Page 394 - Foundations of Marketing

Marketing Channels and Supply-Chain Management | Chapter 13 361

The distribution component of the marketing mix focuses on the decisions and activities
involved in making products available to customers when and where they want to
purchase them. EcoATM addresses a distribution problem by conveniently positioning
ATM machines in high-traffic areas where consumers can recycle their electronic items. The
machines are automated and easy to use and consumers do not have to go out of their
way to seek them out, making the company’s distribution strategy a success. Choosing
which channels of distribution to use is a major decision in the development of marketing
strategies.
distribution The decisions and
In this chapter, we focus on marketing channels and supply-chain management. First,
activities that make products
we explore the concept of the supply chain and its various activities. Second, we elaborate
available to customers when
on marketing channels and the need for intermediaries, and then we analyze the primary
and where they want to
functions they perform. Next, we outline the types and characteristics of marketing channels, purchase them
discuss how they are selected, and explore how marketers determine the appropriate intensity
supply chain All the activities
of market coverage for a product. We examine the strategic channel issues of leadership, coop-
associated with the flow and
eration, and confl ict. We also look at the role of physical distribution within the supply chain, transformation of products
including its objectives and basic functions. Finally, we review several legal issues that affect from raw materials through to
channel management. the end customer

FOUNDATIONS OF THE SUPPLY CHAIN LO 1 . Describe the foundations
of supply-chain management.
An important function of distribution is the joint effort of all involved organizations to
create an effective supply chain , which refers to all the activities associated with the flow
and transformation of products from raw materials through to the end customer. An effec-
tive supply chain results in a total distribution system, involving firms that it may help to operations management The
think of as existing along a conceptual line. A distribution system involves firms that are total set of managerial activities
“upstream” (e.g., suppliers) and “downstream” (e.g., wholesalers and retailers) that work used by an organization to
to serve customers and generate competitive advantage. Historically, marketing focused transform resource inputs into
exclusively on certain downstream supply-chain activities, but today marketing profession- products, services, or both
als recognize that they can secure marketplace advantages by effectively integrating all logistics management
supply-chain activities, including operations, logistics, sourcing, and marketing channels. Planning, implementing, and
Integrating these activities requires marketing managers to work with managers in opera- controlling the efficient and
effective flow and storage
tions, logistics, and supply. Operations management is the total set of managerial activi-
2
ties used by an organization to transform resource inputs into goods, services, or both. of products and information
from the point of origin
Logistics management involves planning, implementing, and controlling the efficient and
to consumption to meet
effective flow and storage of products and information from the point of origin to consump- customers’ needs and wants
tion in order to meet customers’ needs and wants. The annual cost of business logistics in supply management In its
3
the United States is huge, at nearly $ 1.3 trillion. To put this in perspective, the entire U.S. broadest form, refers to the
4
annual gross domestic product (GDP) is around $ 15 trillion. Supply management (e.g., processes that enable the
purchasing, procurement, sourcing) in its broadest form refers to the processes that enable progress of value from raw
the progress of value from raw material to final customer and back to redesign and final material to final customer and
disposition. back to redesign and final
Supply-chain management is the set of approaches used to integrate the functions of disposition
operations management, logistics management, supply management, and marketing chan- supply-chain management
nel management so products are produced and distributed in the right quantities, to the A set of approaches used
right locations, and at the right time. It includes activities like manufacturing, research, to integrate the functions
of operations management,
sales, advertising, and shipping. Supply-chain management involves all entities that facili-
logistics management, supply
tate product distribution and benefi t from cooperative efforts, including suppliers of raw
management, and marketing
materials and other components to make goods and services, logistics and transporta-
channel management so
tion fi rms, communication fi rms, and other fi rms that indirectly take part in marketing products are produced
exchanges. Supply-chain managers must encourage cooperation between organizations in and distributed in the right
the supply chain and understand the tradeoffs required to achieve optimal levels of effi - quantities, to the right
ciency and service. locations, and at the right time

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