Upgrade to remove ads
MKT291 Chapter 12
Terms in this set (65)
Marketing Channel of Distribution
consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.
Marketing channels can be compared to a pipeline through which water flows from a source to a terminus. Marketing channels make possible the flow of products and services from a producer, through intermediaries, to a buyer.
An intermediary between the manufacturer and the end-user markets
Agent or broker
An intermediary with legal authority to act on behalf of the manufacturer
An intermediary who sells to other intermediaries, usually to retailers; term usually applies to consumer markets
An intermediary who sells to consumers
An imprecise term usually used to describe intermediaries who perform a variety of distribution functions, including selling, maintaining inventories, extending credit; may be used to describe wholesalers
A more imprecise term than distributor, that can mean the same as distributor, retailer, wholesaler,etc
Three basic functions of intermediaries
transactional, logistical, facilitating
Buying-Purchasing products for resale or as an agent for supply of a product
Selling-contracting potential customers, promoting products and seeking orders
Risk taking-assuming business risks in the ownership of inventory that can become obsolete or deteriorate
Assorting-Creating product assortments from several sources to serve customers
Storing-assembling and protecting products at a convenient location to offer better customer service
Sorting-Purchasing in large quantities and breaking into smaller amounts desired by customers
Transporting-physically moving a product to a customer
Financing-Extending credit to customers
Grading-inspecting, testing or judging products and assigning them quality grades
Marketing information and research-providing info to customers and suppliers, including competitive conditions and trends
Consumer benefits of intermediaries
In more specific terms, marketing channels help create value for consumers through the four utilities: time, place, form, and possession.
refers to having a product or service when you want it.
means having a product or service available where consumers want it
involves enhancing a product or service to make it more appealing to buyers.
entails efforts by intermediaries to help buyers take possession of a product or service, such as having airline tickets delivered by a travel agency.
Internet Marketing Channels
Interactive electronic technology has made possible Internet marketing channels, which employ the Internet to make products and services available for consumption or use by consumers or organizational buyers. A unique feature of these channels is that they combine electronic and traditional intermediaries to create time, place, form, and possession utility for buyers.
*Can't perform logistical function of intermediaries
Direct Marketing Channels
allow consumers to buy products by interacting with various advertising media without a face-to-face meeting with a salesperson. Direct marketing channels include mail-order selling, direct-mail sales, catalog sales, telemarketing, interactive media, and televised home shopping (the Home Shopping Network).
sometimes called omnichannel marketing, is the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online. Multichannel marketing seeks to integrate a firm's electronic marketing and delivery channels.
an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.
Strategic Channel Alliances
whereby one firm's marketing channel is used to sell another firm's products. Strategic alliances are popular in global marketing, where the creation of marketing channel relationships is expensive and time-consuming.
Vertical Marketing Systems
professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact
Three Types of Vertical Marketing Systems
Corporate, contractual, administered
Corporate Vertical Marketing System
The combination of successive stages of production and distribution under a single ownership
a producer might own the intermediary at the next level down in the channel.
a retailer might own a manufacturing operation
Contractual Vertical Marketing System
independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone. Contractual systems are the most popular among the three types of vertical marketing systems.
Three variations of contractual vertical marketing system
Wholesaler-sponsored voluntary chains
Wholesaler-Sponsored Voluntary Chains
involve a wholesaler that develops a contractual relationship with small, independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management efforts. With the organization of a large number of independent retailers, economies of scale and volume discounts can be achieved to compete with chain stores.
Retail Sponsored Cooperatives
exist when small, independent retailers form an organization that operates a wholesale facility cooperatively. Member retailers then concentrate their buying power through the wholesaler and plan collaborative promotional and pricing activities.
contractual arrangement between a parent company (a franchisor) and an individual or firm (a franchisee) that allows the franchisee to operate a certain type of business under an established name and according to specific rules.
Four Types of Franchising
Manufacturer-sponsored retail franchise systems Manufacturer-sponsored wholesale franchise systems
Service sponsored retail franchise system
Service sponsored franchise systems
Manufacturer sponsored retail franchise system
prominent in the automobile industry, where a manufacturer such as Ford licenses dealers to sell its cars subject to various sales and service conditions.
Manufacturer sponsored wholesale franchise system
exist in the soft-drink industry. For example, Pepsi-Cola licenses wholesalers (bottlers) that purchase concentrate from Pepsi-Cola and then carbonate, bottle, promote, and distribute its products to retailers and restaurants.
Service Sponsored retail franchise system
Service-sponsored retail franchise systems are used by firms that have designed a unique approach for performing a service and wish to profit by selling the franchise to others.
Service sponsored franchise systems
Service-sponsored franchise systems exist when franchisors license individuals or firms to dispense a service under a trade name and according to specific guidelines.
Administered Vertical Marketing System
achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.
Target Market Coverage
Achieving the best coverage of the target market requires attention to the density—that is, the number of stores in a geographical area—and type of intermediaries to be used at the retail level of distribution. Three degrees of distribution density exist: intensive, exclusive, and selective.
Three Degrees of Distribution Density
Intensive, Exclusive and selective
means that a firm tries to place its products and services in as many outlets as possible. Intensive distribution is usually chosen for convenience products or services such as candy, fast food, newspapers, and soft drinks.
the extreme opposite of intensive distribution because only one retailer in a specific geographical area carries the firm's products. Exclusive distribution is typically chosen for specialty products or services, such as some women's fragrances and men's and women's apparel and accessories.
Advantages of Extensive
Retailers and industrial distributors prefer exclusive distribution for two reasons. First, it limits head-to-head competition for an identical product. Second, it provides a point of difference for a retailer or distributor.
lies between these two extremes and means that a firm selects a few retailers in a specific geographical area to carry its products. Selective distribution weds some of the market coverage benefits of intensive distribution to the control over resale evident with exclusive distribution.
involves those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost.
the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements.
Flow of Product
logistics deals with decisions needed to move a product from the source of raw materials to consumption
Three Elements of logistics management
First, logistics deals with decisions needed to move a product from the source of raw materials to consumption—that is, the flow of the product. Second, those decisions have to be cost effective. Third, while it is important to drive down logistics costs, there is a limit: A firm needs to drive down logistics costs as long as it can deliver expected customer service, which means satisfying customer requirements.
the various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users. It differs from a marketing channel in terms of the firms involved. A supply chain includes suppliers that provide raw material inputs to a manufacturer as well as the wholesalers and retailers that deliver finished products to consumers. The management process is also different.
Supply Chain Management
the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering products and services that provide value to consumers.
Important Feature of Supply Chain Management
its application of sophisticated information technology that allows companies to share and operate systems for order processing, transportation scheduling, and inventory and facility management.
Three Step Supply Chain Marketing Strategy
Understand the customer, understand the supply chain, harmonize the supply chain
Understand the customer
To understand the customer, a company must identify the needs of the customer segment being served. These needs, such as a desire for a low price or convenience of purchase, help a company define the relative importance of efficiency and responsiveness in meeting customer requirements.
Understand the Supply Chain
Second, a company must understand what a supply chain is designed to do well. Supply chains range from those that emphasize being responsive to customer requirements and demand to those that emphasize efficiency with a goal of supplying products at the lowest possible delivered cost.
Harmonize the supply chain
Harmonize the supply chain with the marketing strategy. Finally, a company needs to ensure that what the supply chain is capable of doing well is consistent with the targeted customer's needs and its marketing strategy. If a mismatch exists between what the supply chain does particularly well and a company's marketing strategy, the company will need to either redesign the supply chain to support the marketing strategy or change the marketing strategy.
a practice that involves unloading products from suppliers, sorting products for individual stores, and quickly reloading products onto its trucks for a particular store.
Lessons from Dell and Walmart's supply chain strategies
First, there is no one best supply chain for every company. Second, the best supply chain is the one that is consistent with the needs of the customer segment being served and complements a company's marketing strategy. And finally, supply chain managers are often called upon to make trade-offs between efficiency and responsiveness on various elements of a company's supply chain.
Total Logistics Cost
includes expenses associated with transportation, materials handling and warehousing, inventory, stockouts (being out of inventory), order processing, and return products handling.
the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience.
Time in a supply chain
In a supply chain setting, time refers to order cycle or replenishment time for an item, which means the time between the ordering of an item and when it is received and ready for use or sale. The various elements that make up the typical order cycle include recognition of the need to order, order transmittal, order processing, documentation, and transportation
Quick Response and Efficient Consumer Response
Another emphasis is to make the process of reordering and receiving products as simple as possible, often through inventory systems
the consistency of replenishment.
Communication is a two-way link between the buyer and seller that helps in monitoring service and anticipating future needs. Status reports on orders are a typical example of communication between the buyer and seller.
The concept of convenience for a supply chain manager means that there should be a minimum of effort on the part of the buyer in doing business with the seller.
Vendor Managed Inventory
the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items.
a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal.
YOU MIGHT ALSO LIKE...
Marketing 3001 Chapter 12
Chapter 15 Marketing
OTHER SETS BY THIS CREATOR
ECO 465: Exam 2
Eco 465 Exam 1
BLS Exam 2