Discuss the nature and importance

Một phần của tài liệu Ebook Marketing an introduction (13th edition): Part 2 (Trang 31 - 35)

Marketing logistics (or physical distribution) is an area of potentially high cost savings and improved customer satisfac- tion. Marketing logistics addresses not only outbound logistics but also inbound logistics and reverse logistics. That is, it in- volves the entire supply chain management—managing value- added flows between suppliers, the company, resellers, and final users. No logistics system can both maximize customer service and minimize distribution costs. Instead, the goal of logistics management is to provide a targeted level of service at the least cost. The major logistics functions are warehousing, inventory management, transportation, and logistics information management.

The integrated supply chain management concept recog- nizes that improved logistics requires teamwork in the form of close working relationships across functional areas inside the company and across various organizations in the supply chain. Companies can achieve logistics harmony among func- tions by creating cross-functional logistics teams, integrative supply manager positions, and senior-level logistics executive positions with cross-functional authority. Channel partnerships can take the form of cross-company teams, shared projects, and information-sharing systems. Today, some companies are out- sourcing their logistics functions to third-party logistics (3PL) providers to save costs, increase efficiency, and gain faster and more effective access to global markets.

key terms

objective 10-1

Value delivery network (p 328)

Marketing channel (distribution channel) (p 329)

Channel level (p 331)

Direct marketing channel (p 331) Indirect marketing channel (p 331) objective 10-2

Channel conflict (p 332)

Conventional distribution channel (p 333)

Vertical marketing system (VMS) (p 333)

Corporate VMS (p 334) Contractual VMS (p 334) Franchise organization (p 334) Administered VMS (p 335)

Horizontal marketing system (p 335) Multichannel distribution system

(p 336)

Disintermediation (p 336) objective 10-3

Marketing channel design (p 339) Intensive distribution (p 341) Exclusive distribution (p 341) Selective distribution (p 341)

objective 10-4

Marketing channel management (p 343)

objective 10-5

Marketing logistics (physical distribution) (p 347)

Supply chain management (p 348) Distribution center (p 350) Multimodal transportation (p 352) Integrated logistics management

(p 353)

Third-party logistics (3PL) provider (p 354)

Discussion Questions

10-1. Compare and contrast upstream and downstream part- ners in a company’s supply chain. Explain why value delivery network might be a better term to use than sup- ply chain. (AACSB: Communication)

10-2. Compare direct marketing channels and indirect mar- keting channels. Name the various types of resellers in marketing channels. (AACSB: Communication) 10-3. Name and describe the three strategies available when

determining the number of marketing intermediaries.

(AACSB: Communication; Reflective Thinking) 10-4. List and briefly describe the major logistics functions.

Provide an example of a decision a logistics manager would make for each major function. (AACSB: Com- munication; Reflective Thinking)

10-5. What are third-party logistics providers, and why do companies use them? (AACSB: Communication) 10-6. The most common type of contractual vertical market-

ing system is the franchise organization. Visit the In- ternational Franchise Association at www.franchise.org

and find a franchise that interests you. Write a report describing the franchise. Identify what type of franchise it represents and research the market opportunities for that product or service. (AACSB: Communication; Use of IT; Reflective Thinking)

10-7. Form a small group and research the distribution chal- lenges faced by companies expanding into emerging international markets such as China, Africa, and India.

Develop a multimedia presentation on how one com- pany overcame these challenges. (AACSB: Communi- cation; Reflective Thinking; Use of IT)

10-8. Although most big companies love to make and sell their products, many loathe the associated logistics. They dis- like the bundling, loading, unloading, sorting, storing, reloading, transporting, customs clearing, and tracking.

What advantages are there to businesses in using third- party logistics? Investigate how the growth of third- party logistics has affected distribution in your own country.

(AACSB: Communication; Reflective Thinking)

Do you think that you have what it takes to write a best- selling novel? In the past, authors had to go through tradi- tional publishing houses to print and distribute their work, but technology has turned the publishing industry on its head.

Although aspiring authors could always self-publish a book, selling it through the traditional channels—bookstores—was only a pipe dream for most. But that has all changed thanks to the Internet and social media. Amazon’s Kindle Direct Publishing is a popular platform for self-publishers, but oth- ers such as Smashwords, Author Solutions, and Fast-Pencil offer similar services with hundreds of thousands of authors and titles. For example, Amanda Hocking’s self-published e-book sales caught the attention of a publisher, and now the former social worker is a millionaire. Self-published books have grown nearly 300 percent in less than 10 years, with the majority being e-books. Almost 40 percent of readers now own e-readers, such as Kindles and iPads. That creates

opportunities for anyone wanting to distribute their works to these avid readers. For example, after being turned away by traditional publishers, author Christine Bronstein created her own online social network to promote her book, Nothing but the Truth, So Help Me God: 51 Women Reveal the Power of Positive Female Connection, which launched on Amazon and Barnes & Noble sites.

10-9. Visit a self-publishing site such as Amazon’s Kindle Direct (https://kdp.amazon.com) and create a presenta- tion to give to aspiring authors about distributing their works this way. (AACSB: Communication; Use of IT;

Reflective Thinking)

10-10. What other industries’ channels of distribution have been affected dramatically by online, mobile, and so- cial media? (AACSB: Communication; Reflective Thinking)

Minicases anD aPPlications

online, Mobile, and social Media Marketing self-Publishing

Marketing by the numbers tyson expanding Distribution

Tyson Foods is the largest U.S. beef and chicken supplier, processing more than 100,000 head of cattle and 40-plus million chickens weekly. Primary distribution channels are supermarket meat departments. However, the company is now expanding distribution into convenience stores. There are almost 150,000 gas stations and convenience stores where the company would like to sell hot Buffalo chicken bites near the checkout. This is a promising channel, as sales are growing considerably at these retail outlets and profit margins on prepared foods are higher than selling raw meat to grocery stores. Tyson will have to hire 10 more sales rep- resentatives at a salary of $45,000 each to expand into this distribution channel because many of these types of stores are

independently owned. Each convenience store is expected to generate an average of $50,000 in revenue for Tyson. Refer to Appendix 3: Marketing by the Numbers to answer the follow- ing questions.

10-13. If Tyson’s contribution margin is 30 percent on this product, what increase in sales will it need to break even on the increase in fixed costs to hire the new sales reps?

(AACSB: Communication; Analytical Reasoning) 10-14. How many new retail accounts must the company

acquire to break even on this tactic? What average num- ber of accounts must each new rep acquire? (AACSB:

Communication; Analytical Reasoning)

Video case Progressive

Progressive has attained top-tier status in the insurance industry by focusing on innovation. Progressive was the first company to offer drive-in claims service, installment payment of premiums, and 24/7 customer service. But perhaps Progressive’s most in- novative moves involve its channels of distribution. Whereas most insurance companies distribute via intermediary agents or direct-to-consumer methods, Progressive was one of the first to see value in doing both. In the late 1980s, it augmented its agency distribution with a direct 800-number channel.

Two decades ago, Progressive moved into the digital fu- ture by becoming the first major insurer to launch a Web site.

Soon after, it allowed customers to buy auto insurance policies online in real time. Today, customers can use Progressive’s

Web site to do everything from managing their own account in- formation to reporting claims directly. Progressive even offers one-stop concierge claim service.

After viewing the Progressive video segment, answer the following questions about marketing channels.

10-15. Apply the concept of the supply chain to Progressive.

10-16. Using the model of consumer and business channels found in the chapter, sketch out as many channels for Progressive as you can. How does each of these chan- nels meet distinct customer needs?

10-17. Discuss the various ways that Progressive has had an impact on the insurance industry.

Marketing ethics ethical sourcing

Lush, the fresh cosmetics company, was launched in 1995. The team behind the new business had designed many of the most successful body shop products. In less than 20 years, Lush has grown to over 850 stores in over 50 countries worldwide and includes over 6,000 employees.

From the outset, the company was concerned about en- suring that they ethically sourced their product ingredients.

This has become a key USP, and together with its anti-animal testing stance and freshly made ethos, it sets the business apart from most of its competitors. It does mean that the prices for products are marginally higher, but this is offset by the unique minimalist packaging and general vibe of the brand.

When Lush looks for suppliers, they consider the whole picture. To them, it is important that to take into account the conditions under which any workers may operate, whether pro- duction of the ingredient impacts on the environment, whether the ingredients are vegetarian and have not been tested on ani- mals, and whether the impact from transportation is minimal.

Today, Lush indirectly supports 400 women in Ghana who supply fair trade shea butter and have stopped using palm oil from Indonesia in order to protect the natural habitat of the orang-utan. They also buy directly from small farmers in Tunisia, Costa Rica, the Dominican Republic, and Laos.

Source: Lush, https://www.lushsg.com; “Ethical Buying Policy,” https://www.

lush.co.uk/article/ethical-buying-policy.

10-11. Write a brief report on a business of your choice that ex- clusively uses ethical sourcing. What are the criteria that are being used to establish the ethical standards they op- erate? (AACSB: Communication; Reflective Thinking) 10-12. Should ethical sourcing be the default standard for

all businesses? (AACSB: Communication; Reflective Thinking; Ethical Reasoning)

company cases 10 apple Pay/15 7-eleven

See Appendix 1 for cases appropriate for this chapter. Case 10, Apple Pay: Taking Moble Payments Mainstream. In the past, Apple has disrupted marketing channels with revolution- ary products. With Apple Pay, Apple is proving once again that

it can deliver. Case 15, 7-Eleven: Adapting to The World’s Many Cultures. Just a convenience store in the U.S., 7-Eleven has a strong global presence by catering to different distribution strategies throughout the world.

MyMarketingLab

If assigned by your instructor, complete these writing sections from your Assignments in the MyLab.

10-18. Why does channel conflict occur? Name and describe the various types of channel conflict. (AACSB: Communication)

10-19. Should retailers be responsible for safety conditions in garment supplier facto- ries in other countries? Discuss. (AACSB: Written and Oral Communication;

Reflective Thinking; Ethical Understanding and Reasoning)

Part 2: UnDerstanDing the MarketPlace anD cUstoMer ValUe (chaPters 3–5) Part 3: Designing a cUstoMer ValUe-DriVen strategy anD Mix (chaPters 6–14) Part 4: extenDing Marketing (chaPters 15–16)

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