Madhu_PLACE Strategies

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This is useful for MBA teachers and students of marketing management. It is made in lucid style for easier understanding, prepare for exams, and teaching and learning process.

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MARKETING MANAGEMENT:

D.V. Madhusudan Rao Dept. MBA, School of Graduate Studies, Jigjiga University ETHIOPIA MARKETING MANAGEMENT Developing PLACE Strategies 1

Chapter Questions:

Chapter Questions What is a marketing channel system and value network? What work do marketing channels perform? How should channels be designed? What decisions do companies face in managing their channels? How should companies integrate channels and manage channel conflict? What are the key issues with e-commerce? How will be the Future? Is it M-Commerce or ….? 2 1/3/2013

What is a Marketing Channel?:

3 What is a Marketing Channel? A marketing channel system is the particular set of interdependent organizations involved in the process of making a product or service available for use or consumption. 1/3/2013

Channels and Marketing Decisions:

Channels and Marketing Decisions A Push strategy uses the manufacturer’s sales force, trade promotion money, and other means to induce intermediaries to carry, promote, and sell the product to end users Application: It is appropriate for low-brand loyalty products, impulse items, brand choice is made in stores products and products benefits are well understood. A Pull strategy uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries Application: It is appropriate for high brand loyalty and high involvement products, consumers are able perceive differences between brands and when they choose the brand before they go to the store. 4 1/3/2013

Buyer Expectations for Channel Integration:

5 Buyer Expectations for Channel Integration Ability to order a product online and pick it up at a convenient retail location Ability to return an online-ordered product to a nearby store Right to receive discounts based on total online and offline purchases 1/3/2013

Marketing Flows in the Marketing Channel :

Marketing Flows in the Marketing Channel 6 1/3/2013

Categories of Buyers:

Categories of Buyers Habitual shoppers —purchase from the same places in the same manner over time High value deal seekers —know their needs and “channel surf” a great deal before buying at the lowest possible price Variety-loving shoppers —gather information in many channels, regardless of price High-involvement shoppers —gather information in all channels, make their purchases in a low-cost channel, but takes advantage of customer support from a high-touch channel 7 1/3/2013

Consumer Marketing Channels:

Consumer Marketing Channels 1/3/2013 8

Industrial Marketing Channels:

9 Industrial Marketing Channels 1/3/2013

Increasing Efficiency:

10 Increasing Efficiency 1/3/2013

Types of Shoppers:

Types of Shoppers Service/quality customers —care most about the variety and performance of products in stores as well as the service provided Price/value customers —most concerned about spending their money wisely Affinity customers —sought stores that suited people like themselves or the members of groups they aspired to join 1/3/2013

Channel Member Functions:

Channel Member Functions Gather information Develop and disseminate persuasive communications Reach agreements on price and terms Acquire funds to finance inventories Assume risks Provide for storage Provide for buyers’ payment of their bills Oversee actual transfer of ownership 12 1/3/2013

Designing a Marketing Channel System:

13 Designing a Marketing Channel System Analyze customer needs Evaluate major channel alternatives Identify major channel alternatives Establish channel objectives 1/3/2013

Channel Service Outputs:

Channel Service Outputs Lot size —number of units the channel permits a typical customer to purchase on one occasion Waiting/delivery time —average time customers of that channel wait for receipt of the goods Spatial convenience —degree to which the marketing channel makes it easy for customers to purchase the product Product variety —assortment breadth provided by the marketing channel Service backup —add-on services (credit, delivery, installation, repairs) provided by the channel 14 1/3/2013

Channel objectives:

Channel objectives State in terms of targeted service output levels Minimize total cost and still provide desired levels of service output Channel Objectives vary with product characteristics Perishable products—more direct marketing Bulky products—minimize shipping distance Nonstandard products—sold directly by sales representatives Products requiring installation or maintenance service—sold and maintained by company or franchised dealers 15 1/3/2013

Identifying Channel Alternatives:

16 Identifying Channel Alternatives Types of intermediaries Number of intermediaries Terms and responsibilities 1/3/2013

No. of Intermediaries: Strategies:

Intensive Selective Intensive Selective No. of Intermediaries: Strategies = number of outlets Exclusive Market Exposure Strategies 17 1/3/2013

Exclusive Distribution:

18 Exclusive Distribution Exclusive: Limiting the distribution to only one intermediary in the territory LEICA was officially appointed Jebsen & Jebsen Marketing as the exclusive distributor for Singapore, Malaysia, Thailand, Indonesia and Brunei A main factor in choosing J&J was its expertise in “high-quality technical products on the consumer market.” Source: Smartinvestor , Singapore Ed. June 2000 Advantages: Maximize control over service level/output Enhance product’s image & allow higher markups Promotes dealers loyalty, better forecasting, better inventory and merchandising control Restricts resellers from carrying competing brands Disadvantages: Betting on one dealer in each market Only suitable for high price, high margin, and low volume products

Intensive Distribution:

19 Intensive Distribution Intensive: Distribute from as many outlets as possible to provide location convenience Ex: Newspapers, Most fast moving consumer goods you see in the newsstand Photo processing shops Advantages: Increased sales, wider customer recognition, and impulse buying Disadvantages: Characteristically low price and low-margin products that require a fast turnover Difficult to control large number of retailers

Selective Distribution:

20 Selective Distribution Selective: Appoint several but not all are retailers Daewoo has 2 distributors in Singapore “ Starsauto , part of a larger Indonesian group, represents Daewoo’s traditional line of sedans. Homegrown family-owned JTA Motors market Daewoo’s offroad vehicles like the Musso and Korando , and an upmarket model called the Chairman. (Source: BT, Motoring, Feb4/1999) Advantages: Better market coverage than exclusive distribution More control and less cost than intensive distribution Concentrate effort on few productive outlets Selected firms capable of carrying full product line and provide the required service Disadvantages: May not cover the market adequately Difficult to select dealers (retailers) that can match your requirement and goals

Terms and Responsibilities of Channel Members:

Terms and Responsibilities of Channel Members Price policy —price list and schedule of discounts and allowances that intermediaries see as equitable and sufficient Condition of sale —payment terms and producer guarantees Distributors’ territorial rights —distributors’ territories and the terms under with the producer will enfranchise other distributors Mutual services and responsibilities (e.g., McDonald’s provide franchisees with a building, promotion support, recordkeeping system, training, and general administrative and technical assistance; franchisees are expected to satisfy company standards for the physical facilities, cooperate with new promotion programs, furnish requested information, and buy supplies from specified vendors) 21 1/3/2013

The Value-Adds Vs. Costs of Different Channels:

22 The Value-Adds Vs. Costs of Different Channels 1/3/2013

Break-Even Chart for the Choice Between A Company Sales Force and Manufacturer’s Sales Agency:

23 Break-Even Chart for the Choice Between A Company Sales Force and Manufacturer’s Sales Agency 1/3/2013

Channel-Management Decisions:

Channel-Management Decisions Selecting channel members Training channel members Motivating channel members Evaluating channel members Modifying channel members 1/3/2013 24

Channel Power:

25 Channel Power Coercive --threat Reward —extra benefit Legitimate --contract Expert --knowledge Referent —proud to be associated 1/3/2013

Channel Integration and Systems:

Channel Integration and Systems Fairly good to good Contracts McDonald’s Complete One company ownership Florsheim Some to good Economic power and leadership General Electric Characteristics Type of channels Little or none None Typical “ inde-pendents ” Amount of cooperation Traditional 1. Vertical marketing systems (VMS) Administered Contractual Corporate Control maintained by Examples 26 1/3/2013 2. Horizontal (symbiotic) marketing systems: Two or more unrelated companies putting together resources to exploit a marketing opportunity . Yugoka in Japan 3. Multichannel systems

PowerPoint Presentation:

Producers or Middlemen May Be Channel Captains 27 1/3/2013

What is Channel Conflict?:

What is Channel Conflict? Channel conflict occurs when one member’s actions prevent another channel from achieving its goal. Types of channel conflict Vertical Horizontal Multichannel 28 1/3/2013

Causes of Channel Conflict:

Causes of Channel Conflict Goal incompatibility —manufacturer want rapid penetration with low prices but dealers want high margins and pursue short-run profitability Unclear roles and rights —company’s sales force competing with dealers Differences in perception —manufacturers optimistic about short-term economic outlook and want dealers to carry higher inventory than dealers want to carry because they are pessimistic Intermediaries’ dependence on manufacturer —dealers affected by manufacturer’s product and pricing decisions 29 1/3/2013

Managing Channel Conflict:

30 Managing Channel Conflict Adoption of superordinate goals —jointly seeking goals Exchange of employees Joint membership in trade associations Cooptation --efforts by one organization to win the support of the leaders of another organization by including them in advisory councils, boards of directors, etc Diplomacy- -each side sends a person or group to meet with its counterpart to resolve a conflict Mediation --resorting to a neutral third party to conciliate two parties interest Arbitration --two parties agree to present arguments to one or more arbitrators and accept the arbitration decision Legal recourse 1/3/2013

e-Commerce Marketing Practices:

e-Commerce Marketing Practices Pure-click (only Web) Brick-and-click (Firm + Web) Brick-and-mortar (only firm) E-business describes the use of electronic means and platforms to conduct a company’s business. E-commerce means, the company site offers to transact selling of products and services online. E-purchasing, E- mktg 31

E-Commerce: On-line Distribution:

E-Commerce: On-line Distribution 1/3/2013 32 The success depends on the characteristics of the consumers in the market in terms of their disposition to e-commerce and surfing habits Eg . South Korea has the most dynamic Internet surfers in Asia. They spend the least time—28 seconds—on a web page before moving on Australian surfers were the “stickiest”, clocking one minute per page (Source: March 2001 figures from Nielsen/ NetRatings Globel Index)

The FUTURE:M-Commerce:

The FUTURE:M-Commerce Cell phones , PDAs, Smart phones UMTS Mobile commerce is going to be the next revenue stream once the killer mobile-application is rolled out The penetration of mobile data services is low in ASPAC (1%) compared to the Western Europe (23%), Japan (21%) and the US (7%) (Source: ARC Group, 2000) Japan’s NTT DoCoMo's recently launched i -Mode, a data communications service rather like Wap , and signed up several million customers (Source: Intelligent Enterprise Asia, July 2001) 1/3/2013 33

Starbucks Hear Music Coffeehouse:

Starbucks Hear Music Coffeehouse Retailing and Wholesaling 34

Chapter Questions:

Chapter Questions What major types of marketing intermediaries occupy this sector? What marketing decisions do these marketing intermediaries make? What are the major trends with marketing intermediaries?

What is Retailing?:

36 What is Retailing? Retailing includes all the activities involved in selling goods or services directly to final consumers for personal, non-business use.

Planning a Retailer’s Strategy:

Convenience Product Selection Fairness in Dealings Helpful Information Prices Social Image Convenience Product Selection Fairness in Dealings Helpful Information Prices Social Image Planning a Retailer’s Strategy Key Features Affecting Consumers’ Retail Choice Shopping Atmosphere

PowerPoint Presentation:

Types Of Retailers Specialty Stores Department Stores Supermarkets Convenience Stores Off-Price Retailer Superstores Catalog Showroom Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items Wide Variety of Food, Laundry, & Household Products Limited Line of High-Turnover Convenience Goods Inexpensive, Overruns, Irregulars, and Leftover Goods Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services Broad Selection, Fast Turnover, Discount Prices Narrow Product Line, Deep Assortment Store Type Length and Breadth of Product Assortment Discount Stores Broad Product Line, Low Margin, High Volume 38 1/3/2013

PowerPoint Presentation:

Low Price Low Status Low Margin Mid Price Mid Status Mid Margin High Price High Status High Margin New Entrants Wheel of Retailing 39 1/3/2013

Figure 18.1: Retail Positioning Map:

40 Figure 18.1: Retail Positioning Map

Levels of Retail Service:

Levels of Retail Service Self service —many customers will to locate-compare-select process to save money Self selection —customers find their own goods, although they can ask for assistance Limited service —retailers carry more shopping goods and services such as credit and merchandise-return privileges Full service —salespeople are ready to assist in every phase of the locate-compare-select process

Non-store Retailing:

Non-store Retailing Direct selling —multilevel selling and network marketing selling door-to-door, or at home sales parties Direct marketing —direct mail, catalog marketing, telemarketing, television direct-response marketing, electronic shopping Automatic vending —variety of merchandise, impulse goods, hosiery, cosmetics, hot food, etc. Buying service — storeless retailer servicing a specific clientele—usually employees of a large organization—who are entitled to buy from a list of retailers that have agreed to give discounts in return for membership

Major Types of Corporate Retail Organizations:

Major Types of Corporate Retail Organizations Corporate chain store —two or more outlets owned and controlled, employing central buying and merchandising, and selling similar lines of merchandise ( GAP ) Voluntary chain —wholesaler-sponsored group of independent retailers engaged in bulk buying and common merchandising (Independent Grocers Alliance) Retailer cooperative —independent retailers using a central buying organization and joint promotion efforts ( ACE Hardware) Consumer cooperative —retail firm owned by its customers. Members contribute money to open their own store, vote on its policies, elect a group to manage it, and receive dividends Franchise organization —contractual association between a franchisor and franchisees (McDonald’s) Merchandising conglomerate —corporation that combines several diversified retailing lines and forms under central ownership, with some integration of distribution and management (Allied Domeq PLC with Dunkin’ Donuts and Baskin-Robbins, plus a number of British retailers and a wine and spirits group

PowerPoint Presentation:

Conventional Retailers – Try to Avoid Price Competition Conventional Offerings Single- & limited- line stores Expanded assortment &/or reduced margins & service Supermarkets, disc. houses, mass merch., super-, club- Stores, + Safeway, IKEA, Home Depot, Costco Added conv., higher margins, reduced assortment C-stores, vending, door- to-door, phone, mail, some e-tail 7-11, Pepsi vending, Avon, Lands’ End, QVC Expanded assortment, reduced margins, more information Internet eBay, Amazon, Zappos, Netflix, Dell Expanded assortment & service Specialty shops & dept. stores Ritz Camera, Coach, Gap, Macy’s

PowerPoint Presentation:

Large retail stores do most of the business Only about 11% of stores sell over $5 million annually but they account for almost 70% of retail sales Yet, some small retailers control "their" market Larger stores enjoy economies of scale Corporate chain stores also enjoy economies of scale Account for about half of all retail sales (and much higher in some product categories) Continuing to grow Independent retailers form chains Cooperative chains are retailer sponsored Voluntary chains are wholesaler sponsored Retailer Size and Profits

PowerPoint Presentation:

Growing fast, but still in very early stages Convenience not defined by location of product assortment More information of some types but not others More technical detail Less touch and feel Generally requires more advance planning Delivery takes time and adds costs Competitive effects impact other retailers New types of specialists and intermediaries will continue to develop Retailing and the Internet

PowerPoint Presentation:

Retailers should offer low prices to get faster turnover and greater sales volume—by appealing to larger markets Started with supermarkets in 1930s Really caught on with mass-merchandisers large stores self-service oriented Examples: Wal-Mart, Target Competition among mass-merchandisers has heated up Limited-line mass-merchandisers (“category killers”) grew rapidly, but growth has subsided Mass-Merchandising Concept

PowerPoint Presentation:

Videotapes and DVDs at grocery stores Microwave popcorn at video rental stores Computer software at bookstores Clothing and fashion accessories at a motorcycle dealership One-hour prints from digital pictures at drugstores Examples of Scrambled Merchandising

PowerPoint Presentation:

An Example of a Large Retail Chain

Department Store Model: The Showcase Store:

50 Department Store Model: The Showcase Store

What is a Franchising System?:

What is a Franchising System? A franchising system is a system of individual franchisees, a tightly knit group of enterprises whose systematic operations are planned, directed, and controlled by the operation’s franchisor.

PowerPoint Presentation:

The franchiser develops a good marketing strategy and the retail franchise holders carry out the strategy in their own units. Strong legal contracts govern the relationship. Franchisers have been successful with newcomers. especially popular with service operations Franchise sales account for about half of all retail sales. Franchise Operations

Characteristics of Franchises:

Characteristics of Franchises The franchisor owns a trade or service mark and licenses it to franchisees in return for royalty payments The franchisee pays for the right to be part of the system The franchisor provides its franchisees with a system for doing business

Advantages of Franchising:

Advantages of Franchising

Disadvantages of Franchising:

Disadvantages of Franchising

New Retail Environment:

New Retail Environment New retail forms and combinations Growth of intertype competition Competition between store-based and non-store-based retailing Growth of giant retailers Decline of middle market retailers Growing investment in technology Global profile of major retailers

New Retail Forms and Combinations:

New Retail Forms and Combinations Combination retailers —some supermarkets includes bank branches; bookstore feature coffee shops, etc. Pop-ups —lt retailers promote brands, reach seasonal shoppers for a few weeks in busy areas and create buzz (JC Penney unveiled designer Chris Madden’s home, bath, and kitchen line in a 2,500-square-foot Rockefeller Center space for one month only. Showcase stores —Some stores not only sell other companies’ brands but get the vendors of the brands to take responsibility for stock, staff, and even the selling space. The vendors then hand over a percentage of the sales to the store’s owner

PowerPoint Presentation:

Growth of Internet merchants and online retailing Electronic retailing (kiosks, TV, etc.) In-home shopping (catalogs, etc.) More price competition Vertical integration More chains and franchises chains becoming larger, more powerful More and better information (for example, scanner data) Some Trends in Retailing

Retailers’ Marketing Decisions:

Retailers’ Marketing Decisions Target market —profile of customer Product assortment —breadth and depth Procurement —merchandise sources Prices —decided in relation to the target market Services —pre-purchase, post-purchase, ancillary (click next slide)

Retailers’ Marketing Decisions (cont.):

Retailers’ Marketing Decisions (cont.) Store atmosphere ( click next slide ) Store activities —brick-and-mortar and e-commerce Communications —advertisement, special sale, money-saving coupons, etc. Location decision ( click next slide )

Store Atmosphere:

Store Atmosphere Walls Lighting Signage Product placement Floors Surface space Music

Retail Category Management:

62 Retail Category Management Define the category Figure out its role Set goals Choose the audience Implement the plan Figure out tactics Assess performance

Retailer Services Mix:

Retailer Services Mix Pre-purchase services —accepting telephone and mail orders, advertising, window and interior display, fitting rooms, shopping hours, fashion shows, and trade-ins Post-purchase services —shipping and delivery, gift wrapping, adjustments and returns, alterations and tailoring, installations Ancillary services —general information, check cashing, parking, restaurants, repairs, interior decorating, credit, rest rooms, and baby-attendant service

Location Decision:

16- 64 Location Decision General business districts —downtown Regional shopping centers —large suburban malls containing 40 to 200 stores, typically featuring one or two nationally known anchor store, such as JC Penney or Lord & Taylor Community shopping centers —smaller malls with one anchor store and between 20 and 40 smaller stores Strip malls strips —cluster of stores, usually housed in one long building, serving a neighborhood’s needs for groceries, hardware, laundry, shoe repair, and dry cleaning Location within a larger store —certain well-known retailers—McDonald’s, Starbucks, Nathan’s, Dunkin’ Donuts—locate new, smaller units as concession space within larger stores or operations, such as airports, schools, or department stores

Tips for Increasing Sales in Retail Space:

Tips for Increasing Sales in Retail Space Keep shoppers in the store Don’t make them hunt Make merchandise available to the reach and touch Note that men do not ask questions Remember women need space Make checkout easy

Location decision-Indicators of Sales Effectiveness:

66 Location decision-Indicators of Sales Effectiveness Number of people passing by % who enter store % of those who buy Average amount spent per sale

Private Label Brands:

Private Label Brands Private labels (reseller, store, house, or distributor brand) is a brand that retailers and wholesalers develop are ubiquitous Consumer accepts private labels Private-label buyers come from all socioeconomic strata Private labels are not a recessionary phenomenon Consumer loyalty shifts from manufacturers to retailers

Private Labels:

68 Private Labels

Marketing Debate:

Marketing Debate Does it matter where your products/ services are Sold? (Channel Image Vs. Brand Image) 1/3/2013 69

PowerPoint Presentation:

18- 70 Wal-Mart has for the first time moved into the number one position on Fortune magazine’s “Fortune 500” list, passing up such companies as GM and Exxon. How has their target market identification helped put them into this position? What can Wal-Mart’s chief rivals, K-Mart and Target, do to try to close the gap? Discussion Question

Marketing Discussion:

Marketing Discussion Think of your favourite retailers. How have they integrated their channel system ? How would you like their channels to be integrated? Do you use multiple channels from they? Why? 1/3/2013 71

PowerPoint Presentation:

Why are Wholesalers Used? Wholesaler Functions Management Services & Advice Selling and Promoting Market Information Buying and Assortment Building Risk Bearing Bulk Breaking Transporting Financing Warehousing 72 1/3/2013

Wholesaling Functions:

Wholesaling Functions Selling and promoting —sales force help manufacturers reach many small business customers at a relatively low cost Buying and assortment building —select items and build the assortment their customers need Bulk breaking —buy large carload lots and breaking the bulk into smaller units Warehousing —hold inventories, and reduce inventory costs and risks to suppliers and customers Transportation —provide quicker delivery to buyers because they are closer to the buyers Financing —grant credit, and finance suppliers by ordering early and paying bills on time Risk bearing —absorb some risk by taking title and bearing cost of theft, damage, spoilage, and obsolescence Market information —supply competitor activities, new products, price developments, etc Management services and counseling —training sales clerks, helping with store layouts and displays, etc.

Wholesalers’ Marketing Decisions:

74 Wholesalers’ Marketing Decisions Target market Product assortment Price Promotion Place

PowerPoint Presentation:

Separate business that producers set up away from their factories to handle wholesaling functions. Represent only about 4.3 percent of all wholesalers Handle 28.4 percent of total wholesale sales Sales high because they are placed in best markets True operating costs may be difficult to determine Manufacturer’s Sales Branches

PowerPoint Presentation:

Types of Wholesalers

PowerPoint Presentation:

U.S. Wholesale Trade by Type of Wholesale Operation

Major Wholesaler Types:

78 Major Wholesaler Types Merchant Full-service Limited-service Brokers and agents Manufacturers Specialized

PowerPoint Presentation:

Take title to (own) the products they sell About 88.3% of wholesalers are merchant wholesalers Handle about 61.2% of total wholesale sales Two basic types: Full-service wholesalers Limited-function wholesalers Merchant Wholesalers

PowerPoint Presentation:

Provide all of the wholesaling functions Three major types: General merchandise wholesalers Single-line (or general-line) wholesalers Specialty wholesalers Full-Service Merchant Wholesalers

PowerPoint Presentation:

Cash and carry wholesalers—operates like service customers except must pay cash Drop-shippers—take title to products they sell but do not stock or deliver them Truck wholesalers—typically deliver perishable items Rack jobbers—usually display products on their own racks Catalog wholesalers—sell out of catalogs Some Limited-Function Merchant Wholesalers

Agent Middlemen Are Strong on Selling:

Manufacturer’s Agents Brokers Selling Agents Selling Agents Brokers Manufacturer’s Agents Agent Middlemen Are Strong on Selling Auction Companies Types of Agent Middlemen

PowerPoint Presentation:

Sell similar products for several noncompeting producers Work on a commission basis Basically are independent, aggressive sales reps Especially helpful to small producers and producers whose customers are very spread out Manufacturers’ Agents

PowerPoint Presentation:

Main purpose is to bring buyers and sellers together Usually have a temporary relationship with buyer and seller while the deal is negotiated Earn a commission—from either the buyer or seller—depending on who hired them Especially common with seasonal products and products sold infrequently Brokers

PowerPoint Presentation:

Wholesalers who do not own the products they sell Main purpose is to help with buying and selling Usually operate at relatively low cost Usually provide fewer functions than merchant wholesalers Often specialize not only by product-type, but also by customer type Agent Middlemen

PowerPoint Presentation:

Fewer, but larger, wholesalers Use of computers to control inventory, order processing Closer relationships with customers More selective in picking customers Trends in Wholesaling

Market Logistics Planning:

Market Logistics Planning Deciding on the company’s value proposition to its customers Deciding on the best channel design and network strategy Developing operational excellence Implementing the solution

What are Integrated Logistics Systems?:

What are Integrated Logistics Systems? An integrated logistics system (ILS) includes materials management, material flow systems, and physical distribution, aided by information technology.

Market Logistics:

Market Logistics Sales forecasting Distribution scheduling Production plans Finished-goods inventory decisions Packaging In-plant warehousing Shipping-room processing Outbound transportation Field warehousing Customer delivery and servicing

Logistics Systems:

Inventory When to order How much to order Just-in-time Costs Minimize Costs of Attaining Logistics Objectives Warehousing Storage Distribution Order Processing Submitted Processed Shipped Logistics Functions Transportation Water, Truck, Rail, Pipeline & Air Logistics Systems 90 1/3/2013

PowerPoint Presentation:

Goals of the Logistics System Provide a Targeted Level of Customer Service at the Least Cost. Maximize Profits, Not Sales. Higher Distribution Costs/ Higher Customer Service Levels Lower Distribution Costs/ Lower Customer Service Levels 91 1/3/2013

Market Logistics Decisions:

92 Market Logistics Decisions How should orders be handled? Where should stock be located? How much stock should be held? How should goods be shipped?

Determining Optimal Order Quantity:

93 Determining Optimal Order Quantity

Transportation Factors:

94 Transportation Factors Speed Frequency Dependability Capability Availability Traceability Cost

Transportation Modes:

Rail Piggyback Nation’s largest carrier, cost-effective for shipping bulk products Truck Fishyback Flexible in routing & time schedules, efficient for short-hauls of high value goods Water Trainship Low cost for shipping bulky, low-value goods, slowest form Pipeline Ship petroleum, natural gas, and chemicals from sources to markets Air Airtruck High cost, ideal when speed is needed or to ship high-value, low-bulk items Transportation Modes 95 1/3/2013

Containerization:

96 Containerization

Market Logistics:

97 Market Logistics Organizational Lessons Companies should appoint a senior vice president of logistics to be the single point of contact for all logistical elements The senior vice president of logistics should hold periodic meetings with sales and operations people to review inventory, etc. New software and systems are the key to achieving competitively superior logistics performance in the f

Marketing Debate:

Marketing Debate Should National Brand Manufacturers also supply Private Brand Labels? 1/3/2013 98

Marketing Discussion:

Marketing Discussion Think of your favourite stores. What do they do that encourages your loyalty? What do you like about the in-store experience? What further improvements could they make? 1/3/2013 99

Reference:

Reference Kotler , Kelly, Koshy and Jha (2009) Marketing Management: A South Asian Perspective, 14 th ed. Pearson Prentice Hall, pp.400-53

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