marketing ch 11
Terms in this set (77)
an overarching system of formal and informal relationships within which the firm participates to procure, transform and enhance, and ultimately supply its offerings in final form within a market space.
value networks are ___and ____
fluid and complex
the core aim of value network by the participating suppliers, customers, and other stakeholders in which the members of the network combine capabilities according to their expertise and the competencies required from the situation
network organization or virtual organization
new breed of organization. eliminates many in-house business functions and activities in favor of focusing only on those aspects for which it is best equipped to add value.
to be in a position to be maximally flexible, adaptable and speedy in response to the many key change drivers affecting business today such as rapidly shifting technology, discontinuous innovation, fickle consumer markets, and relentless mkt globalization.
channel of distribution
a system of interdependent relationships among a set of organizations that facilitates the exchange process
aka middlemen. play a role in the exchange process bw producer and consumer
take title to the product
do not take title to the product . perform a variety of physical distribution, transaction and communication, and facilitating functions that make exchange possible
independent business entity that links producers and end user consumers or organizational buyers
middleman that buys goods outright, taking title to them. ex: distributor, wholesaler
business entity that negotiates the purchases, sales or both, but doesnt take title to the goods. ex: broker, manufacturer's rep.
agent that usually operates on an extended contract, often sells within an exclusive territory, handles noncompeting but related lines of goods, and has limited authority to price and create terms of sale
wholesale middleman, found especially when selective or exclusive distribution is common and strong promotional support is needed. aka wholesaler
entity primarily engaged in buying, taking title to, storing (usually) and physically handling goods in large quantities. wholesalers resell the goods(usually in smaller quantities) to retailers or to organizational buyers
middleman that buys from manufacturers and sells to retailers. this intermediary is sometimes called a "rack jobber" to connote the service of stocking racks or shelves with merchandise.
entity that assists in the performance of distribution tasks other than buying, selling and transferring title (ex: trucking companies, warehouses)
entity primariliy engaged in seling to end user consumers
no intermediaries and operates strictly from producer to end user consumer or business user
contains one or more intermediary levels
physical distribution or logistics
integrated process of moving input materials to the producer, in-process inventory through the firm, and finished goods out of the firm through the channel of distribution.
represents all organizations involved in supplying a firm, the members of its channels of distribution, and its end-user consumers and business users.
supply chain management
the management of coordinating all these value-adding flows
occurs within a channel to better match quantities needed to space constraints and inventory turnover requirements. ex: breaking bulk performed by walgreen's retailer's own warehouse
taking in a product from multiple sources and transforming it, by SORTING it into diff classifications for sales thru the channel. ex: eggs may come into processing from diff farmers and sorted by grade, size to be packaged on way to retailers
intermediaries do this when they accumulate products from several srcs and then make those prods available down the channel as a convenient assortment for consumers. ex: assortment of the TVs at Best Buy and the expert staff
reduce # of transactions required, sell downstream, buy and evaluate upstream, facilitate financing, market research, risk taking.
transportation and storage
most commonly provided channel intermediary activities . ex: amazon keeps sufficient inventory of books avail for shipping across a variety of choices (ups, next day air)
performance of transaction and communication functions:
selling, buying, marketing communications
intermediaries provide a sales force to represent a manufacturer's product line.
both wholesalers and retailers perform an important function by evaluating products and ultimately simplifying purchase decisions by creating assortments
intermediaries receive incentives from manufacturers to participate in helping promote prods. ex: when target ad features tide laundry, target prob received a promotional allowance from P&G.
include a variety of activities that help fulfill the completed transactions and also maintain the viability of the channel relationships.
readily avail credit at various stages in the distribution process. (producers, wholesalers, retailers may facilitate)
intermediaries are closer to end user consumers and business users than manufacturers, theyre in an ideal position to gather info about mkt and consumer trends
intermediaries can add value by reducing the risk of others in the channel
shortening or collapsing of marketing channels due to the elimination of one or more intermediaries, is common in the electronic channel.
stability in online shopping was facilitated by
UPS / FEDEX
insourcing / third-party logistics
attractive for many firms whose core competencies do not include elements of supply chain management. the trend has opened up opportunities for firms such as UPS and Fedex, to change their business focus from mere shipping to broad logistics of supply chain functions
vertical marketing systems
vertically aligned networks behaving and performing as a unified system. ex: traditional, administered, contractual, corporate
traditional marketing system
act as stand-alone companies, act in self-serving ways, results in channel conflict bc there is no cooperation or control.
administered marketing system
some amount of cooperation, control maintained by economic power and leadership. ex: walmart, frito lay
contractual marketing system
fairly good to good amt of cooperation, control maintained by contracts. ex: mcdonalds, H&R block
corporate marketing system
complete amt of cooperation, control maintained by one company ownership, ex: niketown, florsheim
a vms can be set up in 3 diff ways
corporate systems, contractual systems, administered systems
at its essence, in a VMS a channel member:
1)owns the owners 2) has contracts with them 3) simply forces cooperation through sheer clout within the channel
the degree to which any member of a marketing channel can exercise influence over the other members of the channel.
can occur in which channel members experience disagreements and their relationship can become strained or fall apart.
involves an explicit or implicit threat that a channel captain will invoke negative consequences on a channel member if it does not comply with the leader's request or expectations. ex: walmart
in the form of writing big orders. few vendors wont NOT work with a potential business who is a retail giant just bc they can be difficult to work with. ex: walmart
channel members adopt an approach of utilizing their unique competencies to influence others in the channel. may take the form of sharing important product knowledge. ex: clinique counter at nordstrom, McKesson.
when a channel member is respected , admired, or revered based on one or more attributes. ex:stouffer', frito-lay
results from contracts such as franchise agreements or other formal agreements. ex: mcdonalds
refers to the number of intermediaries involved in distributing the product
this strategy is designed to saturate every possible intermediary and especially retailers. typically associated with low cost convenience goods
rely on the consumer seeing the prod and feeling an immediate want and being able to purchase now
goods for which a consumer may engage in a limited search. goods are candidates for selective distribution.
examples of shopping goods
clothes, appliances, home furniture
if a manufacturer opts for this, it is part of an overall positioning strategy built on prestige, scarcity and premium pricing
means that much of the intensive promotional activities take place from the manufacturer downward thru the channel of distribution.
slotting allowance or shelf fee
to secure distribution in an intermediary's inventory listing and warehouse or onto a retail shelf
focuses much of its promotional investment on the end user consumer. heavy advertising in media, direct marketing, coupons to create a demand from intermediaries from the bottom of channel upward
traditional logistics. thought of as starting with production and ending with receipt of finished good by end user consumer
sourcing materials and knowledge inputs from external suppliers to the point at which production begins
deals with how to get goods back to a manufacturer or intermediary after purchase
returns are higher in ___channel
if item that is ordered is not in stock, inbound replenishment processes are triggered
enterprise resource planning (ERP systems)
program that manages much of the logistics process for many firms. SW application designed to integrate information related to logistics processes thru out the organization. once data are entered, they are automatically linked thru systems
just in time inventory control systems
goal is to balance the double edged sword of potentially having too many goods on hand and creating unnecessary warehousing costs, with the chance of having so little inventory in stock that stock outs occur requiring expensive rush production and express delivery
materials requirement planning (MRP)
one component of ERP systems. guides overall mgt of inbound materials from suppliers to facilitate minimal production delays
when a supplier creates a restrictive agreement that prohibit their intermediaries from selling competing firms' prods.
if exclusive dealing is legal depends on:
whether it interferes with intermediary's right to act independently or the rights of competitors to succeed - is competition lessened by arrangement?
exclusive dealing lessens competition if it :
1) accounts for substantial market share 2) involves a substantial dollar amt. 3) involves a big supplier and smaller intermediary, which sets up a case for coercion
exclusive dealing may be legal if the parties show
exclusivity is essential for strategic reasons, such as to maintain prod image. ex: high fashion brands.
protects an intermediary from having to compete with others selling a producer's goods
for exclusive territory to be legal
it would have to be demonstrated that the exclusivity doesnt violate any statutes on restriction of competition
if a seller requires an intermediary to purchase a supplementary product to qualify to purchase the primary product the intermediary wishes to buy . ex: you can buy my printer, but to do so u must sign a contract to buy it.