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Chapter 14 Marketing Management
Chapter 14 Marketing Management
Supply Chain Management: coordination of flows among firms in the supply chain
to maximize total profitability. Physical movement of goods and sharing the info
about it (which goods, marketing campaign to assure the demand, and the logistics, to
know where the products are)
Insourcing: A practice in which a company contracts with a specialist firm to
handle all or part of its supply chain operations. external company is brought
into the client company to run essential operations
o Flows do not only include physical movement of goods, but also info sharing
about goods!
o Trend: companies traditionally known for other things are remaking
themselves as specialists who take over coordination of clients supply
chains for them
Outsourcing: Company delegating nonessential tasks to subcontractors
Difference between supply chain and channel of distribution: number of members and
their function; supply chain is broader
Channel of distribution = The series of firms or individuals that facilitates the
movement of a product from the producer to the final customer.
Manufacturer-owned intermediaries:
Have separate business units that perform all the functions of independent
intermediaries & maintain complete control over channel
o Sales branches: carry inventory, provide sales and services to customers in a
specific geographic area (i.e. Petroleum products, industrial machinery, motor
vehicles).
o Sales offices: like agents, do not carry inventory but provide selling functions in
geographic area. Located close to customers reduce selling costs and provide
better customer service.
o Manufacturers showrooms: permanent-display facilities for customers to visit
Understanding logistics
Physical distribution: The activities used to move finished goods from
manufacturers to final customers, including order processing, warehousing, materials
handling, transportation, and inventory control. For logistics planning: focus is on the
customer, not just to deliver at lowest cost! The appropriate goal is to provide the
product at the lowest cost possible so long as the firm meets delivery requirements.
Logistics Functions
1) Order processing: The series of activities that occurs between the time an
order comes into the organization and the time a product goes out the door.
Enterprise resource planning (ERP) systems: A software system that
integrates information from across the entire company, including finance, order
fulfillment, manufacturing, and transportation and then facilitates sharing of the
data throughout the firm.
2) Warehousing: Storing goods in anticipation of sale or transfer to another
member of the channel of distribution enables marketers to provide time utility
to consumers by holding on to products until consumers need them (match
demand and supply)
Private warehouses: high initial investment but lose less stock due to damage
Public warehouses: allow firms to pay for a portion of warehouse space rather
than having to own an entire storage facility
Distribution center: warehouse that stores goods for short periods of time and
that provides other functions (eg. breaking bulk)
Non-shop retailing
Any method used to complete an exchange with a product end user that does not
require a customer visit to a store (catalogues, websites)
Shop image: The way a retailer is perceived in the marketplace relative to the
competition.
- Atmospherics: The use of color, lighting, scents, furnishings, and other design
elements to create a desired store image.
Shop personnel:
- Need to complement desired store image & They need to play a part in a theater
play
- Scripts, costumes and roles to play
- Most people rate the quality of service low because shops do not hire enough
people
Pricing policy:
- Price points (price range) of merchandise is critical
- Everyday-low-pricing (EDLP) strategy about setting prices between manufacturer
and deeply discounted stores, who mainly compete on price