question

Describe the four types of marketing channels and the roles they play in marketing strategy.

answer

Marketing (distribution) channels are the systems of marketing institutions that enhance the physical flow of goods and services, along with ownership title, from producer to consumer or business user. In other words, they help bridge the gap between producer or manufacturer and business customer or consumer. Types of channels include direct selling, selling through intermediaries, dual distribution, and reverse channels. Channels perform four functions: facilitating the exchange process, sorting, standardizing exchange processes, and facilitating searches by buyers and sellers.

question

Outline the three major channel strategy decisions.

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Decisions include selecting a marketing channel and determining distribution intensity. Selection of a marketing channel may be based on market factors, product factors, organizational factors, or competitive factors. Distribution may be intensive, selective, or exclusive.

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Describe the concepts of channel management, conflict, and cooperation.

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Manufacturers must practice channel management by developing and maintaining relationships with the intermediaries in their marketing channels. The channel captain is the dominant member of the channel. Horizontal and vertical conflict can arise when disagreement exists among channel members. Cooperation is best achieved when all channel members regard themselves as equal components of the same organization.

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Describe the three different vertical marketing systems.

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A vertical marketing system (VMS) is a planned channel system designed to improve distribution efficiency and cost-effectiveness by integrating various functions throughout the distribution chain. This coordination can be achieved by forward integration or backward integration. Options include a corporate marketing system, operated by a single owner; an administered marketing system, run by a dominant channel member; and contractual marketing systems, based on formal agreements among channel members.

question

Explain the roles of logistics and supply chain management in an overall distribution strategy.

answer

Effective logistics requires proper supply chain management. The supply chain begins with raw materials, proceeds through actual production, and then continues with the movement of finished products through the marketing channel to customers. Supply chain management takes place in two directions: upstream and downstream. Tools that marketers use to streamline and manage logistics include radio frequency identification (RFID), enterprise resource planning (ERP), and logistical cost control.

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Identify the six major components of a physical distribution system.

answer

Physical distribution involves a broad range of activities concerned with efficient movement of finished goods from the end of the production line to the consumer. As a system, physical distribution consists of six elements: 1. customer service, 2. transportation, 3. inventory control, 4. materials handling and protective packaging, 5. order processing, and 6. warehousing. These elements are interrelated and must be balanced to create a smoothly functioning distribution system and to avoid suboptimization.

question

Compare the five major modes of transportation.

answer

The five major modes of transport are railroads, motor carriers, water freight, pipelines, and air freight. Railroads rank high on flexibility in handling products; average on speed, dependability in meeting schedules, and cost; and lower on frequency of shipments. Motor carriers are relatively high in cost but rank high on speed, dependability, shipment frequency, and availability in different locations. Water carriers balance their slow speed, low shipment frequency, and limited availability with lower costs. The special nature of pipelines makes them rank relatively low on availability, flexibility, and speed, but they are also lower in cost. Air transportation is high in cost but offers very fast and dependable delivery schedules.

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Discuss the role of transportation intermediaries, combined transportation modes, and warehousing in improving physical distribution.

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Transportation intermediaries facilitate movement of goods in a variety of ways, including piggyback, birdyback, and fishyback services—all forms of intermodal coordination. Methods like unitization and containerization facilitate intermodal transfers.

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distribution

answer

Movement of goods and services from producers to customers.

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marketing (distribution) channel

answer

System of marketing institutions that enhances the physical flow of goods and services, along with ownership title, from producer to consumer or business user.

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logistics

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Process of coordinating the flow of information, goods, and services among members of the distribution channel.

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supply chain management

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Control of the activities of purchasing, processing, and delivery through which raw materials are transformed into products and made available to final consumers.

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physical distribution

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Broad range of activities aimed at efficient movement of finished goods from the end of the production line to the consumer.

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marketing intermediary (middleman)

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Wholesaler or retailer that operates between producers and consumers or business users.

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wholesaler

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Channel intermediary that takes title to the goods it handles and then distributes these goods to retailers, other distributors, or business or B2B customers.

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direct channel

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Marketing channel that moves goods directly from a producer to the business purchaser or ultimate user.

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direct selling

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Strategy designed to establish direct sales contact between producer and final user.

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manufacturer's representative

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Agents wholesaling intermediary that represents manufacturers of related but noncompeting products and receives a commission on each sale.

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dual distribution

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Network that moves products to a firm's target market through more than one marketing channel.

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reverse channels

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Channel designed to return goods to their producers.

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intensive distribution

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Distribution of a product through all available channels.

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selective distribution

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Distribution of a product through a limited number of channels.

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exclusive distribution

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Distribution of a product through a single wholesaler or retailer in a specific geographic region.

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closed sales territories

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Exclusive geographic selling region of a distributor.

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tying agreements

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Arrangement that requires a marketing intermediary to carry items other than those they want to sell.

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channel captain

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Dominant and controlling member of a marketing channel.

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gray goods

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Products manufactured abroad under license from a U.S. firm and then sold in the U.S. market in competition with that firm's own domestic output.

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vertical marketing system (VMS)

answer

Planned channel system designed to improve distribution efficiency and cost-effectiveness by integrating various functions throughout the distribution chain.

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forward integration

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Process through which a firm attempts to control downstream distribution.

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backward integration

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Process through which a manufacturer attempts to gain greater control over inputs in its production process, such as raw materials.

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corporate marketing system

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VMS in which a single owner operates the entire marketing channel.

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administered marketing system

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VMS that achieves channel coordination when a dominant channel member exercises its power.

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contractual marketing system

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VMS that coordinates channel activities through formal agreements among participants.

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retain cooperative

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Group of retailers that establish a shared wholesaling operation to help them compete with chains.

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franchise

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Contractual arrangement in which a wholesaler or retailer agrees to meet the operating requirements of a manufacturer or other franchiser.

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supply chain

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Complete sequence of suppliers and activities that contribute to the creation and delivery of merchandise.

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upstream management

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Controlling part of the supply chain that involves raw materials, inbound logistics, and warehouse and storage facilities.

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downstream management

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Controlling part of the supply chain that involves finished product storage, outbound logistics, marketing and sales, and customer service.

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radio frequency identification (RFID)

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Technology that uses a tiny chip with identification information that can be read by a scanner using radio waves from a distance.

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enterprise resource planning (ERP) system

answer

Software system that consolidates data from among a firm's various business units.

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third-party (contract) logistics firms

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Company that specializes in handling logistics activities for other firms.

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suboptimization

answer

Condition that results when individual operations achieve their objectives but interfere with progress toward broader organizational goals.

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common carriers

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Businesses that provide transportation services as for-hire carriers to the general public.

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contract carriers

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For-hire transporters that do not offer their services to the general public.

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private carriers

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Transporters that provide service solely for internally generated freight.

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intermodal operations

answer

Combination of transport modes, such as rail and highway carriers (piggyback), air and highway carriers (birdyback), and water and air carriers (fishyback), to improve customer service and achieve cost advantages.

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materials handling system

answer

Set of activities that move production inputs and other goods within factories, warehouses, and transportation terminals.

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containerization

answer

Process of combining several unitized loads into a single, well-protected load for shipment.

MKT 300 Ch. 14 (Marketing Channels and Supply Chain Management) – Flashcards

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