Ch 16 Marketing

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marketing channel management is also known as
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supply chain management
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supply chain management
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set of approaches and techniques firms employ to efficiently and effectively integrate suppliers, manu, warehouses, stores, and transport intermediaries into a seamless operation in which merch is produced and dist in right q, right place, and right time
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supply chain mgmt reduces
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systemwide costs while satisfying the service levels customers require
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supply chain mgmt adds value by
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getting products to customers efficiently, quickly, and at a low cost
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wholesalers
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firms that buy products from manu and resell them to retailers (retailers sell products directly to consumers) *some retail chains function as both retailers and wholesales ie. costco
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viral marketing program
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encourages people to pass along a marketing message to other potential consumers
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each participant in the marketing channel ___ ____
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adds value *but also increases costs
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distribution center
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facility for receipt, storage, and redistribution of goods to company stores, may be operated by retailers, manufacturers, retailers, or dist specialists
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fulfillment center
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used to ship directly to customers
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types of marketing channels
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direct marketing channel indirect marketing channel
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direct marketing channel
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no intermediatiries btw buyer and seller typically, seller is manu
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indirect marketing channel
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one or more intermediaries work w manu to provide goods and services to customers
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wholesalers more common when
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company does not buy in sufficient q to make it cost effective for manu to deal with them directly or in less developed econ where retailers are rare
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managing the marketing channel and supply chain
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buying entities: retailers, wholesalers sellers: manu or wholesaleres facilitators of exchange: transport co conflicting goals create conflict
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vertical channel conflict
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supply chain members that buy and sell to one another are not in agreement about their goals, roles, or rewards common goals create incentive to cooperate
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horizontal channel conflict
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disagreement or discord among members at the same level in a marketing channel,, such as two competing retailers or two competing manufacturers
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ways to manage supply chain (2)
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1 – through vertical marketing systems 2 – develop strong relationships with partners
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conflict is more pronounced when channel members are
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independent entities
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independent or conventional marketing channel
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several independent members (manu, wholesaler, retailr) attempt to satisfy their own objectives and max their profits at the expense of other members – none of members have control over the others
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vertical marketing system
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marketing channel in which the members act as a unified system 3 types: administered, contractual, corporate diff types reflect increasing formalization and control
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the more ______ the vertical marketing system, the ____ likely conflict is to ensue
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more formal = less conflict
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administered vertical marketing system
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no common ownership or contractual relationships, dominant channel member controls or holds the balance of power (see types of power)
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types of power
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exists when one firm has the means or ability to dictate the actions of another member at a different level of distribution reward, coercive, referent, expertise, information, or legitimate (contract)
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contractual vertical marketing system
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indep firms at diff levels of the marketing channel join through contracts to obtain economies of scale and coordination and to reduce conflict ie. franchising
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franchising
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most common type of CVMA contractual agreement btw franchisor and franchisee that allows the franchisee to operate a retail outlet using a name and format developed and supported by the frachisor
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top 10 franchises of 2014
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anytime fitness, hampton hotels, subway, supercuts, jimmy johns, 7-11, servpro, dennys, pizza hut, dunkin donuts
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franchise contract
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franchisee pays lump sum plus royalty on sales in return for right to operate in specific location franchisor provides assistance locating and developing, training and ads
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a franchise system combines
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the entrepreneurial adv of owning a biz with the efficiencies of a vertical marketing system that functions under single ownership
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corporate vertical marketing system
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parent company has complete control and can dictate the priorities and objectives of the marketing channel bc it owns multiple segments of the channel (manu plants, warehouses, retail outlets) potential conflict is lessened
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managing marketing channels and supply chains through strategic relationships
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mutual trust open communication common goals interdependence credible commitments
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strategic relationship or partnering relationship
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marketing channel members are committed to maintaining the relationship over the long term and investing in opps that are mutually beneficial
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mutual trust
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belief that a partner is benevolent and honest will be more willing to share relevant ideas, clarify goals, and communicate efficiently
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monitoring supply chain members becomes pertinent when suppliers
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are located in less developed countries
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open communication
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share info, develop forecasts together, and coordinate deliveries
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common goals
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incentive to pool strengths and abilities to exploit potential ops together
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interdependence
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develop deeper long-term relationships based on mutual benefits
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credible commitments
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involve spending money to improve the products or services provided to customer or the info tech
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making info flow through marketing channels
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6 flows
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flow 1 (customer to store)
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sales associate scan UPC tag
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UPC
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universal product code tag 13 digit code indicating manufacturer, descrip of item, info about packaging and promotions may be replaced with RFID flow 1 – customer to store
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flow 2 (store to buyer)
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POS terminal records purchase info and sends electronically to the buyer at the corporate office -monitor and analyse sales
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flow 3 (buyer to manufacturer)
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purchase info aggregated by retailer as a whole, who then makes an order for new merch and sends it to the manufacturer
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flow 4 (store to manufacturer)
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sometimes sales data goes directly to manu so they can decide when to ship new merchandise to distribution centers sometimes order process done automatically
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flow 5 (store to distribution center)
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coordinate deliveries nd check inventory status
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flow 6 (manufacturer to distribution center & buyer)
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ASN – advanced shipping notice
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ASN
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advanced shipping notice – electronic document that supplier sends the retailer in advance of a shipment to tell the retailer exactly what they expect in the shipment
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Data warehouse
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purchase data collected at POS (flow 2) foes into huge database known as warehouse EDI and supply chain systems (vendor managed inventory)
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EDI
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Electronic data interchange computer to computer exchange of business docs from a retailer to a vendor and back -purchase orders, invoices, data about returned merch -purchase order changes, order status, retail prices, transport routes *quicker with fewer errors in data
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VMI
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vendor managed inventory improves marketing channel efficiency in which the manufacturer is responsible for maintaining the retailers inventory levels in each of its stores
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by sharing the data in the retailer’s data warehouse and communicating the info via EDI
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the manuf automatically sends merch to retailers store or dist/ fulfillment center when the inventory at the store reaches a specified level
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VMI can reduce
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vendor and retailer costs role shift – selling items instead of managing inventory at the stores
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distribution centers vs direct store delivery
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consider 1. total cost associated with each 2. customer service criterion of having the right merch at teh store when customer wants to buy it (depends on nature of demand)
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distribution centers
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manufacturer to distribution center (to store)
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distribution centers benefits
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-more accurate sales forecasts when many stores are combined and serviced by one DC -retailers carry less merch -easier to avoid running out of stock, order from DC as needed -retail store space more expensive
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direct store delivery
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manufacturer to store
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direct store delivery benefits
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-if retailer has few outlets or concentrated in metropolitan area -perishable goods or trends
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distributions (or fulfillment) center
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performs: management of inbound transportation, receiving and checking, storing and cross docking, get merch floor ready, ticketing and marking, preparing to ship merch to store, shipping merch to store
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management of inbound transportation (dist center)
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buyers and planners coordinate physical flow of merch to stores -planners -disbatchers
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planners
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employees responsible for the financial planing and analysis of merch and its allocation to stores
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disbatchers
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person who coordinates deliveries to distribution center retailers lower net merchandise cost if they negotiate directly with trucking co to consolidate shipments
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receiving and checking using UPC or RFID (dist center)
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use EDI to minimize processes ASN tells dist center what should be in each carton, and UPC or RFID tags on carton automatically counts it as received and checked
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receiving
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process of recording the receipt of merch as it arrives at the dist center
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checking
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process of going through the goods upon receipt to make sure they arrived undamaged and that merch ordered was the merch received
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RFID tags
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tiny computer chips that automatically transmit to a special scanner all the info about the containers contents or individual products act as passive tracking devices
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storing and cross docking (dist center)
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merch sales rate and degree of perishability/ fashionability determine whether cartons are stored or cross docked
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cross docking distribution center
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merchandise cartons are prepackaged by the vendor for a specific store UPC/RFID tags indicate where to send ready for sale merch is routed from the unloading dock to the loading dock for that specific store
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getting merch floor ready (dist center)
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see floor ready merch and ticking and marking
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floor ready merch
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merch that is ready to be placed on the selling floor entails ticketing, marking, and placing garments on hangers
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ticketing and marking
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affixing price and ID labels to the merch more efficient for a retailer to perform these activities at a dist center bc they have special areas set aside
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preparing to ship merch to a store (dist center)
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pick ticket – document or display on a screen in a forklift truck indicating how much of each item to get from specific storage areas
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shipping merch to store (dist center)
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most dist centers run 50-100 outbound truck routes in one day
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in 1990s even most innovative firms needed ___days to fulfill an order from the warehouse to the customer
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15-30 involves order creation and physical delivery
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JIT inventory systems AKA
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QR (quick response) systems
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JIT systems
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deliver less merch on a more frequent basis than traditional inventory systems 3 benefits: lead time, increased porduct availability & lower inv investment, and costs
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reduced lead time (JIT benefit)
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shorter lead times allow for easier demand forecasts
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inc product availability and lower inv investment (JIT benefit)
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ability to satisfy demand can actually increase while inventory decreases
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costs of JIT system
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dist function becomes much more complicated with more freq deliveries smaller orders are more expensive to transport JIT require strong commitment w vendors

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