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469 | CH 12

Terms in this set (42)

administered channel arrangement
a distribution system with a dominant member that guides the channel
carrying costs
monies spent on holding inventory
channel arrangement
a system that guides the administration of the marketing functions that must be performed as part of the distribution program
channel captain
the leader of an administered channel arrangement who takes on the role based on the size expertise or influence in the company
channels of distribution
the paths of goods and services take from the producer to the end user
coercive power
channel power based on the ability of a channel member to remove privileges or punish channel members for noncompliance
contractual channel arragement
a binding contract that identifies all the tasks to be performed by each channel member with regard to production, delivery, sorting, pricing, and promotional support
direct channel
a channel in which the producer sends the product directly to the customer or end user
dual channels (or multichannel distribution or hybrid marketing system)
the use of more than one channel of distribution for a company's goods or services
exclusive distribution
-a system that limits the number of distributors of a product to only one or two in each geographic area
-exclusivity and prestige, high intermediary control
-sales are lower for exclusive goods but gross margin is higher
-ex: specialty goods that require unique effort
expert power
channel power based on the experience and knowledge a channel member possesses
horizontal integration
an acquisition or merger at the same level in the distribution channel
indirect channels
channels in which goods and services go through on e or more intermediaries before reaching customers or end users
intensive distribution
-a system that makes the product available to consumers in as many different places as possible
-seeks to create high volume of sales at low gross margins
-ex: consumer & staple goods
just-in-time
an inventory control system that focuses on items being received just when they are needed rather than being stored in a warehouse
legitimate power
channel power based on a contractual arrangement
logistics
all the activities associated with the physical movement and storage of goods from the producer to the consumer
operational audit
an audit designed to examine the procedures and processes used in operating the warehouse or distribution center, layout and usage of the facility, staff productivity, and freight analysis
partnership-channel arrangement
a system in which the members of the channel work together for the benefit of all the members involved in distribution
pull strategy
a program in which the manufacturer focuses on stimulating consumer demand through extensive advertising and consumer promotions
push strategy
a program in which the manufacturer focuses on providing intermediaries with the kinds of incentives that will lead them to cooperate in marketing products
quick response
an inventory control system for retailers that creates an efficient supply flow of goods that approximates consumer purchase patterns
referent power
channel power based on the channel member being liked or respected
reward power
channel power based on the ability to provide special privileges, such as financial rewards for engaging in desirable behavior
selective distribution
-a system in while only carefully chosen outlets will carry a product in a geographic area
-achieve reasonable level of sales and gross margin
-ex: durable goods(washers &fridges)
-if viable keep
stock turnover
number of times per year that firm's average inventory on hand is sold
supply chain management
process of managing the actual physical movement of products from the producer to the consumer or end user
trading companies
complex marketing system specializing in providing intermediary services
vertical integration
the strategy of acquiring or merging with an intermediary in the channel such as a supplier or retailer
vertical marketing system
a system in which manufacturers, wholesalers, retailers, within the same channel act as a unified whole
difference between supply chain mgt and logistics
supply chain mgt. is the process of managing logistics (actual physical movement of products from producer to end user)
forward vertical integration
a manufacturer opens a distribution system or its own retail stores
backward vertical integration
a retailer creates a distribution system or begins manufacturing items to be sold in the store
fully vertically integrated
a company has its own suppliers, produces its own goods, and then sells them in its own stores
a|d of vertical integration
-strengthens a companys position in the channel
-offers channel member control
-increases gross margins
-entering new business which may be unsuccessful
types of channel power
-expert
-referent
-legitimate
-reward
-coercive
methods of transportation
choice determines how quickly goods move, costs, and flexibility of movement
-trucks
-railways
-air
-water
-pipelines
-intermodal transportation
-freight forwarders
intermodal transportation
3 modes, steady growth, containerization
pipelines
low cost, liquid products only, expensive to build/maintain, oil
water
-essential for international
-high weight/volume products
-13% of shipments
air
-low volume/weight
-high value
-high speed
-less than 1%
railways
-high weight, high volume goods
-40% of shipments
-high weight/volume, long distances
-low cost
-limited access
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