Ch. 15 MAR 3023 – Flashcards
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Market Channel
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-consists of individuals and firms involved in the process of making a product/service available for use or consumption by consumers -make the flow of products flow from a producer through intermediaries to a buyer
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Functions by Intermediaries
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-transactional function -logistical function -facilitating function
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Transactional function
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-buying: purch product for resale or as an agent for supply of product -selling: contacting potential customers, promoting products, and seeking orders -risk taking: assuming business risks in the ownership of inv that become obsolete/deteriorate
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Logistical function
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-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: purch in large quantities and breaking into smaller amounts desired by customers -transporting: physically moving a product to customers
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Facilitating function:
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~make transactions easier for buyers -financing: extending credit to customers -grading: inspecting, testing, or judging products and assigning them quality grades -marketing info and research: providing info to customers and suppliers, including competitive conditions and trends
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Consumer benefits of Interm
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-time, place, form and possession utility
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Types of marketing channels
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-direct, indirect LOOK AT PAGES 388-389
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Direct channel:
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-producer and ultimate consumers deal directly with each other
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Indirect channel:
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intermediaries are inserted between producer and consumers -perform numerous channel functions
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Multichannel marketing
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-blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop/buy in trad interm and online -can leverage the value-adding capabilities of diff channels
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Dual distribution
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-arrangement where a firm reaches different buyers by employing 2 or more diff types of channels for same basic product ~ex. GE sells its large appliances directly to home and apt builders but uses retailers to sell to consumers **-strategic channel alliances: one firm's marketing channel is used to sell another firm's product
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Vertical marketing systems
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-professionally managed and centrally coordinated marketing channels designed to achieve channel econ and max marketing impact -three types of systems: corp, contractual, and administrated
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Corporate vertical marketing systems
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-combo of stages of production and distribution under a single ownership ~forward and backward integration: used when comp try to reduce distribution costs/gain greater control over supply sources/resale of their products
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Forward integration
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-part of Corporate vertical marketing systems -own the intermediary at the next level down in the channel
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Backward integration
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-part of Corporate vertical marketing systems -retailer might own a manuf operation
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Contractual vertical marketing system
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-independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional econ and marketing impact rather than alone -most popular type of system ~3 types of contractual: wholesaler-sponsored voluntary chains, retailer-sponsored cooperatives, and franchising
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Wholesaler-sponsored voluntary chains
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-involve a wholesaler that develops contrac relationship with small, independent retailers to standardize and coordinate buying practices, merch programs, and inv management effors
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Retailer-sponsored cooperatives
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-small, independent retailers from an org operate a wholesale facility cooperatively
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Franchising
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-most visible variation of contractual systems -contrac arrangement btwn parent comp (franchisor) and indiv/firm (franchisee) that allows the franchisee to operate a certain type of business under an est name and follow rules
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4 types of franchise systems
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1) Manuf-sponsored retail franch: prominent in auto industry-dealers subject to various sales and service conditions 2) Manuf-sponsored wholesale franch: in soft drink industry-coke sells wholesalers syrup and they carbonate it and bottle it to =final product 3)Service sponsored retail franch: used by firms that have designed unique approach for performing service and wish to profit by selling franch to others 4) Service sponsored franch: frach license indiv/firms to dispense a service under trade name+guidelines
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Administered vertical marketing systems
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-achieve coordination at successive stages of production and distrib by size and influence of one channel member rather than through ownership
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1 Density
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-number of stores in a geographical area -three degrees: intensive, exclusive, and selective
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Intensive distribution
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-Firm tries to place its products and services in as many outlets as possible -chosen for convenience products like candy
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Exclusive distribution
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-Extreme opposite of intensive distribution -only -only 1 retailer in a specified geographical area carries the firm's products -chosen for specialty products -limits head to head competition for an identical product -provides a point of diff for retailer/distribution
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Selective distribution
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-between these 2 extremes -firm selects a few retailers in a specific geographical area to carry its products -most common form of distributuion intensity
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2 Buyer requirements
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-second consideration in channel choice: gaining access to channels and interm that satisfy some interests buyers want -4 interests: info, convenience, variety, pre or postsale services
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3 profitability
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-determined by margins earned (rev - cost) for each channel -costs include distrib, adv, and selling expenses
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Channel conflict
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-one channel member believes ankther is engaged in behavior that prevents it from achieving its goals -2 types: vertical and horizontal conflict
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Vertical conflict
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-btwn diff levels in a mar channel Ex. Wholesaler and retailer -disintermediation: channel member byspases another and sells/buys products direct
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Horizontal conflict
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-btwn interm at the same level in a mar channel Ex. Two or more retailers , two or more wholesalers -arises when manuf increases its distribution coverage in a geog area
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Secure cooperation in mar channels9
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-channel captain: coord, directs, supports other channel members; producers, wholesalers, retailers ~becomes ch captain because they have the ability to influence the behavior of other members ~4 influences: 1-reward: econ influences comes from ability to give members rewards 2-expertise: ability to manage inv, streamline order processing 3-id: with a particular channel member which crestes influence for that member 4-legit right: 1 channel member directs behavior of other members
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Dual distribution
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-anticomletitive Ex. Manuf distributes through its own vertically integrated channel in comletition with independent wholesalers and retailers that also sell products
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Vertical integration
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Subject to legal action under the clayton act (prohibits exclusive dealing and tying arrangements that lessen comp) if it lessens competition /fosters a monopoly
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Logistics
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-activities that focus on getting the rjght amount of the right products to the right place at right time at lowest cost -logistics deal with with decisions needed to move product from source of raw materials to consumption
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Supply chain
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-various firms involved in performjng the activities required to create and deliver a product to consumers/industrial users -includes suppliers that provide raw materials to manuf, wholesalers, retailers -sup ch management - integration and org of info and logistics activ across firms
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Aligning supply chain with mark strategy
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-understand the customer, understand the supply chain, harmonize supply chain with mark stategy
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Total logistics cost
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-expenses assoc with transportstion, materials handeling, inv, stockouts, order processing, return products
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Customer service
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-ability of logistics management to satsfy users in terms of time, dependability, communications, and convenience
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Vendor managed inv (vmi)
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-suppliersupplier determines the product amount and assortment a customerneeds and automatically delivers appropriate items
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Reverse logistics
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-reclaiming recyclable and reusable material, returns, reworks from point of consumption
