MKT 3010 1st Edition Lecture 16 Outline of Last Lecture What is included in a company’s supply chain?What is supply chain management?Supply chain, marketing channels, and logistics are relatedBenefits of supply chain managementThe key business process of supply chain managementOutline of Current Lecture Ch. 15 cont.Supply chain componentsInventory management through JIT systemsSupply chains affect marketingCh. 16 What is retailingChoosing retail partnersClassifying retail outletsUsing the 4 P’s to create value in retailingBenefits of stores for consumersBenefits of the Internet and multichannel retailingThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Effective multichannel retailingStore experienceCurrent LectureMarch 26Chapter 15 cont.: Supply Chain and Channel ManagementSupply Chain Components- Sourcing and procurement- purchasing department (raw materials, resale, etc.), want to reduce cost of supplies but also want to be a good customer- Production scheduling- Push or Pull strategy?o Push: when inventory is low, produce more goods (no order yet but based on forecast you produce), pushes down supply chaino Pull: demand comes from bottom of supply chain, triggers production and it is pulled down the supply chain, must have flexible supply chain and production capabilities- Order processing- uses EDI (electronic data interchange): looks at efficiency, and makes sure you have an adequate assortment of inventory to produce goods while still keeping costs low.- Inventory Control- want to have a good mix of push and pull- Warehousing and materials handling- Must pay insurance, taxes, and opportunity cost of the expense of keeping the product in inventory (money could be used somewhere else)- Transportation- 5-10% of price of good is from transportation, what is the cost and time it takes to deliver, reliability, is product delivered safely, traceability (RFID chips)Inventory Management through Just-In-Time Systems (elements of supply chain arrive just in time to go through the next step in the chain)- Benefits of JIT systems- less inventory (in retail this is called Quick response system)o Reduced lead timeo Increased product availabilityo Lower inventory investmentSupply Chains Affect Marketing- Fulfilling delivery promises- Meeting customer expectations- Reliant on an efficient supply chainChapter 16: Retailing and Multichannel MarketingWhat is retailing?- End of the supply chain- Marketing meets the consumer- Add value to products soldChoosing Retail Partners- Channel structure- how is our supply chain set up already? More developed, cohesive, and “vertical” will be able to get into more retailers.- Customer expectation- want to be in the store where your target market shops- Channel member characteristics- Distribution intensityo Intensive- manufacturer wants to be in as many retail locations as possible (food, drinks)o Exclusive- limit the number of retailers that can sell your product (wants to develop a sense rarity or luxury, going to very appropriate customers)Classifying Retail Outlets- Form of ownership- independent retailer is most common, also corporate chains, and franchises- Level of service- does costumer handle transaction, is there assistance to customer, is it full service- Type of merchandise lineo Depth- a lot of different kinds of one type of producto Breadth- few choices of each type of product, how many different types of productsUsing the Four P’s to Create Value in Retailing- Product assortment and services mix***most important part of retail- getting this right for retail is imperative and is achieved by knowing target market/customer. Find ways to differentiate product from competition- Price- understand customer to hit the right price point, selling strategies:o High volume at low price- smaller margin but more product over timeo Low volume at high price- bigger margin but less sold over time- Promotion- trying to increase your share of wallet- percentage of consumer’s budget towards that retailer; mobile commerce to communicate with customers has helped to increase this; cooperative advertising is a manufacturer and a retailer working together to promote products- Place- convenience, good locationBenefits of Stores for consumers (physical stores)- Browsing- many consumers browse first online and then go to store to make final decision - Tactile tendencies- want to touch and interact with product- Personal Service- Cash and Credit- Entertainment and social interaction- Instant gratification- Risk reductionBenefits of the Internet and Multichannel Retailing (internet, store, catalog)- Broader selection- Personalization- more micromarketing opportunities- Insights- more info to strategize about customers- Customer satisfaction and loyalty- Expand market presenceEffective Multichannel Retailing- consistent and efficient: - Integrated CRM system- Brand Image- make sure it is consistent- Pricing- Supply chainStore Experience- Carefully orchestratedo Entrance- need to account for decompression zone: time to acclimate to new environment, need to offer a feeling or attractiono Layout- move customers through the store to benefit IT not the consumer; more productthat a consumer passes the more they typically buy; Zone 4 is back of store and want to get customers back thereo Lighting- try to adjust blink rate of customers to develop different moods or feelingso Color- lots of cultural references in color; also associate colors with different characteristicso Sound- creates mood of retail locationo Smell- scent is affected quicker that sight, triggers feelings and moodsKey terms:Push and pull strategiesEDIRFIDJIT systemDistribution intensity (intensive/exclusive)DepthBreadthShare of walletTactile tendenciesMultichannel retailingDecompression zoneZone