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Business purchase and marketing > L8, Distribution and supply chain management > Flashcards

L8, Distribution and supply chain management Flashcards

1
Q

what happened during the industrial revolution?

A

(late 19th century/early 20th centry)

  1. Mass production to obtain economies of scale
  2. a need for mass distribution
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2
Q

What gaps were created as the production and the customers were at different places?

A
  • Large geographical distance - place gap
  • Long delivery times - time gap
  • assortment gap
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3
Q

what is the link between manufacturers and customers?

A
  1. the marketing Channel

2. the channel of distribution

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4
Q

what is a marketing channel?

A

a set of interdependent organizations involved in the process of making a product or service available for the user consumption

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5
Q

what is distribution?

A

distribution includes the whole process in which products are sold and transferred to customers

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6
Q

what is physical distribution?

A

physical distribution are activities related to making a product physically available to customers.

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7
Q

what is the task of distribution?

A

To bridge the gap between production and consumption by creating three types of utilities

  1. time utility
  2. place utility
  3. form utility
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8
Q

what different types of flow are there?

A
  1. physical flow
    —> the product’s path from production to consumption
  2. Information flow
    —> technical
    —> commercial
    —> administrative
  3. ownership
  4. financial
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9
Q

what different types of channels are there?

A
  1. Direct sales
    —> sales goes direct from producer to the customer
  2. Indirect sales
    —> Sales goes through one or many middlemen, e.g. resellers or distributors
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10
Q

What is the advantage with a middle man?

A

The number of transactions are reduced

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11
Q

What is the function of a middle man for the producer?

A
  1. market coverage
  2. sales contact
  3. inventory
  4. order management
  5. marketing information
  6. customer support
  7. light assembly
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12
Q

What is the function of a middle ma for the customer?

A
  1. availability
  2. assortment
  3. suitable order quantity
  4. technical support
  5. financial solutions
  6. service
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13
Q

what are the steps to create value through direct channels?

A
  1. create value merchants
  2. design logistics system
  3. deploy value merchants
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14
Q

What are the steps to strengthen reseller performance?

A
  1. build marketplace equity
  2. craft reseller value proposition
  3. construct channel offering
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15
Q

What can a company do to improve distribution?

A
  1. Create value through direct channels
  2. Strengthen reseller performance
  3. Design superior value-adding marketing channels
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16
Q

when should direct sales be used?

A
  1. large and well defined customers
  2. customers require direct sales
  3. negotiation on top level is required
  4. feedback from customers are important
  5. producer needs to be part of the implementation of the product
  6. customized solutions
  7. complex products that require extensive product knowledge
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17
Q

when could indirect sales be used?

A
  1. Fragmented customer structure with many small customers
  2. need of assortment
  3. fast deliveries are required
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18
Q

What is total customer experience? (TCE)

A
  1. TCE includes all aspects of a customer’s interactions with a supplier
  2. TCE with regards o fulfillment and augmented value-added services
    —> the efficient low-cost transactional experience
    —> the high-touch consultative experience
    —> the flexible multi-access-point experience
    —> the one-stop shopping experience
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19
Q

What are the six steps in channel design?

A
  1. specify marketing goals and objectives
  2. Customer value assessment of TCE (total customer experience)
  3. Envision a value proposition for each targeted segment
  4. Reformulate the TCE for each segment in accordance to the value proposition
  5. Configure the channel network
  6. Finalize marketing and distribution management
20
Q

What is meant by the first channel design step “specify market cannel goals and objectives”?

A
  1. maximize the market access
  2. optimize value-added
  3. minimize cost-to-serve

and how to balance these three

21
Q

What is meant by the channel design step “customer value assessment of TCE”?

A
  1. what TCE elements are prioritized by different customers?

2. What are they willing to pay for the TCE elements?

22
Q

What is meant by the channel design step “Envision a value proposition for each targeted segment”?

A

Take the customer’s perspective

23
Q

What is meant by the channel design step “reformulate the TCE for each segment in accordance to the value proposition”?

A

Incremental or radical changes might be required

24
Q

What is meant by the channel design step configure the channel network””?

A
  1. maximize market access and balance exposure and coverage
  2. Optimize value added though postponement or speculation
  3. Minimize cost-to-serve via functional acquisition and functional spin-off
    —> who does what in the channel
    —> relates to specialization
4. Build a channel network model 
—> conventional channels
—> modular channels
—> hybrid channels 
—> integrated multi-channels
25
Q

what is market exposure?

A

the degree to which customers are reached with appropriate channels (direct, indirect: single/multiple channels)

26
Q

what is market coverage?

A

The number of resellers and direct sales persons assigned in a certain area
— exclusive
— selective
— intensive

27
Q

how do you optimize value added when direct sales?

A

postponement

28
Q

how do you optimize value added when indirect sales?

A

speculation

29
Q

What is meant by the channel design step “ Finalize the marketing and distribution management”?

A
  1. Which firms will we ask to participate and what will be their roles
    —> what functions to perform?
  2. Feasable profit model for the partners
  3. choose channel partners
  4. agreements on contract terms, conditions and time frames
30
Q

How should one think about distribution in general?

A
  1. It is not always possible to chose and it can be hard to know that is the best option
  2. The best solution for company A might not be the best solution for company B
31
Q

how can you strengthen reseller performance?

A
  1. channel positioning
    —> stabils good reputation among resellers
  2. create market equity
    —> the value that a customer receives from acquiring a particular seller’s product or service through a particular reseller
    —> created by channel equity, brand equity and reseller equity
  3. Determine expectations on reseller performance
    —> market access
    —> value-added services
    —> cost-to-serve
    —> intended TCE
    —> specified requirements on facilities and staff, numer of sales calls etc.
  4. Determine channel offerings to resellers
    —> channel core elements
    —> capability-building programs
    —> incentive programs
  5. Construct a channel positioning matrix
  6. Communicate the offering to the reseller
32
Q

what is reseller equity?

A

value from one reseller compared to another

33
Q

what is brand equity?

A

values of one supplier’s offering compared to another

34
Q

what is channel equity?

A

The value a reseller receives from the channel offering a supplier provides

35
Q

Describe what a channel positioning offering model consist of, which also the channel positioning matrix builds on!

A 
1. Channel core elements
—> financial returns
—> quality products
—> competitive prices
—> reliable delivery
—> brand equty
2. Capability-building programs
—> promotional support
—> responsiveness systems training
—> technical assistance
—> market research
—> company policies
3. Incentive programs
—> Manufacturer
—> sales force incentives
—> Distributor sales force incentives
—> distributor firm incentives
36
Q

How can you create sustaining reseller partnerships?

A

The supplier should provide:

  1. training and coaching
  2. sales and marketing programs
  3. pricing support
  4. operational and technical support

The reseller should provide:

  1. superior service to the customers
  2. innovate in the local market place
  3. enhance the supplier’s brand equity

The supplier and reseller should together coordinate:

  1. joint annual planning
  2. clarify roles and responsibilities
  3. communicate
  4. IT systems for communication (PRM system)
  5. A reseller advisory council
  6. Reformulate gives and gets
37
Q

Name some potential conflicts int he relationship between producers and the middlemen!

A
  1. economic aspects
    —> discounts and price
  2. The view of the distributor role
    —> independent actor or the producer’s extended arm
    —> reasonable inventory level, assortment, numer of calls?
  3. Fuzzy boundaries within and between channels
    —> who is doing what in the channel
    —> which channel should approach which customers
    —> risk of competition between channels
  4. Degree of exclusivity
    —> complementing/competitivue assortments
    —> geographical exclusiveness
38
Q

name some characteristics of the PC-industry!

A
  1. short product life cycles
  2. heavy price reductions
  3. differences in customer demands
  4. few standardized components
39
Q

In what way might different customers have different demands?

A
  1. technical support
  2. installation
  3. delivery to the customer’s home
  4. order through the internet
  5. plug & play
  6. requirement on assortment
  7. help with product selection
40
Q

give four examples of distribution arrangements!

A
  1. The indirect model
  2. The direct model
  3. Channel assembly
  4. Design and assembly by the customer
41
Q

Describe the traditional indirect PC-channel

A
  1. Producer
  2. Transporter
  3. Distributor
  4. Transporter
  5. Reseller
  6. Customer
    —> PC at the customer
42
Q

Describe the direct PC-channel

A
  1. Supplier
  2. Transporter
  3. PC at the customer
43
Q

Describe the channel assembly!

A
  1. producer
  2. transporter
  3. Distributor customizing
  4. transporting
  5. reseller with customer contact
  6. PC at the customer
44
Q

Describe customized distribution arrangement!

A
  1. Distributor of components sell directly to the customers
45
Q

What is the mission of a value merchant?

A

They recognizes the costs and value associated with each element of a market offering and seeks an equitable return for both customer an supplier firm

46
Q

How to build value merchants?

A
  1. training and education
  2. value-based sales tooles
  3. compensation and reward systems

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