MKTG 311 1st Edition Lecture 21 Outline of Last Lecture I. Step 6: Price Adjustment StrategiesII. Other ConsiderationsIII. Ch-15: Key TermsIV. Example: The Automotive Supply ChainV. Why Have IntermediariesVI. Consumer Channels- LevelsOutline of Current Lecture I. B2B Channels- LevelsII. Multi-channel Distribution SystemIII. Marketing SystemsIV. Distribution IntensityV. Channel ConflictVI. Marketing LogisticsVII. Major Logistic FunctionsCurrent LectureI. B2B Channels- LevelsThese 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.- IBM (Direct Channel), Caterpillar and Stake Fastener Company (Indirect)- Functions like a whole seller (Industrial Distribution), Harkman Electric (Indirect)- ComplexII. Multi-channel Distribution System- Sometimes companies or industries interact with more than one level of the channel at a time. Example: Pharmaceutical Company (hospital) - Direct: HMO’s and Insurance Companies. Indirect: Agents (Large drugstore chain- Walmart)III. Marketing Systems- It is the relationship that exists within the marketing channel or the distribution channel.- 3 Primary Types of Marketing Systems:1. Conventional Marketing System- Multi level distribution channel, but all of the members are independent and the relationship is mostly transaction based (Buying and Selling Relationship)2. Vertical Marketing System- Formal cooperation between 2 or more levels of the distribution channel.Specific Types of Vertical Marketing System: Administered Vertical Marketing System- All channel members are independent, but they work together with the help of a powerful channel member. Example: Walmart Corporate Vertical Marketing System- A single firm owns two or more levels of the distribution channel. Example: Sherman Williams (Manufacturer and the retail store owner) Contractual Vertical Marketing System- Cooperation by contract, it spells out the rights and responsibilities of different parties in the distribution channel. Example: Mc Donald’s, Subway, 7-11- All Franchises.3. Horizontal Marketing System- Two or more firms at the same level of the distribution channel that agree to work together and get the product or service to the end consumer. Example: One World Alliance, partnership: American Airlines, British Airways, Mexicana Air, and Finn Air.IV. Distribution Intensity (availability of the product):- Deals with availability of the product. - Intensive Distribution: It maximizes product availability every wholesaler and retailer that can stock and carry the product. Example: Convince product: milk, bread, gas.- Selective Distribution: In the middle. Example- Technology, appliances- Exclusive Distribution: The product is limited to one location in a single geographic region. Example: Prestige products like a BMW dealership.V. Channel ConflictDifferent Types of Channel Conflict:- Horizontal Conflict: Conflict between 2 or more members of the same level of thedistribution channel. Example: 2 car dealerships (retail level)- Vertical Conflict: Conflict between 2 different levels of the distribution channel. Example: Manufacturer and retailer. * Manufacturer that decides to sell direct.VI. Marketing Logistics- Marketing Logistics defined- The physical flow of materials and final goods from the producer to the end consumer.- Those activities that get the right amount of the right product to the right customer at the right time at the lowest possible cost.- Flow of the product.- Arriving at decisions containing cost in a cost effective manner.- Delivering customer service.- What are the parts of Logistics?- Inbound Distribution: Moving products and supplies to the factor from suppliers.- Outbound Distribution: Moving products from the factory to the end consumer.- Reverse Distribution: The returns from the customer.VII. Major Logistic Functions1. Warehousing (Storage of the product) – 2 Types: Storage Warehouse Solution: (long term storage of the product) and Distribution Center (less about storage and more about getting the product closer to where is needs to be). Example: Walmart- First Distribution Center in the 1960’s. Today – 100 Distribution Centersin the US, each center serves 100+ stores.2. Inventory Management- How much inventory should the firm keep on hand? Issue like: Perishability, technology, Just in Time3. Transportation Management- How is the product transported in the US. Largest and #1- Trucks 35%. #2- Rail 31%. Pipeline 16%. Water 11%. Air 5%.- Intermodal TransportationPiggyback: Use of truck and railHighest cost to lowest cost: Air___ WaterTransit (the fastest to slowest): Air____ WaterTransibility: Air____ Water4. Logistics Information Management- How companies share information with their