Chapter 10 – Study Guide

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Value delivery network
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A network composed of the company, suppliers, distributors, and, ultimately, customers who partner to help the entire system deliver better customer value.
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Marketing channel (distribution 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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A marketing channel containing one of more intermediary levels.
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Channel conflict
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Disagreements among marketing channel members on goals, roles, and rewards – 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, perhaps 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 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 product 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.
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Franchise organization
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A contractual vertical marketing system in which a channel member, called a franchisor, 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 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 Intensive distribution: 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 product.
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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
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An independent logistics provider that performs any or all of the functions required to get a client’s product to market.

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