BUS602: Marketing Management

6a. Identify the various channels of distribution, such as wholesale and retail, undertaken by different companies 

• What are the different types of channel partners companies utilize for distribution?
• What is the difference between B2B (business-to-business) and B2C (business-to-consumer) channels?
• What are the factors companies consider when making channel selections?
  

Channel partners are the intermediaries manufacturers use to get products into the hands of the consumer. Wholesalers procure products from the producers and store them in ways that make it convenient for retailers to sell. Merchant wholesalers, also known as distributors, offer manufacturers a wide range of services, including warehousing, supplying credit, and delivering goods to customers. Brokers don't purchase any goods or take title but act as a negotiator between buyers and producers. Retailers obtain goods from the above intermediaries and sell them directly to the consumer. Retail retailers include supermarkets, specialty stores, department stores, warehouse clubs, outlets, and online retailers, among many others.

A business-to-business purchase begins with the producer and then moves on to either an agent/broker or an industrial distributor. Goods then move on directly to the business or government agency making the purchase.

A business-to-consumer purchase goes through many more steps before making it to the ultimate user. Goods move from the producer to an agent, wholesaler, or distributor. This is followed by a move to the retailer, who then sells the goods to the consumer.

A business will consider several factors in channel selection to determine which channel will be most effective. One of the first things to consider is the type of customer being targeted. This is especially important when distinguishing between consumer buyers and business customers. The nature of the product can also help a company identify the proper channel. For example, channels for non-perishable goods can be quite different from channels for fresh fruits, vegetables, dairy, and meat products. Channel partner capabilities can impact decisions since some partners may be more suited to a company's specific needs. The economy and changing exchange rates can be factors when determining a channel, as can the available technology. Finally, it is important to evaluate the channels being used by the competition. If their products make it to the marketer more quickly, then a change in channel distribution is needed.

To review, see Using Marketing Channels to Create Value for Customers, Distribution Measures, and Distribution Systems in Omni-Channel Retailing.

6b. Describe the importance of a firm's supply chain and its relationship to the value chain 

• What are the four main elements of the supply chain?
• What is the role of sourcing in the supply chain?
• What are the keys to value chain success?
  

The main elements in the supply chain begin with purchasing. This involves buying all of the materials needed to produce finished goods. Once materials are purchased, manufacturing and operations follow. This is where raw materials are turned into finished products; the entire process is monitored for quality and consistency. Once goods are completed, various modes of transportation will move the goods to various locations. This distributes the merchandise to various outlets, including warehousing, where the goods are stored as inventory.

Sourcing is how companies seek suppliers for the goods and services they need to manufacture their products. While some companies own their supply chain, many companies seek other firms, known as outsourcing. For example, rather than having their own fleet of trucks and other modes of transportation, companies will hire companies for logistics. However, there are advantages and disadvantages to this strategy. Companies can place a greater focus on their core business, but they may also lose some control over the process.

Supply chain management must correlate directly with meeting market and consumer needs. This way, an organization can provide real and meaningful value to a customer. This begins with fully understanding a customer's needs and habits. This is followed by ensuring that a company can differentiate its product from the competition. This includes understanding how those products are manufactured and marketed, as well. Next, it is important to understand the producers and suppliers of the materials used to create the product. The finished product will only be as good as its parts. Finally, a company must seek effective ways to build the brand and communicate the benefits to the consumer.

To review, see Using Supply Chains to Create Value for Customers, What is Supply Chain Management?, and Value Chain Management in a Food Export Business.

6c. Describe the various logistical challenges of delivering the product to the customer, such as time to market and cost 

• What is the role of logistics in supply chain management?
• How do companies determine the most efficient mode of transportation for their goods?
• How do warehousing and transportation influence distribution costs?
  

Logistics involves getting goods from one point to another. This complex process requires careful planning and execution and impacts the overall supply chain by adding value to the offering. Resources managed through logistics include tangibles such as food, materials, equipment, and liquids, and intangible factors such as time and information. Additionally, logistics includes integrating packaging, production, warehousing, transportation, and security.

There are many ways in which a company can transport its merchandise. Some of these modes of transportation include trucking, shipping, rail, air, and pipeline. Often, merchandise may be transported through more than one mode. However, choosing the right mode or modes can be complex. For example, the nature of the product can impact how quickly a product needs to get to market. Dairy products and fresh flowers require modes of transportation that will get them into the hands of the consumer quickly, while transportation choices for furniture and clothing can include slower modes. Additionally, items of high value need to be transported quickly to avoid the risk of theft along the way.

Warehousing is a way for companies to ensure sufficient inventory to meet consumer demand. However, this also results in additional costs associated with storage and handling. Further, product damage is greater because the merchandise is moved more often and to more locations before reaching the consumer. The distribution of goods has evolved and is more efficient through distribution centers and fulfillment houses. These are often owned by third-party logistics providers, known as 3PLs.

The overall goal of the operations discussed here is to make the most of a business' operations and increase profit. Value chain management is essential in reaching these goals. By having a strong value chain management process in place, a company can better monitor and manage all elements that go into manufacturing, procurement, production, quality control, and distribution.

To review, see The Function of Logistical Management, Modes of Transport, and Warehousing and Distribution.

Unit 6 Vocabulary 

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• brokers
• channel partners
• channel selections
• distribution
• intermediaries
• logistics
• manufacturing and operations
• modes of transportation
• purchasing
• retailers
• sourcing
• supply chain management
• third-party logistics
• value chain management
• warehousing
• wholesalers