 Welcome everyone to Unit 6 of MBA 602 Marketing Management. Melinda Salzer here again to guide you through this unit. In Unit 6 today, we'll be talking about channels of distribution, supply chain, and logistics. Here are the learning objectives that we'll be exploring today. We will identify the various channels of distribution such as wholesale and retail that different companies can use. We'll talk about the importance of a firm supply chain and the relationship it has to the value chain. We'll talk about some of the logistical challenges that companies face when delivering a product to the customer such as time to market and cost. As I've mentioned in previous units, sometimes students say, well, why do we have to have learning objectives? It's very simple. Each learning objective ties directly to the course material and to the content that's covered throughout the course. The assessments are specifically tied to the learning objectives and also helps you with test preparation. Now, as always, I welcome your questions at any time, so if you're watching this recording, feel free to post your questions and submit them, and we will get back to you with your answers as soon as possible. The topics that we'll cover today specifically are about partners, wholesalers, intermediaries, and brokers, and we'll talk about the differences between these intermediaries. We'll talk about logistics and third parties, overall operations, and the role of retail. We'll talk about supply chain and value chain management as well as the various modes of transportation and how those relate to the specific types of merchandise that is being shipped. So let's look at the first learning outcome, which is to identify the various channels of distribution that are undertaken by different companies. And the things that we'll look at are the different types of channel partners that companies utilize for distribution. We'll talk about the differences between B2B, which is business to business, and B2C, which is business to consumer channels, and there is quite a bit of a difference. And we'll also talk about the factors that companies consider when they're making their channel selections. So first, let's talk about intermediaries. So intermediaries are the channel partners that companies use to get the products into the hands of the consumers. And some of these might be wholesalers, brokers, and retailers. So wholesalers procure products from the producers and they store them in ways that make it convenient for retailers to sell. Merchant Hole Sailors, also known as distributors, can offer manufacturers a wide range of services that can include warehousing, supplying credit, and also delivering goods directly to customers. So brokers don't purchase any goods, but they take title and they act as a negotiator between a buyer and a producer. And finally, retailers, which we know also as consumers, they obtain goods from the various intermediaries and they sell directly to us, to the consumer. And there are a variety of retailers that can include supermarkets, specialty stores, department stores, warehouse clubs, outlets, and increasingly, as we have seen over the past few years, online retailers. Let's talk a little bit about the differences between, excuse me, my apologies. Let's talk a little bit about the differences between business to business and business to consumer channels. So a business to business purchase begins with the producer and then moves either to an agent broker or distributor and then to the business or the buyer, which could be a business, could be a government agency or it could be an institution of some kind. A business to consumer purchase goes through different kinds of steps and we start off with the same way. We start off with a producer and an agent wholesaler or distributor, but then the next step in that process is to the retailer who sells directly to consumer. So let's talk a little bit about channel selection. One of the first things that's important to consider when you're talking about channel selection is the type of customer that's being targeted. This is especially important when we're distinguishing between consumer buyers and business customers. The nature of the products can also help a company identify the proper channel. So for example, think about if you are selling non-perishable goods, furniture, things that even canned goods, canned foods or whatever, you can choose a channel selection that might take a little bit more time and it might not need special requirements, but what if you're selling perishable goods? What if you're selling milk and fruits and vegetables and ice cream? The channel selection is going to very tremendously based on those kinds of needs. So we talk about the customer, we talk about the kinds of products and the process, how long it's going to take for the transaction and what benefits those different channels can provide to you as a producer. Also, the economy and changing exchange rates might impact factors when determining a channel as well as the technology that might be available. So it's also finally to recognize the channels of distribution that are used by your competition. So even if you have a product that could potentially take a little bit longer to get to its ultimate destination, if your competition is getting there first and you're two or three months or six months behind, you're going to find yourself in a deficit. So it's important to recognize also what your competition is using in terms of channel selection. And again, as always, well, we welcome any of your questions, please make sure you submit them and we will get back to you. So learning outcome two is to describe the importance of a firm's supply chain and the relationship to the value chain. And for this learning outcome, we'll talk about the four main components of the supply chain. We'll talk about the role of sourcing in the supply chain and we'll talk about the keys to value chain success. So the main elements for the supply chain are purchasing, which involves buying all of the materials needed to produce the finished goods, right? You have to select your suppliers. You have to create your strategic alliances. You have to get the materials that you need to actually manufacture whatever it is that you're offering to consumers. Once those materials are purchased, then you move on to manufacturing and operations and you look at inventory control, quality control, how you're going to streamline the process to make it as profitable as possible, but also as effective as possible. You move on to distribution. Once you have your finished goods, how are you going to get them to the ultimate customer and all of these work together to provide customer value? And the last step, of course, is integration. How do you coordinate everything? How do you measure the success of your process? How do you control what's going on? And also I would certainly add to this evaluation of the overall process, which is an important part of any strategy is are you ultimately providing the customer value that they're seeking? And these are the elements that go into the supply chain. So let's talk about the role of sourcing in the supply chain. And this is how companies actually seek suppliers for the goods and services that they're looking to manufacture. Now, while some companies might actually own their supply chain, many companies seek other firms and this is known as outsourcing. For example, a company rather than have their own fleet of trucks might hire companies for the logistics aspect of their process. Now, there are pros and cons to both. So if you are, let's say owning your supply chain and you don't outsource and you have everything in-house, some of the benefits are that you can have control over the process and you can have a better understanding of timing and how things are going. However, there is a greater risk to that because of anything within your internal processes, breaks in that chain, you might find yourself without any other options. So that if you're outsourcing, if you're using, if you're hiring for logistics, you're automatically opening yourself up to the connections and relationships with other suppliers, with other sources in the supply chain. So there are again, pros and cons in each company depending upon what they're offering, depending upon the competition, depending upon the sources that are available might choose different strategies at different times. So let's talk about supply chain management and this really is all about meeting the needs of your customers. This way an organization can really provide real and meaningful value to their customers and it really begins with fully understanding what is your customer need. By understanding what your customer needs, you can ensure that you're going to produce something that's going to be successful in the marketplace. But you also need to make sure that you have a strong competitive advantage by being different than your competition. How is your product different from other brands in the market? This really is essential in the supply chain management process because if your product isn't different than anybody else's, you're not going to gain customers, you're not going to increase profits and you're certainly not going to generate customer loyalty. So when you're doing this, it's important to understand the producers and the suppliers with whom you're working. Are they providing you with the supplies, with the manufacturing processes, with everything that will enable you to produce a quality product that will be different than the competition, certainly superior than the competition and meeting your customer's needs. So once you have all that in place, it's important to have a strong distribution network and a strong distribution channel in place and we'll talk about that in a moment. And all of these work together to build awareness. If your customers don't know that you're out there, you're not going to have any success. So again, the supply chain management process requires you to understand your customer needs, ensure product differentiation, make sure that you're using suppliers and producers that are effective and of the highest quality, make sure that you have a good distribution process in place and seek to build awareness of what you're offering to the public. And again, as I've mentioned, any questions at any time, please submit them and we'll be sure to get back to you. Okay, so for learning outcome three for unit six, we will describe the various logistical challenges of delivering a product to the customer such as timing to market and cost. We'll talk about the role of logistics and supply chain management, how companies determine the most efficient mode of transportation for their goods and how warehouse and transportation influence distribution costs. And I would like to say that very often logistics and distribution is not always the, for some, not always the most interesting aspect of marketing, it requires a lot of analysis, it requires a lot of time management, it requires a lot of real focus on details and might not be that interesting, but think about this, if we don't have effective logistics in place, if we don't have effective distribution strategies in place, then you cannot get your products to your customers. So while it might not be the most exciting elements of the process, it's one of the most essential and really important factors and a breakdown in logistics, a breakdown in supply chain management, a breakdown in distribution can be disastrous. And if we look at some of the challenges that we've faced pretty much on a global level in the past year or two about getting supplies and getting merchandise to marketplaces, this is all related to distribution and logistics. So it's a very important element of the overall process. So let's talk about logistics. And again, logistics is very simple, it's getting goods from one point to another. And of course, that sounds like it's very simple, but as you can see from this graphic and from the things that we're talking about is that it's much more complex than just saying, okay, we have something we need to get from point A to point B. There's a lot of elements that go into it and it really requires a lot of careful planning, execution and everything that's done can impact the overall supply chain by adding value to what you're offering. Resources are managed through logistics such as the resources that are managed through logistics, excuse me, food, materials, equipment, liquids and also intangibles such as time and information. Logistics also includes packaging and production and warehousing, transportation as well as security for everything that's being distributed. So let's look at different kinds of transportation modes at a glance and some of the basics of train rail, shipping and air. And each one of these modes of transportation have pros and cons, different costs associated with them, depending upon what your product is, depending upon how quickly you need to get something there wherever there happens to be. We'll determine the mode of transportation selected and for different products, different modes of transportation could be used at different times or also in conjunction with each other. So for example, dairy products and fresh flowers which we might not necessarily think of really require modes of transportation that will get them into the hands of customers relatively quickly. As I mentioned earlier, different things like furniture or clothing can be transported on modes of transportation that are slower. Another thing to consider is that items that are of high value need to be transported more quickly because the longer it takes to transport goods from one place to another, the higher the risk of theft. So it's important to make sure that if something that you're transporting is of high value that you get it there as quickly as possible. And please feel free to take the time to look over this slide and to look at some of the pros and cons, the elements that go into how a company might choose which mode of transportation for any given product. And let's finally look at the impact of warehousing and transportation on distribution costs. So obviously companies want to be as efficient as possible but they wanna make sure that they also can meet customer demand. So having things that are warehouse might have associated higher costs of storage and handling. Also, if merchandise is moved from one place to another place more frequently, there's a greater risk of product damage before it finally gets to reaching the consumer. Distribution centers have evolved clearly and they are more efficient. And so when you use distribution centers and fulfillment houses, which are also known as third party logistics or three PLS, they can do a better job of ensuring that everything gets to where it needs to be. In a timely fashion, in efficient fashion, certainly in a safe fashion. And all of these factors and all of it connects to the value chain and to value chain management. And so the idea is to make the most of a business operations increase profits and the value chain management is really essential in reaching these goals. So if you have a strong value change management process in place, a company is in a better position to monitor and manage all of the elements that go into the manufacturing process, procurement, production, quality control, and ultimately distribution. So again, while we look at distribution, we look at the supply chain, we look at logistics as being maybe not as exciting as marketing, maybe not as exciting as even doing some market research. As you can see that they're an essential component to ensuring that the companies are making the most of their offerings, meeting customer needs, and also as we talk about all the time is how do you differentiate yourself from the competition. And this concludes unit six, short and sweet, but special and as I've mentioned, feel free to ask your questions. I know that logistics and supply chain management tends to garner questions because it can be complex and I'm happy to answer your questions at any time. Thank you.