Marketing CH 12-13 – Flashcards
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Value delivery network
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The network made up of the company, suppliers, distributors, and ultimately customers who "partner" with each other to improve the performance of the entire system in delivering customer value.
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Marketing channel
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A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.
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Channel level
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A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.
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Direct marketing channel
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A marketing channel that has no intermediary levels.
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Indirect marketing channel
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Channel containing one or more intermediary levels.
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Channel conflict
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Disagreement among marketing channel members on goals and roles—who should do what and for what rewards.
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Conventional distribution channel
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A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole.
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Vertical marketing system (VMS)
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A distribution channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate.
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Corporate VMS
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A vertical marketing system that combines successive stages of production and distribution under single ownership—channel leadership is established through common ownership.
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Contractual VMS
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A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than they could achieve alone.
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Franchise organization
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A contractual vertical marketing system in which a channel member, called a franchiser, links several stages in the production-distribution process.
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Administered VMS
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A vertical marketing system that coordinates successive stages of production and distribution, riot through common ownership or contractual ties, but through the size and power of one of the parties.
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Horizontal marketing system
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A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
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Multichannel distribution system
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A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments.
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Disintermediation
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The cutting out of marketing channel intermediaries by product or service producers, or the displacement of traditional resellers by radical new types of intermediaries.
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Marketing channel design
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Designing effective marketing channels by analyzing consumer needs, setting channel objectives, identifying major channel alternatives, and evaluating them.
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Intensive distribution
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Stocking the product in as many outlets as possible.
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Exclusive distribution
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Giving a limited number of dealers the exclusive right to distribute the company's products in their territories.
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Selective distribution
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The use of more than one, but fewer than all, of the intermediaries who are willing to carry the company's products.
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Marketing channel management
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Selecting, managing, and motivating individual channel members and evaluating their performance over time.
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Marketing logistics (physical distribution)
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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.
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Supply chain management
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Managing upstream and. downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers.
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Distribution center
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A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible.
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Intermodal transportation
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Combining two or more modes of transportation.
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Integrated logistics management
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The logistics concept that emphasizes teamwork, both inside the company and among all the marketing channel organizations, to maximize the performance of the entire distribution system.
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Third-party logistics (3PL) provider
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An independent logistics provider that performs any or all of the functions required to get its client's product to market.
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Retailing
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All activities involved in selling goods or services directly to final consumers for their personal, non-business use.
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Retailer
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A business whose sales come primarily from retailing.
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Specialty store
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A retail store that carries a narrow product line with a deep assortment within that line.
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Department store
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A retail organization that carries a wide variety of product lines each line is operated as a separate department managed by specialist buyers or merchandisers.
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Supermarket
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A large, low-cost, low-margin, high-volume, self-service store that carries a wide variety of grocery and household products.
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Convenience store
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A small store, located near a residential area, that is open long hours seven days a week and carries a limited line of high-turnover convenience goods.
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Superstore
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A store much larger than a regular supermarket that offer a large assortment of routinely purchased food products, nonfood items, and services.
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Category killer
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Giant specialty store that carries a very deep assortment of a particular line and is staffed by knowledgeable employees.
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Service retailer
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A retailer whose product line is actually a service, including hotels, airlines, banks, colleges, and many others.
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Discount store
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A retail operation that se1l standard merchandise at lower prices by accepting lower margins and selling at high volume.
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Off-price retailer
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A retailer that buys at less-than-regular wholesale prices and sells at less than retail. Examples are factory outlets, independents, and warehouse clubs.
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Independent off-price retailer
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An off-price retailer that is either independently owned and run or is a division of a larger retail corporation.
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Factory outlet
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An off-price retailing operation that is owned and operated by a manufacturer and that normally carries the manufacturer's surplus, discontinued, or irregular goods.
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Warehouse club
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An off-price retailer that sells a limited selection of brand name grocery items, appliances, clothing, and a hodgepodge of other goods at deep discounts to members who pay annual membership fees.
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Chain stores
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Two or more outlets that are commonly owned and controlled.
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Franchise
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A contractual association between a manufacturer, wholesaler, or service organization (a franchiser) and independent businesspeople (franchisees) who buy the right to own and operate one or more units in the franchise system.
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Shopping center
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A group of retail businesses planned, developed, owned, and managed as a unit.
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Wheel-of-retailing concept
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A concept that states that new types of retailers usually begin as low-margin, low-price, low-status operations but later evolve into higher-priced, higher-service operations, eventually becoming like the conventional retailers they replaced.
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Wholesaling
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All activities involved in selling goods and services to those buying for resale or business use.
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Wholesaler
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A firm engaged primarily in wholesaling activities.
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Merchant wholesaler
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An independently owned business that takes title to the merchandise it handles.
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Broker
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A wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiations.
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Agent
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A wholesaler who represents buyers or sellers on a relatively permanent basis, performs only a few functions, and does not take title to goods.
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Manufacturers' sales branches and offices
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Wholesaling by sellers or buyers themselves rather than through independent wholesalers.
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Distribution Channel
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Intermediaries; Channel functions; Channel structure
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Intermediaries
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anyone who comes between manufacturer and consumer
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Channel functions
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Information (flows back to manufacturer); Promotion; Contact (with customer at point of sale); Matching (customers' needs: assortment of varied goods at stores); Negotiation (payment); Physical Distribution (how to get to customer); Financing; Risk Taking (stores responsible for left overs)
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Channel structure
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Direct (services); Indirect (wholesaler, retailer); can use more than one
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Channel Conflict
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Vertical (within same company, GM and dealerships); Horizontal (at the same level, Taco Bell stores close together)
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Channel Organization
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Conventional Distribution Channel (manufacturer - wholesaler - retailer - consumer); Vertical mktg. systems (VMS); Horizontal Marketing Systems; Hybrid Marketing Systems
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Vertical mktg. systems (VMS)
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combines manufacturer - wholesaler - retailer chain; Corporate VMS (apple); Contractual VMS (franchises); Administrated VMS (Wal-Mart, one party has all power);
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Number of Marketing Intermediaries
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Intensive distribution (Coca-Cola, many locations, many substitutes); Selective distribution (shopping goods, look for product, less availability); Exclusive distribution (few or one location, specialty goods, make product for only one retailer (model numbers) not always expensive (Avon))
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Legal Considerations
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anti-trust; can't limit distribution (anti-competition); can't limit suppliers for franchises; legal restrictions: limited opening hours, alcohol/drugs, guns, hunting licenses, tobacco
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Channel Management
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Selecting Channel Members (willing to work); Motivating Channel Members (feedback)
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Physical Distribution
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logistics of getting product to consumer; problems: limited shelf life; good examples: amazon, Wal-Mart
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Retail Product Line
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Specialty (few items, narrow line); Department (wide variety, but not deep); Supermarkets (private labels, higher margins, convenience goods, breadth and width); Convenience (limited selection of high turnover convenience goods); Superstores (hyper-market: Carrefour); Discount Stores (Wal-Mart); Off-price retailers (warehouse [Costco], outlet malls [avoid horizontal conflict], deep discount [TJ Maxx])
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Category Killers
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specialty stores with large selection (Barnes & Noble, Staples, PetsMart)
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Retailer Marketing Decisions (target market and the 4 P's)
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what products? returns? service varies; price must match other Ps; promotion - seasonal prices, timing
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Future of Retailing
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Competition (internet, price, hours); Megastores (REI); Stores as Entertainment (shopping experience)
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Wholesalers
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merchants (take title, then resell); brokers (earn from commission, multiple companies); agents (earn from commission, one company)
