousing or order processing.
Global logistics and supply chain management
Shippers and distributors must be aware of the permits, licenses and registrations they may need to acquire, and any tariffs/quotas etc that apply in each country.
Transportation can be a major issue w/ global supply chains
Uncertainty regarding shipping is the top reason companies avoid international markets.
Classifying retail operations
Chain stores - owned as a group by a single organization
Franchise - right to operate a business/sell a product
Level of service
Full service or Self service
Gross margin - amt of $ a retailer makes as a percentage of sales after COGS is subtracted.
Major types, focus just on high-level categories
Department stores - housing several depts under one roof
Specialty stores - specializes in one type of merch.
Supermarkets - mainly food/groceries
Drugstores - mainly pharmacy
Convenience stores - mini. supermarket, limited line of high turnover goods
Discount store - competes on low prices and high volume (see other card)
Tendency to offer a wide variety of nontraditional goods and services under one roof.
Non-store retailing, types/characteristics
Shopping without a store.
Ex: automatic vending
Selling products through door to door representatives or at home parties.
Catalogs and mail order
Product and trade name franchising - dealer agrees to sell certain products provided by manufacturer
Business format franchising - ongoing relationship where a franchisor grants the business operating rights to a franchisee.
Retail strategy, steps
1. Defining target market
based on demographic, geographic or psychographic characteristics
2. Develop marketing mix:
Key retail strategies
The product offering
Presentation of store/Atmosphere
Employee type (friendly, knowledgeable) and density
Merchandise type and density
Sound - control the pace of traffic, attract a shoppers attention
Visual factors - colors create a mood or focus attention
Personnel, customer service
New developments in retailing
Interactivity - ex: Build-a-Bear workshop M-commerce - enables consumers w/ wireless devices to connect to the internet and shop
Set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer.
Channel structures (business/industrial)
Direct channels are typical
Industrial wholesalers - channel members who buy and take title to products
Private exchange - company creates a network so it can connect its business w/ suppliers
Discount store (types)
Full line- very limited service, broad assortment of well known branded goods
Specialty - Offers nearly complete selection of single line merch., uses self-service, discount prices and high volume
Warehouse membership clubs - limited service wholesalers that sell a limited selection of brand name household items
Off price retailer - sells at prices 25% or more below dept. store prices because it pays cash for stock.
Functions performed by Intermediaries
Contacting and Promoting
Negotiating (type of transportation, method of payment, when to deliver)
Risk taking (of owning inventory)
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