I. Fundamentals of Business

1

• I. Fundamentals of Business

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Ownership form

• Sole proprietorship
• Partnership
• Corporation

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Sole proprietorship

• Advantages
• Ease and Cost of Formation
• Secrecy
• Distribution and use of profit
• Flexibility and control
• of the business
• Government regulation
• Taxation
• Closing the business

• Disadvantages
• Unlimited liability
• Limited source of funds
• Limited Skills
• Lack of Continuity
• Lack of qualified employees

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Partnership

• Article of partnership a legal documents that
  set forth the basic agreement between the
  partners
• General Partnership
• Limited Partnership
• Joint Ventures

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Partnership

• Advantages
• Ease of Organization
• Availability of capital and credits
• Combined skills and knowledge
• Decision making
• Regulatory controls
• Taxation

• Disadvantages
• Unlimited liability
• Business responsibility
• Life of partnership
• Distribution of profit
• Limited source of fund

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Corporation

• Legal document to be fiiled
• Name and address
• Objective of the corporation
• Classes of stock
• Expected life of the corporation
• Financial Capital Required at the time of
  incorporation
• Provisions for transferring shares stock between
  owners
• Provisions for the regulation of internal
  corporate affairs
• Address of the registered business office
• Names and addresses of the initial board of
  directors
• Names and addresses of incorporators
• Based on this the state issues Corporate Charter

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Corporation

• Private Corporation a corporation owned by one
  or few people who are closely involved in
  managing the business
• Public Corporation corporation whose stock
  anyone can buy sell or trade
• Quasi-public corporation corporations owned and
  operated by federal, state, or local government
• Non-profit corporation Corporations that
  focused on providing a service rather than
  earning the profit, but are not owned by
  government entity.

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Elements of corporation

• The board of directors
• Stock ownership
• Preferred stocks owners have a claim on profit
  before other stockholders, but not running the
  business
• Common stocks have voting rights

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Corporation

• Advantages
• Limited liability
• Ease to transfer ownership
• Perpetual life
• External source of fund
• Expansion potential

• Disadvantages
• Double taxation
• Forming a Corporation
• Disclosure of information
• Employee-Owner Separation

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Other types of ownership

• S Corporations taxed as it were a partnership
  but have limitation on shareholders
• LLC Form of ownership that provides limited
  liabilities on taxation like a partnership but
  places fewer restriction on shareholders
• Cooperative an organization composed of
  individuals or small businesses that have banded
  together to reap the benefits of belonging to a
  larger organization

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Trends in Business ownership

• Merger the combination of two companies
  (usually corporations) to form a new company
• Horizontal merger
• Vertical merger
• Conglomerate merger
• Acquisition the purchase of one company by
  another, usually by buying the stock
• Leverage buyout (LBO) a purchase in which a
  group of investors borrows money from banks and
  another institutions to acquire a company, using
  the assets of the purchased company to guarantee
  the loan

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The nature of management

• Setting the goals objectives that a business
  hopes and plans to achieve.
• Goal setting provides direction for managers at
  all level
• Helps firms allocate resources
• Helps to define corporate strategy
• Helps managers assess performance
• Long-term goals vs short-term goals

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Formulating Strategy
Analyze the organization
Match the organization and its environment
Formulate strategy
Set strategic goals
Analyze the environment
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The PESTEL FRAMEWORK
What environmental factors are affecting the
organization? Which of these are the most
important at the present time? In the next few
years

• Political
• Government Stability
• Taxation Policy
• Foreign trade regulation
• Social welfare policies
• Sociocultural factors
• Population demographics
• Income distribution
• Social mobility
• Lifestyle changes
• Attitudes to work and leisure
• Levels of education
• Environmental
• Environmental protection laws
• Waste disposal
• Energy consumption

• Economic factors
• Business cycles
• GNP trends
• Interest rates
• Money supply
• Inflation
• Unemployment
• Disposable income
• Technological
• Government spending
• New discoveries/development
• Speed of technology transfer
• Legal
• Monopolies legislation
• Employment law
• Health and product safety

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Management Process

• Management is the process of planning,
  organizing, directing, and controlling an
  organizations resources to achieve its goal
• Planning the management process of determining
  what an organization needs to do and how best to
  get it done
• Organizing management process of determining
  how best to arrange an organizations resources
  and activities into a coherent structure.
• Directing - management process of guiding and
  motivating employees to meet an organizations
  objectives
• Controlling - management process of monitoring an
  organizations performance to ensure that it is
  meeting its goals.

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The Control Process
Set goals
Measure Performance
Evaluate Performance
Take corrective action
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Levels of Management

• Top Managers President, vice-president, CEO,
  CFO, treasurer
• Middle Managers Plant managers, operations
  managers, division manager
• First-Line Managers Supervisor, office
  managers, group leader

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Areas of management

• Human Resources
• Operations
• Marketing
• Information
• Financial
• Other (RD, Public Relation)

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Basic Management Skills

• Technical
• HR
• Conceptual
• Decision Making
• Time Management

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Determinants of Organization

• Organizational structure Specialization of the
  jobs to be done within an organization and the
  ways in which they relate to one another
• Organizational Chart Diagram depicting a
  companys structure and showing employees where
  they fit into its operation
• Chain of command Reporting relationship within
  company

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Specialization and Departmentalization

• Job specialization the process of identifying
  the specific jobs that need to be done and
  designating the people who will perform them
• Departmentalization process of grouping jobs
  into logical units
• Profit Center separate company unit responsible
  for its own costs and profit
• Customer Departmentalization
• Product
• Process
• Geographic
• Functional

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Multiple Forms of Departmentalization
President
Vice President Marketing
Vice president Production
Vice president Finance
Functional
Italian Plant manager
French Plant manager
German Plant manager
Geographical
Product
Consumer Products
Industrial Products
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Type of organizational structure
Authority is determined by the relationships
between group functions and activities
CEO
Marketing
Production
Finance
RD
CEO
Division A
Division B
Division C
Corporate Divisions operate as autonomous
business under the larger corporate umbrella
Marketing
Production
Finance
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Type of organizational structure
CEO
Marketing
Production
Finance
RD
Product A
Product B
Product C
Teams are formed and team members report to two
or more managers
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Managing production and Improving Quality
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Goods and Service Operations

• Service Operations Business Activities that
  provide tangible and intangible services
• Goods Production Business operations that
  create tangible products
• In the service sector the profit and loss
  statement should reflect such valuable assets as
  employee brainpower and sensitivity to customer
  needs.

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Operations

• Products provide customers with utility the
  ability of the product to satisfy a human wants
• Operations Management is the systematic direction
  and control of the processes that transform
  resources into finished services and goods.
• Operations Managers are Managers responsible for
  production, inventory, and quality control

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Operations management

• Production managers
• plan
• organize
• schedule
• control

• Inputs
• plant
• capital
• human resources
• material
• customers

Outputs
Transformational activities
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Operations Process

• An operations process is a set of methods and
  technologies used in the production of goods and
  services
• Types of good manufacturing
• Transformational technology
• Chemical process
• Fabrication process
• Assembly
• Transport process
• Clerical process
• Types of service processes
• High-contact process (bus) level of
  service-customer contact in which the customer
  receives the service as part of the system
• Low-contact process (repair service) - level of
  service-customer contact in which the customer
  need to be a part of system to receive service

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Differences between Service and Manufacturing
Operations

• Focus on performance
• Focus on process and outcomes
• Focus on service characteristic
• Intangibility
• Customization
• Unstorability
• Focus on service quality considerations

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Operations Planning
Business Plan and Forecast
Long-range Operations Plan capacity, location,
quality methods
Operation Schedules master production schedule,
detailed schedule
Operations control Quality control, materials
management
Output to customers
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Operations Planning

• Capacity planning THE STAKES ARE HIGH
• Location planning to consider availability of
  raw materials, labor, energy and transportation
  costs, local and state regulations and taxes, and
  community living conditions
• Layout planning
• Productive facilities - workstations and
  equipment for transforming raw materials
• Process layouts
• Product layouts
• Cellular layouts
• Nonproductive facilities storage and
  maintenance areas
• Support facilities offices, restrooms, parking
  lots, cafeterias, and so forth
• Methods planning
• Process flow-chart

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Operations Control

• Scheduling
• Materials management
• Transportation
• Warehousing
• Purchasing
• Supplier selection
• Inventory control
• Tools for for operation process control
• Worker training
• Just-in-time production system
• Material requirements planning
• Quality control

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Total Quality Control

• Total quality management is the sum of all
  activities in getting quality products into
  market place
• Quality reliability - consistency of the
  products quality from unit to unit.
• Quality ownership principle of total quality
  management that holds that quality belongs to
  each person who creates it while performing job.

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Tools of quality management

• Competitive product analysis. Process by which a
  company analyzes a competitors products to
  identify desirable improvements in its own
• Statistical process control. Evaluation methods
  that allow managers to analyze vatiation in
  companys production activities
• Control chart

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Value, Satisfaction, and Quality

• Customer value is a difference between the values
  of the customer gains from owning and using a
  product and the cost of obtaining the product.
• Customer satisfaction depends on a products
  perceived performance in delivering value
  relative to a buyers expectations
• TQM programs designed to constantly improve the
  quality of a product

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Exchange, Transactions, and Relationships

• Exchange is the act of obtaining a desired object
  from someone by offering something in return
• A transaction consists of a trade of values
  between two parties One party gives X to another
  party and gets Y in return monetary
  transaction v barter transaction
• Relationship marketing beyond creating short
  term transactions, marketers need to build long
  term relationships with valued customers,
  distributors, dealers , and suppliers

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Markets

• The market is a set of actual and potential
  buyers of a product

Product -services
Industry (a collection of sellers)
Industry (a collection of sellers)
Money
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Product marketing
Did people buy it?
Monitor revenues
Re-package/re-brand product
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Marketing Mix
4Cs Customer solution Customer Cost Convenience Co
mmunication
4Ps Product Price Place Promotion
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The companys microenvironment
Publics Financial publics Media
publics Government publics Citizen action
public Local public General public Internal
public
Marketing Intermediaries Resellers Physical
distribution firms Marketing service
agencies Financial intermediaries
Competitors
Customers Consumer market Business
market Government market International market
Suppliers
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The companys macro environment
Economic environment Changes in income consumer
buying pattern
Natural environment Shortage of raw materials
increased pollution governmental intervention
Demographic environment
Technological environment
Cultural environment
Political environment
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Demographic forces

• Demography is the study of human populations in
  terms of size, density, location, age, gender,
  race, occupation, and other statistics
• Generational marketing
• Changing pattern of the family
• Geographic shift in population
• Better-educated and more white-collar population
• Increasing Diversity

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Economic Environment

• The economic environment consists of factors that
  affect consumer purchasing power and spending
  patterns.
• Changes in income
• Income distribution upper-class, middle class,
  working class, underclass
• Changing consumer spending pattern

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Natural Environment

• Marketers should be aware of
• Shortages of raw materials
• Increased pollution
• Increased governmental intervention
• Environmentally sustainable strategy

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Political Environment

• The political environment consist of laws,
  government agencies, and pressure groups that
  influence and limit various organizations and
  individuals in a given society.
• To protect companies from each other
• To protect the interests of society

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Cultural environment

• The cultural environment is made up of
  institutions and other forces that affect a
  societys basic values, perceptions, preferences
  and behaviors.
• Persistence of cultural values
• Shifts in secondary values
• Peoples views of themselves
• Peoples views of others
• Peoples views of organizations
• Peoples views of society
• Peoples views of nature
• Peoples views of universe

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CHAPTER 4 Marketing research and information
systems
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CHAPTER 7 Market Segmentation, Targeting, and
Positioning for Competitive Advantage
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Market Segmentation, Targeting and Positioning

• Segmentation - Dividing the market into distinct
  groups of buyers on the basis of needs,
  characteristics, or behavior who might require
  separate products or marketing mixes
• Targeting The process of evaluating each market
  segments attractiveness and selecting one or
  more segments to enter
• Positioning Arranging for a product to occupy a
  clear, distinctive, and desirable place relative
  to competing products in the mind of target
  consumers.

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Steps in market S,P,T.

• Market Segmentation
• Identify bases for segmenting the market
• Develop segment profiles

• Market Segmentation
• Identify bases for segmenting the market
• Develop segment profiles

• Market Segmentation
• Identify bases for segmenting the market
• Develop segment profiles

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Levels of marketing segmentation
Mass marketing
Segment marketing
Niche marketing
Micromarketing
Complete segmentation
No segmentation
Focusing on subsegments or niches wit h
distinctive traits that may seek a special
combination of benefits
Local marketing
Isolating broad segments that make up a market
and adapting the marketing to match needs of one
ore more segments
Individual marketing
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Strategic Segmentation

• Purpose of segmentation is to identify groups of
  customers with similar needs and behavior
  patterns, so that they can offered more tightly
  focused
• products
• services
• communications
• Segments should be
• identifiable
• quantifiable
• addressable
• of sufficient size to be worth addressing

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Segmentation

• Geography and regionality
• Psychographics
• Preferred sales channels
• Number of products
• Sales territory
• Lifetime value
• Life stage
• Privacy Preferences

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Market Targeting

• Market targeting involves evaluating each market
  segments attractiveness and selecting one or
  more segment to enter
• Target Market a set of buyers sharing common
  needs or characteristics that the company decide
  to serve

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Selecting market segments
Company marketing mix
Market
Undifferentiated marketing
Marketing mix 1
Segment 1
Marketing mix 2
Segment 2
Marketing mix 3
Segment 3
Differentiated marketing
Company marketing mix
Segment 1
Segment 2
Segment 3
Concentrated marketing
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Choosing a positioning strategy

• Competitive advantage an advantage over
  competitors gained by offering consumers greater
  value, either through lower prices or by
  providing more benefits that justify higher
  prices
• Which differences to promote?
• Important
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable

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Developing marketing opportunities and strategies
more
The same
less
more
More for less
More for he same
More for more
The same for less
The same
Benefits
Less for much less
less
Winning value proposition
Price
Best marginal proposition
Losing value proposition
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Elements of value proposition
cost
performance
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What is a product

• Product anything that can be offered to a
  market for attention, acquisition, use, or
  consumption that might satisfy a want or need
• Service any activity or benefit that one party
  can offer to another that is essentially
  intangible and does not result in the ownership
  of anything
• Experience whereas products are tangible and
  services are intangible, experiences are
  memorable.

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Three levels of product
Augmented product
Installation
Packaging
Features
After sale service
Core benefit or service
Delivery and credit
Brand name
Core product
Quality level
Design
Actual product
Warranty
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Marketing considerations for consumer products
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Individual product decisions
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Branding

• Brand is a name, term sign, symbol, or design, or
  a combination of these, that identifies the maker
  or seller of a product or service.
• Brand equity
• Brand name selection
• Brand sponsor the product may be launched as a
  manufacturers brand or manufacturer may sell to
  reseller who give it a private brand.
• Brand strategy

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Brand equity

• The value of the brand, based on the extent to
  which it has high brand loyalty, name awareness,
  perceived quality, strong brand associations, and
  other assets such as patents, trademarks and
  channel relationships.

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Brand name selection

• It should suggest something about the products
  benefits and qualities.
• It should be easy to pronounce, recognize, and
  remember.
• The brand name should be distinctive.
• The name should translate easily into foreign
  languages.
• It should be capable of registration and legal
  protection.

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Brand sponsor

• Manufacturers vs private brand
• Licensing
• Co-branding the practice of using the
  established brand names of two different
  companies on the same product
• Brand staretegy

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Brand strategy

• The company has 4 choices when it comes to brand
  strategy line extension, brand extension,
  multibrands, new brands.
• Line extensions occur when a company introduces
  additional items in a given product category
  under the same brand name such as new flavors,
  forms, color, added ingredients, or package size
• Brand extension involves the use of a successful
  brand name to launch new or modified products in
  an new category

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Four brand strategies
Product category
Existing
New
Existing
Brand name
New
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Packaging and Labeling

• The activities of designing and producing the
  container or wrapper for a product.
• Labeling perform several functions identifies,
  describes and promote.
• Unit pricing
• Open dating
• Nutritional labeling

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Product Line Decision

• A product line is a group of products that are
  closely related because they function ia a
  similar manner.
• Product line length the number of items in the
  product line
• Stretching - occurs when the company lengthens
  its product line beyond its current range.
  downward, upwards or both sides.
• Filling adding more items within the present
  range of the line.

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Product mix decisions

• An organization with several product lines has a
  product mix. A product mix consists of all the
  product lines and items that a particular seller
  offer for sale.

Product mix
Product line 2
Product line 3
Product line n
Product line 1
Subline 1
Subline 2
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Chapter 9

• New Product Development and Product Life-Cycle

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Major stages in new-product development
Idea generation
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New-product development

• The development of original products, product
  improvements, product modifications and new
  brands through the firms own RD efforts.
• Idea generation the systematic search for
  new-product ideas
• Internal sources, 3M approach,customers,
  competitors distributors and suppliers
• Idea management system appoint manager,
  committee, toll numbers, incentives
• Idea screening screening new product ideas in
  order to spot good ideas and drop poor ones as
  soon as possible
• Product concept A detailed version of the
  new-product idea stated in meaningful consumer
  terms
• Concept testing Testing new product concepts
  with a group of target consumers to find out if
  the concepts have strong consumer appeal
• Marketing strategy development designing an
  initial marketing strategy for a new product
  based on the product concept

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Idea screening

• Is the product truly useful to consumers and
  society?
• Is it good for our particular company?
• Does it mesh well with the companys objectives
  and strategies?
• Do we have the people and resources to make it
  succeed?
• Does it delivers more value to customer than do
  the competitors?
• Is it easy to advertise and distribute?

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Marketing strategy development

• Describes the target market planned product
  positioning and the sales and the profit goals
  for the first few years
• Outlines the products planned price,
  distribution, and marketing budget for the first
  year
• Describes the the planned long-run sales, profit
  goals, and marketing mix strategies

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Business Analysis

• Business Analysis a review of the sales, costs,
  and profit projections for a new product to find
  out whether these factors satisfy the companys
  objectives.

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Product development

• Product development a strategy for company
  growth by offering modified or new products to
  current market segments. Developing the product
  concept into physical product in order to ensure
  that the product idea can be turned into a
  workable product

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Test marketing and Commercialization

• The stage of new product development in which the
  product and marketing program are tested in more
  realistic market settings
• Standard test marketing
• Controlled test marketing
• Simulated test markets
• Introducing a new product into the market

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Speeding up New-Product Development

• Sequential product development a new product
  development approach in which hone company
  department works to complete its stage of the
  process before passing the new product along the
  next department stage
• Simultaneous (or team-based) product development
  an approach to developing new products in which
  various company departments work closely
  together, overlapping the steps in the
  product-development process to save time and
  increase effectivenes

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Product Life-Cycle Strategies

• PLC the course of a products sales and profits
  over its lifetime. It involves five distinct
  stages
• Product development begins when the company
  finds and develops new-product idea. During
  product development, sales are zero and the
  companys investment costs mount
• Introduction is a period of slow sales growth as
  the product is introduced in the market. Profit
  are nonexistent in this in this stage because of
  the heavy expenses of product introduction
• Growth is a period of rapid market acceptance
  and increasing profit.
• Maturity is a period of slowdown in sales growth
  because the product has achieved acceptance by
  most potential buyers. Profit level off or
  decline because of increasing marketing outlays
  to defend the product against competition.
• Decline is the period when sales fall off and
  profits drop

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Product life cycle - PLC
Sales and profits
Sales
Profit
Time
Product Development
Introduction
Growth
Maturity
Decline
84
Summary of product life-cycle characteristics,
objectives, strategies
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Chapter 10

• Pricing products pricing considerations and
  approaches

86
Pricing

• Price the amount of money charged for a product
  or service, or the sum of the values that
  consumers exchange for the benefits of having or
  using the product service.

Internal factors
Pricing decisions
Marketing objectives Marketing Mix
strategy Costs Organizational considerations
87
Internal factors affecting pricing decision

• Marketing objectives
• Marketing mix strategy
• Costs
• Types of costs
• Costs at different level of production
• Costs as a function of production experience
• Organizational considerations

88
External factors affecting pricing decisions

• The market and demand
• Pricing in different types of market
• Consumer perceptions of price and value
• Analyzing price-demand relationships
• Price elasticity of demand
• Competitors costs, prices and offers
• Other external factors
• Economic conditions
• Reaction of resellers
• Government
• Social concerns

89
General Pricing Approaches

• Cost-based pricing
• Cost-plus pricing adding a standard markup to
  the cost of product
• Break-even pricing setting price to break even
  on costs of making and marketing a product or
  setting price to make a target profit.
• Value-based pricing offering just the right
  combination of quality and good service at a fair
  price
• Competition based pricing setting prices based
  on the prices that competitors charge for similar
  products

90
Chapter 11

• Pricing Products Pricing strategies

91
New-product pricing strategy

• Market-Skimming Pricing
• Market-Penetration Pricing

92
Product mix pricing strategies

• Product line pricing
• Optional-product pricing
• Captive-product pricing
• By-Product Pricing
• Product Bundle Pricing

93
Price-adjustment strategies

• Discount and allowance pricing
• Segmented pricing
• Psychological pricing
• Promotional pricing
• Geographical pricing
• International pricing

94
Assessing and responding to competitors price
change
Has competitor cut prices?
95
Chapter 12

• Distribution Channels and Logistics Management

96
The nature of the distribution channel

• Distribution channel is a set of interdependent
  organizations involved in the process of making a
  product or services available for use or
  consumption by the consumer or business user

Store
97
Distribution Channel Functions

• Information gathering and distribution
  marketing research and intelligence information
  about actors and forces in the marketing
  environment needed for planning and aiding
  exchange
• Promotion developing and spreading persuasive
  communications about an offer
• Contact finding and communicating with
  prospective buyers
• Matching shaping and fitting the offer to the
  buyers needs, including activities such as
  manufacturing, grading, assembling, and
  packaging.
• Negotiation reaching an agreement on price and
  other terms of the offer so that ownership or
  possession can be transferred.
• Physical distribution transporting and storing
  goods
• Financing acquiring and using funds to cover
  the costs of the channel work.
• Risk taking assuming the risks of carrying out
  channel work

98
Consumer marketing channels

• Direct marketing channel is a channel that has no
  intermediary levels
• Indirect marketing channel contains one or more
  intermediary level

99
Channel behavior

• Channel conflict disagreement among marketing
  channel members on goals and roles who should
  do what and for what rewards
• Horizontal conflict
• Vertical conflict

100
Business marketing channels
101
A conventional marketing channel vs vertical
marketing system
Conventional marketing channel
Vertical marketing system
Conventional distribution channel a channel
consisting of one ore ore independent
producers, wholesalers, and detailers, each
a separate business seeking to maximize its own
profits even at the expense of profits for the
system as a whole.
Manufacturer
Manufacturer
Wholesaler
Wholesaler
Retailer
Vertical Marketing System a channel structure
in which producers, wholesalers, and detailers
act as a unified system. One channel member owns
the others, or has so much power that they all
cooperate
Retailer
Consumer
Consumer
102
Vertical marketing system - VMS

• Corporate VMS combines successive stages of
  production and distribution under single
  ownership - channel leadership is established
  through common ownership
• Contractual VMS - in which independent firms at
  different levels of production and distribution
  join together through contacts to obtain more
  economies or sales impact that they could achieve
  alone
• Wholesaler-sponsored voluntary chain
• Retailer cooperatives
• Franchise organizations in which a channel
  member, called a franchiser, links several stages
  in the production-distribution process.
• Administered VMS coordinates successive stages
  of production and distribution, not through
  common ownership or contractual ties but through
  the size and power of one of the parties

103
Horizontal marketing systems

• A channel arrangement in which two or more
  companies at one level join together to follow a
  new marketing opportunity

104
Hybrid marketing channel

• Multichannel distribution system in which a
  single firm sets up two ore more marketing
  channels to reach one ore more customer segments

Customer segment 1
Customer segment 2
Dealers
Producer
Customer segment 1
Dealers
Distributor
Customer segment 2
105
Analyzing consumer service needs

• Designing the distribution channel starts with
  finding out what targeted consumers want from the
  channel
• Do consumers want to buy from nearby locations or
  are they willing to travel to more distant
  centralized locations?
• Would they rather buy in person, over the phone,
  through the mail, or via the Internet?
• Do they value breadth of assortment or do they
  prefer specialization?
• Do consumers want many add-on services (delivery,
  credit, repairs, installation) or will they
  obtain these elsewhere?

106
Types of intermediaries

• Company sales force expand the companys direct
  sales force. Assign outside salespeople to
  territories and have them contact all prospects
  in the area or develop separate company sales
  forces for different industries.
• Manufacturers activities - Hire manufacturers
  agents independent firms whose sales forces
  handle related products from many companies in
  different regions or industries to sell the new
  test equipment.
• Industrial distributors Find distributors in
  th4e different regions or industries who will buy
  and carry the new line. Give them exclusive
  distribution, good margins, product training, and
  promotional support

107
Number of marketing intermediaries

• Intensive distribution stocking the product in
  as many outlets as possible
• Exclusive distribution giving a limited number
  of dealers the exclusive right to distribute the
  companys products in their territories
• Selective the use of more that one, but fewer
  than all, of the intermediaries who are willing
  to carry the companys products

108
Responsibilities of channel members

• The producers and intermediaries need to agree on
  the terms and responsibilities of each member
• Price policy
• Conditions of sales
• Territorial rights
• Specific services to be performed by each parties

109
Evaluating the alternatives

• Economic criteria a company compares the likely
  probability of different channel alternatives.
• Control issues other things equal the company
  prefers to keep as much control as possible
• Adaptive issue the companies want to keep the
  channel as flexible as possible

110
Physical distribution

• Physical distribution - the tasks involved in
  planning, implementing, and controlling the
  physical flow of materials, final goods, and
  related information from points of origin to
  points of consumption to meet customer
  requirements at a profit

111
Major logistics function
112
Logistics management

• Integrated logistics management the concept
  that emphasizes teamwork, both inside the company
  and among all the marketing channel
  organizations, to maximize the performance of the
  entire distribution system
• Cross functional team inside the company
• Building channel partnerships
• Cross-company teams
• Information sharing
• Anticipatory vs response-based distribution
  systems
• Third-party logistics