question

distribution

answer

the decisions and activities that make products available to customers and when and where they want to purchase them

question

supply chain

answer

all the activities associated with the flow and transformation of products from raw materials through to the end customer; from to to the end

question

supply chain management

answer

long term partnerships among marketing channel members that reduce inefficiencies, costs, and redundancies and develop innovative approaches to satisfy customers ex: T-shirt in class video

question

upstream

answer

suppliers

question

downstream

answer

wholesalers, retailers

question

operations management

answer

the total set of managerial activities used by an organization to transform resource inputs into products, services, or both

question

logistics managements

answer

planning, implementing,and controlling the efficient and effective flow and store of products and information from the point of origin to consumption to meet customers' needs and wants

question

supply management

answer

in its broadest form, refers to the processes that enable the progress of value from raw material to final customer and back to redesign and final disposition ex: purchasing, procurement, sourcing

question

supply-chain managements

answer

a set of approaches used to integrate the functions of operations management, logistics management, supply management, and marketing channel management so products are produced and distributed in the right quantities, to the right locations, and at the right time

question

operations management - sample activities

answer

organizational system-wide coordination of operations and partnerships to meet customers' product needs

question

supply management - sample activities

answer

sourcing of necessary resources, products, and services from suppliers to support all supply-chain members

question

logistics management - sample activities

answer

all activities designed to move the product through the marketing channel to the end user, including warehousing and inventory management

question

channel management - sample activities

answer

all activities related to selling, service, and the development of long-term customer relationships

question

marketing channel (aka channel of distribution or distribution channel)

answer

a group of individuals and organizations that direct the flow of products from producers to customers within the supply chain -if channel member is eliminated, another channel member MUST perform the duties and absorb the costs

question

marketing intermediaries

answer

middlemen that link producers to other intermediaries or ultimate consumers through contractual arrangements or through the purchase and resale of products ex: wholesalers and retailers

question

marketing information - sample activities

answer

analyze sales data and other information in databases and information systems; perform or commission marketing research

question

marketing management - sample activities

answer

establish strategic and tactical plans for developing customer relationships and organizational productivity

question

facilitating exchanges - sample activities

answer

choose product assortments that match the needs of customers; cooperate with channel members to develop partnerships

question

promotion

answer

set promotional objectives; coordinate advertising, personal selling, sales promotion, publicity, and packaging

question

price

answer

establish pricing policies and terms of sales

question

physical distribution

answer

manage transportation, warehousing, materials handling, inventory control, and communication

question

time utility

answer

having products available when the customer wants them -represents the biggest challenge--dealing with speculative production (est. demand) -if wrong, lost sales or increased cost of inventory ex: movies on demand; toy manufacturers around Christmas especially

question

place utility

answer

created by making products available in locations where customers wish to purchase them (convenience stores) ex: shopping malls that have an ATM machine inside; vending machine

question

possession utility

answer

means that the customer has access to the product to use or to store for future use ex: can occur through ownership or through arrangements that give the customer the right to use the product, such as a lease or rental agreement -credit: buy now, pay later ex:lay away, credit

question

form utility

answer

by assembling, preparing, or otherwise refining the product to suit individual customer needs ex: ready to eat soup, canned soup

question

-reduce overall costs of marketing exchanges -reduce search costs for customers

answer

marketing channels facilitate exchange efficiencies

question

create utility and facilitate exchange efficiencies

answer

the significance of marketing channels

question

consumer products business products multiple marketing channels channel alliances

answer

types of marketing channels

question

producer>consumer

answer

producers, like Dell computers,that sell products directly from their factories to end users use direct marketing channels ex:direct/ (direct website)

question

producer>retailers>consumer

answer

a frequent choice of large retailers because it allows them to buy in quantity from manufacturers ex: Kmart and Walmart, new automobiles and new college textbooks are sold this way, primarily nonvoter retailers such as L.L. Bean and J. Crew -for very large retailers

question

producer>wholesalers>retailers>consumer

answer

represents a lon-standing distribution channel, especially for consumer products; practical option for producers that sell to hundreds of thousands of customers through thousands of retailers ex: Wrigley gum has a large number of retailers; many convenience goods -most common

question

producer>agents or brokers>wholesalers>retailers>consumers

answer

frequently for products intended for mass distribution, such as processed foods ex: to place cracker in specific retail outlets, a food processor may hire an agent (food broker) to sell cracker to wholesalers who sell cracker to supermarkets, vending machines, and other retail outlets -producers may to have money to hire sales force

question

producer>organizational buyers

answer

direct channel for business products; more than half of all business products (especially expensive equipment) are sold through direct channels -meeting specifications for buyers

question

producer>industrial distributors>organizational buyers

answer

most effective when a product has broad market appeal, is easily stocked and serviced, is sold in small quantities, and is needed on demand to avoid high losses ex: staples w/ 3m or Adobe

question

producer>agents>organizational buyers

answer

employs a manufactures' agent, doesn't acquire title to the products and usually does not take possession ex:producers have no money or desire for a sales force

question

producer>agents>industrial distributors>organizational buyers

answer

may be appropriate when the producer wishes to cover a large geographic area but maintains no sales force due to highly seasonal demand or because it cannot afford a sales force; also useful for a business marketer that wants to enter a new geographic market without expanding its existing sales force

question

industrial distributor

answer

an independent business organization that takes title to industrial products and carries inventories

question

advantages of industrial distributor

answer

-they can perform the needed selling activities in local markets at a relatively low cost to a manufacture and reduce a producer's financial burden by providing customers with credit services -aware of local needs and can pass on market info to producers -reduce producers' capital requirements

question

advantages of manufacturers' agents

answer

-usually possess considerable technical and market information and have an established set of customers -can be an asset because the seller doesn't have to support a year-round sales force

question

disadvantages of manufacturers' agents

answer

-seller may have little control over the agents -agents generally prefer to concentrate on their larger accounts -often reluctant to spend time following up with customers after the sale, putting forth special selling efforts, or providing sellers with market information when such activities reduce the amount of productive selling time

question

manufacturers' agent

answer

an independent businessperson who sells complementary products of several producers in assigned territories and is compensated through commissions

question

disadvantages of industrial distributor

answer

-may be difficult to control because they are independent firms -often stock competing brands, so a producer cannot depend on them to sell its brand aggressively -maintain inventories so they incur numerous expenses -less likely to handle bulky or slow-selling items or items that needs specialized facilities or extraordinary selling efforts -some lack the technical knowledge necessary to sell and service certain products

question

dual distribution

answer

the use of two or more marketing channels to distribute the same products to the same target market ex: kellogg sells to large retail grocer chains and food wholesalers that in turn sell cereals to retailers -can cause dissatisfaction among wholesalers and smaller retailers when they must compete with large retail grocery chains that make direct purchases from manufactures

question

dual distribution - horizontal

answer

producer to more than 1 retailer system

question

dual distribution - vertical

answer

producer sells directly to consumers and through retailers (Adobe software, converse shoes) ex: vera bradley producer>consumer - can go to their website producer>co owned retailer>consumer - can go tho their store in mall (company owned) producer>retailer>consumer - can go to Maggie Ann's and buy it (not company owned)

question

strategic channel alliance

answer

an agreement whereby the products of one organization are distributed through the marketing channels of another -products of two firms are often similar with respect to target markets or uses, but they aren't direct competitors

question

multiple channels

answer

used when the same product is directed to both consumers and business customers

question

-customer characteristics -product attributes -type of organization -competition -environmental forces -characteristics of intermediaries

answer

selecting marketing channels

question

customer characteristics

answer

marketing managers must consider the characteristics of target-market members in channel selection

question

product attributes

answer

can have a strong influence on the choice of marketing channels

question

type of organization

answer

will have a great impact on the distribution channels chosen

question

competition

answer

it is important for a company to keep its costs low so it can offer lower prices than its competitors if necessary

question

environmental forces

answer

adverse economic conditions might force an organization to use a low-cost channel, even though customer satisfaction is reduced, in contrast a booming economy may allow a company to choose a channel that previously had been too costly to consider

question

-intensive distribution -selective distribution -exclusive distribution

answer

intensity of market coverage

question

intensive distribution

answer

-using all available outlets to distribute a product; -appropriate for most convenience products with high replacement rates; routinized response -provides availability and reduces search time -availability is more important than outlet type ex:Gum, Coke, Pringles, and Duracell batteries - available in many retail outlets

question

selective distribution

answer

-using only some available outlets in an area to distribute a product -appropriate for shopping products, and durable goods with low replacement rates; limited problem solving -high qualification requirements for intermediaries to distribute, sell, service, and support products -desirable when a special effort, such as customer service from a channel member, is important to customers -used to motivate retailers to provide adequate service ex:iPods, televisions, DVD players, and shoes - available in some outlets

question

exclusive distribution

answer

using a single outlet in a fairly large geographic area to distribute a product -suitable for products purchased infrequently, consumed over a long period of time, or requiring service or information to fit them to buyers' needs -expensive, high-quality purchased infrequently; specialty goods; extended problem solving -exclusive outlets provide an incentive to sellers in limited markets -dealers carry complete inventory and have trained staff for sales and service -used as an incentive to sellers when only a limited market is available for products ex: specialty products, such as haute couture, Mont Blanc pens, BMWs, and Fendi handbags - available in very few outlets

question

strategic issues in marketing channels

answer

-competitive priorities in marketing channels -channel leadership, cooperation, and conflict -channel integration

question

channel captain

answer

the dominant leader of a marketing channel or a supply channel -establishes channel policies and coordinates development of the marketing mix -may be a producer, wholesaler, or retailer

question

channel leadership

answer

many marketing-channel decisions are determined by give-and-take among channel partners, with the idea that the overall channel ultimately will benefit

question

channel power

answer

the ability of one channel member to influence another member's goal achievement

question

channel captain - producer

answer

most numerous ex: P&G, Campbell's, Kraft Foods

question

channel captain - retailer

answer

large chains ex: Walmart, Sears, JC Penny

question

channel captain - wholesalers

answer

must be large scale ex: IGA (Independent grocer association - buys in large quantities to reduce costs; pass savings on to member retail grocery stores) -power is shifting to consumers

question

channel cooperation

answer

vital if each member is to gain something from other members; enables retailers, wholesalers, suppliers, and logistics providers to speed up inventory replenishment, improve customer service, and cut the costs of bringing products to the consumer

question

channel conflict

answer

although channel members work toward the same goal-distributing products profitably and efficiently-members sometimes may disagree about the best methods for attaining this goal - intermediaries diversifying into and offering competing products (private label brands) -producers attempting to circumvent intermediaries and dealing directly with retailers or consumers; dual distribution

question

channel integration

answer

channel members can either combine and control most activities or pass them on to another channel member; various channel stages may be combined under the management of a channel captain either horizontally or vertically

question

vertical channel integration

answer

combining two or more stages of the marketing channel under one management -channel members coordinate their efforts to reach target market

question

vertical marketing system (VMS)

answer

a marketing channel managed by a single channel member to achieve efficient, low-cost distribution aimed at satisfying target market customers

question

corporate, administered, or contractual

answer

three forms of vertical marketing systems

question

corporate VMS

answer

combines all stages of the marketing channel, from producers to consumers, under a single owner ex:super-market chains that own food-processing plants and large retailers that purchase wholesaling and production facilities -owns all or part of channel ex: The Limited, Firestone

question

administered VMS

answer

channel members are independent, but a high level of inter organizational management is achieved through informal coordination -one channel member dominates the administered VMS so that distribution decisions take the whole system into account -less restrictive than franchising ex: because of size and power, Intel exercises a strong influence over distributors and manufacturers in its marketing channels, as do Kellogg and Magnavox May tag appliance stores, ACE hardware

question

contractual VMS

answer

the most popular type of vertical marketing system, channel members are linked by legal agreements spelling out each member's rights and obligations -channel members follow strict guidelines ex: franchise organizations, McDonald's and KFC; wholesaler-sponsored groups IGA, Re-Max realtors, -most popular

question

horizontal channel integration

answer

combining organizations at the same level of operation at the same level of operation under one management -cooperative arrangement between 2 or more companies at the same level of channel -2 retailers, 2 producers etc. under same management (Disney merging with Pixar) usually acquired through acquisition or merger

question

buying, selling, storing, transportation, provides market information, financing, risk taking

answer

intermediary services

question

buying

answer

estimate demand for next channel member closer to end consumer and better knows trends

question

selling

answer

acts as a sales force calling

question

storing

answer

takes on the risk and cost of inventory -cost=inventory (non-earning assets) -risk=unsold/spoiled goods ex:produce goes bad, fashion goes out

question

transportation

answer

cost of transporting goods/delivery

question

provides market information

answer

acts as intermediary between channel partners

question

financing

answer

grants credit to retailers or customers

question

risk taking

answer

credit risk, inventory risk, transportation risk (store goes under)

question

wholesaling

answer

transactions in which products are bought for making other products or for general business operations BUT NO TO THE CONSUMERS

question

when to use wholesaling

answer

-smaller producers use for cost savings; don't have economies of scale (how you get product sold worldwide), can't afford sales force -producers may want to put resources elsewhere; invest in expansion, etc. not wholesaling functions -wholesalers are more efficient; skilled specialists with contracts -retailers may prefer wholesaling; can carry many products from many producers

question

merchant, agents and brokers

answer

two types of wholesalers

question

merchant wholesalers

answer

own product, take title, assume risk, and buy and resell products to other wholesaler, to retailers, or to other business customers

question

cash and carry, truck, drop shippers, mail order

answer

limited service wholesaling

question

general line, limited line, specialty, rack jobbers

answer

full service wholesaling

question

general line

answer

(width) wide product mix but limited depth (convenience story)

question

limited line

answer

(depth) few product lines but many products (groceries - packaged goods)

question

specialty line

answer

single product line or a few items (groceries - fruit)

question

rack-jobbers

answer

non-food products (magazines/books/greeting cards)

question

cash and carry

answer

customers pay cash and furnish transportation (fishing wharf) get fish and bring back

question

truck

answer

transports products directly to customers for inspection and selection (snap-on-tools)

question

drop shippers

answer

takes title to goods and negotiates sales but never actually takes possession of products (coal, lumber)

question

mail order

answer

uses catalogs instead of a sales fore to sell products to retail and business buyers ex: small retailers use to acquire industry

question

agents and brokers

answer

do not take title to producers and are compensated with commissions for negotiating exchanges between sellers and buyers

question

agents

answer

represent either buyer or seller usually on a permanent basis

question

brokers

answer

bring buyers and sellers together on a temporary basis -food brokers -real-estate brokers -other brokers

question

manufacturers' agents, selling agents, commission merchant

answer

3 kinds of agents

question

manufactures' agents

answer

independent agent that represents 2+ sellers and usually offers complete product lines in territories

question

selling agents

answer

market a whole product line or a manufacturers' entire output worldwide

question

commission merchant

answer

receives goods on consignment from local sellers and negotiates sales in large, central markets ex: agricultural things-futures; clothes, grains

question

consignment

answer

Goods that are given to a business to sell but for which title to the goods remains with the vendor

question

physical distribution - aka logistics

answer

activities used to move products from producers to consumers and other end users -must meet the needs of both the supply chain and customers

question

outsourcing

answer

the contracting of physical distribution tasks to third parties with specialized logistics skills who don't have managerial authority within the marketing channel ex:E-bay vendors, and Amazon.com use UPS or FedEx; "Fulfilled by Amazon"

question

1. max. customer service 2. decrease costs 3. decrease cycle time-time to process order

answer

physical distribution objectives

question

max. customer service

answer

accuracy of orders fulfillment- % orders filled correctly -availability of order - % orders backorders

question

decrease costs

answer

reducing total distribution costs -overall goal is to achieve the lowest total distribution cost compatible with the firm's customer service objectives

question

decrease cycle time

answer

reducing cycle (process completion) time -faster processes for increased customer service

question

cycle time

answer

the time needed to complete a process

question

order processing, inventory management, materials handling, warehousing, transportation,

answer

physical distribution in supply-chain management

question

order processing

answer

the receipt and transmission of sales order information -entails three main tasks: order entry, order handling, and order delivery -EDI

question

order entry

answer

begins when customers or sales people place purchase orders via telephone, regular mail, e-mail, or website

question

order handling

answer

once an order is entered, it is transmitted to a warehouse, where product availability is verified, and to the credit department, where prices, terms, and the customer's credit rating are checked

question

order delivery

answer

when is has been assembled and packed for shipment, the warehouse schedules delivery with an appropriate carrier

question

electronic data interchange (EDI)

answer

a computerized means of integrating order processing with production, inventory, accounting, and transportation

question

inventory management

answer

developing and maintaining adequate assortments of products to meet customers' needs -minimize inventory costs yet have sufficient supply of goods to satisfy customers -stockouts -reorder point

question

stockouts (or shortages)

answer

then too few products are carried in inventory this is the result of products that can result in brand switching, lower sales, and loss of customers

question

reorder point

answer

the inventory level that signals the need to place a new order =(order lead time x usage rate) + safety stock

question

order lead time

answer

the average time lapse between placing the order and receiving it

question

usage rate

answer

the rate at which a product's inventory is used or sold during a specific time period

question

safety stock

answer

the amount of extra inventory a firm keep to guard against stockiest resulting from above-average usage rates and/or longer-than-expected lead times

question

just-in-time (JIT)

answer

an inventory-management approach in which supplies arrive just when needed for production or resale

question

materials handling

answer

physical handling of tangible goods, supplies, and resources in warehousing operations and transportation from points of production to points of consumption -unit loading -containerization

question

radio frequency identification (RFID)

answer

radio waves to track materials tagged through every phase of handling; greatly improves the tracking of shipments and reduces cycle times. hundreds can be read at a time -standard to track

question

unit loading, containerization

answer

two common methods used in materials handling

question

unit loading

answer

one or more boxes are placed on a pallet or skid; these units can then be loaded efficiently by mechanical means, such as forklifts, trucks, or conveyer systems

question

containerization

answer

the consolidation of many items into a single, large container that is sealed at its point of origin and opened at its destination; providing increased handling efficiency and security in shipping

question

warehousing

answer

the design and operation of facilities for storing and moving goods - fall into two general categories: private and public

question

make bulk

answer

bring small lots together to make one larger lot for shipment

question

break bulk

answer

take large lots and break into smaller lots for shipment

question

functions of warehousing

answer

receiving, identifying, sorting, dispatching to storage, holding goods, recalling and assembling, and dispatching shipments

question

private warehouses

answer

company-operated facilities for storing and shipping products ex: specific requirements, refrigerators

question

public warehouses

answer

business that lease storage space and related physical distribution facilities to other firms ex: christmas/seasonal items

question

field public warehouses

answer

established by public warehouses at the owner's inventory location

question

bonded storage

answer

a warehousing arrangement in which imported or taxable products are not released until the products' owners pay U.S. customs duties, taxes, or other fees

question

distribution centers

answer

large, centralized warehouses that focus on moving rather than storing goods

question

transportation

answer

the movement of products from where they are made to intermediaries and end users

question

railroads, trucks, waterways, airways, and pipelines

answer

transportation modes

question

railroads

answer

carry heavy, bulky freight that must be shipped long distances over land

question

trucks

answer

provide the most flexible schedules and routes of all major transportation modes in the US because they can go almost anywhere -more expensive and vulnerable to weather; size and weight restrictions

question

waterways

answer

are the cheapest method of shipping heavy, low-value, nonperishable goods

question

air transportation

answer

the fastest but most expensive form of shipping, used most often for perishable goods; for high-value, low-bulk items; and for products that require quick delivery over long distances, such as emergency shipments

question

pipelines

answer

the most automated transportation mode, usually belong to the shipper and carry the shipper's products -dependable

question

intermodal transportation

answer

two or more transportation modes used in combination

question

piggyback

answer

shipping that uses both truck trailers and railway flatcars

question

fishyback

answer

shipping that uses truck trailers and water carriers

question

birdyback

answer

shipping that uses truck trailers and air carriers

question

freight forwarders

answer

organizations that consolidate shipments form several firms into efficient lot sizes

question

megacarriers

answer

freight transportation firms that provide several modes of shipment

question

tying agreement

answer

an agreement in which a supplier furnishes a product to a channel member with the stipulation that the channel member must purchase other products as well

question

full-line forcing

answer

in which a supplier requires that channel members purchase the supplier's entire line to obtain any of the supplier's products

question

exclusive dealing

answer

a situation in which a manufacturer forbids an intermediary form carrying products of competing manufactures

question

retailing

answer

all transaction in which the buyer intends to consume the product through personal, family, or household use -the ultimate consumers are the buyers -over 1 million retailers in the US -20% of all employees in US work in retail -majority of personal income is spent in retail establishments -often takes place in stores or service establishments, but also occurs through direct selling, direct marketing, and vending machines

question

retailer

answer

an organization that purchases product for the purpose of reselling them to ultimate consumers -retailers are the critical link between producers and ultimate consumers

question

retailers add value

answer

-create utility for the consumer -enhance image, offer services, offer assistance

question

time, place, possession, and form

answer

create utility

question

catalog, telemarketing, online

answer

retailers are under attack by___,____,___ growing by 25%/yr.

question

product assortment

answer

width, depth

question

width (narrow or wide)

answer

types of products

question

depth (shallow or deep)

answer

choices among products

question

narrow-shallow

answer

concession stand

question

narrow-deep

answer

deli

question

wide-shallow

answer

cafeteria

question

wide-deep

answer

buffet

question

general-merchandise retailers, specialty retailers, non-store retailing, franchising

answer

major types of retail store

question

general-merchandise retailer

answer

a retail establishment that offers a variety of product lines that are stocked in considerable depth

question

department store discount sores convenience stores supermarket superstore hypermarket warehouse club warehouse showroom

answer

types of general-merchandise retailers

question

department store

answer

large retail organizations characterized by a wide product mix and organized into separate departments to facilitate marketing efforts and internal management -offers more services -higher prices ex:Macy's, Sears, JCPenny

question

discount stores

answer

self-service, general-merchandise stores that offer brand-name and private-brand products at low prices -offer fewer services than department stores -lower prices but higher volume ex:Walmart, Target, Kmart

question

convenience stores

answer

a small self-service store that is open long hours and carries a narrow assortment of products, usually convenience items -open long hours ex: 7-eleven, Circle K, Stripes

question

supermarkets

answer

large, self-service stores that carry a complete line of food products, along with some nonfood products such as cosmetics and nonprescription drugs -consumers make more than 3/4 of all grocery purchases in supermarkets -high volume -became popular in 1930's --depression-consumers became price conscious --automobile-could travel further to save money --refrigerators-could store food longer ex: Kroger, Albertson's, Winn-Dixie

question

scrambled merchandising

answer

one of the changes stores make to stay competitive; non-food items (8-25% of sales) like health and beauty, pharmacy, magazines, books (high margins)

question

superstores

answer

giant retail outlets that carry food and nonfood products found in supermarkets, as well as most routinely purchased consumer products (originated in Europe) -combine features of discount stores and supermarkets ex:Walmart Supercenters, SuperTarget, Super Kmart centers, some Kroger stores

question

hypermarkets

answer

stores tha combine supermarket and discount store shopping in one location -larger than superstores -focus on low prices and vast selections -successful in Europe and S. America ex:carrefour (french retailer) Kmart, Walmart and carrefour have operated hypermarkets in the US, most were unsuccessful and and closed

question

warehouse clubs

answer

large-scale, members-only establishments that combine features of cash-and-carry wholesaling with discount retailing -offer same types of products as discount stores but in a limited range of sizes and styles -often located in industrial areas -merchandise is stacked on pallets or displayed on pipe racks -average shopper has more education, higher income, and larger household than average supermarket shopper ex:Sam's Club, Costco

question

warehouse showrooms

answer

retail facilities in large, low-cost buildings with large on-premises inventories and minimal services -warehouse materials-handling technology -vertical merchandise displays -high volume, low overhead operations stress fewer personnel services ex: IKEA

question

the 4th wall

answer

what walk-mart calls the wall in from of register; has vision center, Subway, McDonalds -last opportunity to get more money from you

question

traditional specialty retailers category killers off-price retailers

answer

3 types of specialty retailers

question

specialty retailers

answer

emphasize narrow and deep assortments -do not sell specialty items -offer substantial assortments in a few product lines

question

traditional specialty retailers

answer

stores that carry a narrow product mix with deep product lines -aka limited-line retailers, or single-line retailers -commonly sell shopping products -have high costs, which margins, which levels of service, high prices ex: The limited, radio shack, hickory farms, gap, and foot locker -usually small specialty stores -department stores=main competitors

question

category killers (box store)

answer

concentrate on 1 major product category -compete on the basis of low prices and product availability ex:home depot, petsmart, best buy, Toys R Us

question

single line, limited line, super specialty line

answer

types of traditional specialty retailers

question

single line

answer

clothing- men, women, kids - Gap

question

limited line

answer

women's clothing - Ann Taylor

question

super specialty line

answer

women's lingerie - Victoria's Secret

question

off price retailers

answer

buy manufacturers' seconds, overruns, returns and off season merchandise for resale to consumers at deep discounts -ex: TJ Maxx

question

category killer

answer

a very large specialty store that concentrates on a major product category and competes on the basis of low prices and product availability -expand rapidly and gain sizable market shares ex:Home Depot and Lowe's, Staples, Office Depot, and OfficeMax, Barnes and Noble, Petco and PetSmart, and BestBuy

question

off-price retailers

answer

stores that buy manufacturers' seconds, overruns, returns, and offseason merchandise for resale to consumer at deep discounts ex:T.J.Maxx, Marshalls, Stein Mart, and Burlington Coat Factory

question

-location of retail stores -retail positioning -store image -category management

answer

strategic issues in retailing

question

location of retail stores

answer

least flexible of the strategic retailing issues but is one of the most important because location dictates the limited geographic trading area from which a store draws its customers

question

location

answer

one of the most important decision for a retail store

question

factors affecting location

answer

-intended target market -kinds of products -suitability site for customer access -competitor location -entry and exit, critical mass -"Anchor"-malls have anchor's like Sears or Macy's or JC Penny

question

free standing structures, traditional business districts, traditional shopping centers

answer

types of locations

question

free standing structures

answer

ex: Jiffy lube

question

traditional business districts

answer

ex: Michigan Avenue

question

-neighborhood -community -regional -superregional -lifestyle -power -outlet

answer

types of traditional shopping centers

question

neighborhood shopping center

answer

a type of shopping center usually consisting of several small convenience and specialty stores, such as small grocery stores, gas stations, and fast-food restaurants -generally product mixes consist of essential products, and depth of the product lines is limited

question

community shopping center

answer

a type of shopping center with one or two department stores, some specialty stores, and convenience stores -wide product mixes and deep product lines

question

regional shopping center

answer

a type of shopping center with the largest department stores, widest product mixes, and deepest product lines of all shopping centers ex: many shopping malls, although some are community

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supperregional shopping center

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a type of shopping center with the widest and deepest product mixes that attract customers from many miles away -often have special attractions beyond stores, such as skating rinks, amusement centers, or upscale restaurants ex: Mall of America

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lifestyle shopping center

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a type of shopping center that is typically open air and features upscale specialty, dining, and entertainment stores, usually owned by national chains ex: designed to resemble traditional "Main Street" shopping centers

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power shopping center

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a type of shopping center that combines off-price stores with category killers ex: anchored by stores such as Gap, Toys "R" Us, PetSmart, and Home Depot (all box stores together)

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Retail positioning

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Identifying an unserved or undeserved market segment and serving it through a strategy that distinguishes the retailer from others in the minds of consumers in that segment -niche

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Atmospherics (store image)

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The physical elements in a store's design that appeal to consumers' emotions and encourage buying

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Exterior atmospherics

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Include storefront, display windows, store entrances, and degree of traffic congestion -especially important to new customers

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Interior atmospherics

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Include aesthetic considerations, such as lighting, wall and floor coverings, dressing facilities, and store fixtures

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Category management

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A retail strategy of managing groups of similar, often substitutability products produced by different manufacturers -a move toward a collaborative supply chain initiative to enhance customer value -requires the acquisition, analysis, and sharing of sales and consumer information between the retailer and manufacturer

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Direct marketing

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The use of the telephone, Internet, and no personal media to introduce products to customers, who can then purchase them via mail. Telephone, or the Internet -one type of non-store retailing

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Nonstore retailing

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The selling of products outside the confines of a retail facility -growing rapidly-direct selling-direct marketing

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Catalog marketing, direct response marketing, telemarketing, television home shopping, and online retailing

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Direct marketing can occur through:

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Catalog marketing

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A type of marketing in which an organization provides a catalog from which customers make selections and place orders by mail, telephone, or the Internet -these retailers generally offer considerable,e product depth for just a few lines of products -advantages : efficiency and convenience for customers, retailer benefits by being able to locate in remote, low-cost areas;save on expensive store fixtures; and reduce both personal selling and store operating expenses -disadvantages : inflexible, provides limited service, most effective for a selected set of products

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Direct response marketing

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A type of marketing in which a retailer advertises product and makes it available through mail or telephone orders Ex: television commercial offering exercise machines, cosmetics or household cleaning products available through a toll-free number, and a newspaper or magazine advertisement for a series of children's books available by filling out the form in the ad or calling a number

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Telemarketing

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The performance of marketing related activities by telephone -a number of organizations use this to strengthen the effectiveness of traditional marketing methods -can help generate sales leads, improve customer service, speed up payments on past due accounts, raise funds for nonprofit organizations, and gather marketing data

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Television home shopping

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A form of selling in which products are presented to television viewers, who can buy them by calling a toll-free number and paying with a credit card -most popular products are jewelry, clothing, housewares, and electronics

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Online retailing

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Retailing that makes products available to buyers through computer connections Ex: zappos, eBay

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Direct selling

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Marketing products to ultimate consumers through face to face sales presentations at home or in the workplace -most takes place on individual basis, but some use the "party" approach (Tupperware and Mary Kay) -benefits: gives marketer an opportunity to demonstrate the product in an environment-usually the customers home; door-to-door can give the customer personal attention and the product can be presented to the customer at a convenient time and location -expensive high priced goods

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Automatic vending

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The use of machines to dispense products ( less than 2% of all retail sales), one of most impersonal forms of retailing Ex: redbox, atm

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Franchising

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An arrangement in which a supplier (franchiser) grants a dealer (franchisee) the right to sell products in exchange for some type of consideration

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Franchiser

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Supplier, may receive some percentage of total sales in exchange for furnishing equipment, buildings, management know-how, and marketing assistance to the franchisee

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Franchisee

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Dealer, supplies labor and capital, operated the franchised business, and agrees to abide by the provisions of the franchise agreement

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Franchising advantages - franchisee

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-enables a franchisee to start a business with limited capital and benefit from the business experience of others -some are often assured customers as soon as the open -if business problems arise, the franchisee can obtain guidance and advice from the franchiser at little or no cost -generally more successful than independently owned businesses -franchisee receives materials to use in local advertising and cam benefit from national promotional campaigns sponsored by the franchiser

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Franchising advantages - franchiser

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-the franchiser gains fast and selective product distribution without incurring the high cost of constructing and operating its own outlets -franchiser has more capital for expanding production and advertising -can ensure that outlets are maintained and operated according to its own standards -benefits from fact that the franchisee, being sole proprietor in most cases, is likely to be highly motivated to succeed

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Franchising disadvantages

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-franchiser can dictate many aspects of the business -franchisees must pay to use franchiser's name, products, and assistance -franchisees must often work very hard - some agreements are not uniform -franchiser gives up a certain amount of control when entering into a franchise agreement; consequently individual establishments may not be operated exactly according to the franchiser's standards

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Wholesaling

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Transactions in which products are bought for resale, for making other products, or for general business operations

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Wholesaler

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An individual or organization that sells products that are bought for resale, for making other products, or for general business operations -buy products and resell them to reseller, government, and institutional users

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Services provided by wholesalers

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Extension of the producer's sales force; provide financial assistance ( often pay for transporting goods); reduces a producer's warehousing expenses and inventory investment by holding goods in inventory; extend credit and assume losses from buyers who turn out to be poor credit risks, and when they buy a producer's entire output and pay promptly or in cash, are a source of working capital -serve as conduits for information within the marketing channel -support retailers by assisting with a R,sting strategy, especially the distribution component -can forge successful relationships with retailers for the benefit of customers

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Merchant wholesalers, agents and brokers, manufacturers' sales branches and offices

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Types of wholesalers

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Merchant wholesalers

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Independently owned businesses that take title to goods, assume ownership risks, and buy and resell products to other wholesalers, business customers, or retailers -useful for providing market coverage, making sales contracts, storing inventory, handling orders, collecting market information, and furnishing customer support

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Full service wholesalers, limited service wholesalers

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Types of merchant wholesalers

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Full service wholesalers

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Merchant wholesalers that perform the widest range of wholesaling functions -relied on for product availability, suitable assortment, breaking large quantities into smaller ones, financial assistance, and technical advise and service -earn higher gross margins than other wholesalers, but operating expenses are higher because they perform a wider range of functions

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General merchandise, limited line, specialty line

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Full service wholesalers types

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General merchandise wholesalers

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Full service wholesalers with a wide product mix but limited depth within product lines Ex: drugs, no perishable foods, cosmetics, detergents, and tobacco

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Limited line wholesalers

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Full service wholesalers that carry only a few product lines such as groceries, lighting fixtures etc. but many product mixes Ex:Bergen brunswig corp. pharmaceuticals and health and beauty aids

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Specialty line wholesalers

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Full service wholesalers that carry only a single product line or a few items within a product line Ex: chia seeds direct

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Rack jobbers

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Full service, specialty line wholesalers that own and maintain display racks in stores -specialize in no food items with huh profit margins, such as health and beauty aids, books, magazines, hosiery, and greeting cards

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Limited service wholesalers

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Merchant wholesalers that provide some services and specialize in a few functions -take title to merchandise but often do not deliver merchandise, grant credit, provide marketing info, store inventory, or plan ahead for customers' future needs -important to the distribution of products like specialty foods, perishable items, construction materials, and coal

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Cash and carry, truck, drop shippers, and mail order

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Types of limited service wholesalers

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Cash and carry wholesalers

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Limited service wholesalers that transport products directly to customers for inspection and selection -usually bane a limited line of products with a high turnover rate, such as groceries, building materials, and electrical or office supplies

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Truck wholesalers

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Limited service wholesalers that transport a limited line of products directly to customers for on the spot inspection and selection -often small operators who own and drive their own

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Drop shippers

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Limited service wholesalers that take title to goods and negotiate sales but never actually take possession of products -assume responsibility for products during the entire transaction, including the costs of any unsold goods

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Mail order wholesalers

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Limited service wholesalers that sell products through catalogs -wholesale mail order houses generally feature cosmetics, specialty foods, sporting goods, office supplies, and automotive parts

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Agents and brokers

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Negotiate purchases and expedite sales but do not take title to products, aka functional middlemen, perform a limited number of services in exchange for a commission, which generally is based on the product's selling price -know their markets well and often form long lasting associations with customers -enable manufacturers to expand sales when resources are limited

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Agents

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Intermediaries that represent either buyers or sellers on a permanent basis

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Brokers

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Intermediaries that bring buyers and sellers together temporarily -not involved in financing or physical possession, have no authority to set prices, and assume almost no risks

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Manufacturers' agents, selling agents, commission merchants

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Types of agents

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Manufactures' agents

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Independent intermediaries that represent two or more sellers and usually offer customers complete product lines -sell and take orders year round -restricted to a particular territory -have little or not control over producers pricing and marketing policies -commonly used in sales of apparel, machinery and equipment, steel, furniture, automotive products, electrical goods, and certain food items

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Selling agents

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Intermediaries that market a whole product line or a manufacturer's entire output -perform every wholesaling activity except taking title to products -usually assume sales function for several producers simultaneously and are used often in place of marketing departments -used most often by small producers or by manufacturers that have difficulty maintaining a marketing department because of seasonal production or other factors -generally no territorial limits and compete authority over prices, promotion, and distribution -represent no competing product lines

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Commission merchants

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Agents that receive goods on consignment from local sellers and negotiate sales in large, central markets -broad powers regarding prices and terms of sale -specialize in obtaining the best price possible

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Sales branches

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Manufacturer owned intermediaries that sell products and provide support services to the manufacturer's sales force -situated away from manufacturing plant; located where large customer are concentrated and demand is high -offer credit, deliver goods, give promotional assistance, and furnish other services -customers : retailers, business buyers, other wholesalers - common in lumber and automatics parts industries

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Sales offices

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Manufacturer owned operations that provide services normally associated with agents -located away from manufacturing plants, but carry no inventory -may sell products that enhance the manufacturers own product line

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wheel of retailing

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hypothesis holding that new retailers usually enter market as low status, low margin, low price operators but eventually evolve into high-cost, high price merchants ex:fruit stand to a grocery store

Marketing Ch. 15 & 16 – Flashcards

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