Chapter 12: Managing Marketing Channels and Supply Chains – Flashcards

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Marketing Channel
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Consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers
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Transactional Function
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Intermediaries perform this when they buy and sell products or services. -Shares the risk with the producer when it stocks merchandise in anticipation of sales.
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Logistical Function
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Gathering, sorting, and dispersing products
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Facilitating Function
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Make a transaction easier for buyers
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Four Utilities
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1) Time- Having a product or service when you want it 2) Place- Having a product or service available where consumers want it. 3) Form- Enhancing a product or service to make it more appealing to buyers 4) Possession- Entails efforts by intermediaries to help buyers take possession of a product or service, such as having airline tickets delivered by travel agency.
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marketing channels for consumer products and services
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1) Direct Channel- Producer and consumer deal directly with each other 2) Indirect Channel- intermediates are inserted between the producer and consumers and perform numerous channel functions - Adding a retailer is most common when a retailer is large and can buy in large quantities from a producer or when the cost of inventory makes it too expensive to use a wholesaler - Adding a wholesaler is most common for low-cost, low-unit value items that are frequently purchased by consumers, such as candy, confectionary items, and magazines. - Adding an agent is when there are many small manufacturers and many small retailers; in this type of channel, an agent is used to help coordinate a large supply of the product.
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Marketing channels for business products and services
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Direct- Firms using this channel maintain their own sales force and perform all channel functions. This channel is employed when buyers are large and well defined, the sales effort requires extensive negotiations, and the products are of high unit value and require hands on expertise in terms of installation or use Indirect: - industrial distributor- Sells, stocks, delivers a full product assortment, and finances. - agent- serves as the independent selling arm of producers and represents a producer to industrial users - industrial distributor and agents
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Electronic marketing channel
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Employ the internet to make products and services available for consumption or use by consumers or organizational buyers.
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Direct Marketing channels
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Allow consumers to buy products by interacting with various advertising media without a face to face meeting with a salesperson.
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Multichannel Marketing
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Is the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy traditional intermediaries and online. - Seeks to to integrate a firm's electronic marketing and delivery channels.
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Dual Distribution
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An arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.
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Strategic Channel Alliances
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One firm's marketing channel is used to sell another firm's products
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Vertical Marketing Systems
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Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.
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Corporate vertical system
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The combination of successive stages of production and distribution under a single ownership. - Forward integration- Producer might own the intermediary at the next level down - Backward integration-
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Contractual vertical marketing systems
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Independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone. -Wholesale sponsored voluntary chains- involve a wholesaler that develops a contractual relationship with small, independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management efforts. -Retail sponsored cooperatives- exist when small, independent retailers form an organization that operates a wholesale facility cooperatively. - Franchising- Contractual agreement between a parent company (franchisor) and an individual or firm (franchisee) that allows the franchisee to operate a certain type of business under an established name and according to specific rules
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4 types of franchise agreements
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1) manufacturer sponsored retail franchise systems- prominent in the automobile industry 2) manufacturer sponsored wholesale franchise systems- exist in the soft drink industry 3) Service sponsored retail franchise systems- used by firms that have designed a unique approach for performing a service and wish to profit by selling the franchise to others 4) Service sponsored franchise systems- exist when franchisors license individuals or firms to dispense a service under a trade name and specific guidelines
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Administered vertical marketing systems
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achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership
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Factors affecting channel choice and management
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1) target market coverage 2) buyer requirements 3) Profitability
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1) Target Market Coverage
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1) Intensive distribution- When a firm tries to place its products or services in as many outlets as possible 2) Exclusive distribution- When only one retail outlet in a specific geographical area carries the firm's products 3) Selective distribution- When a firm selects a few retail outlets in a specific geographical area to carry its products
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2) Buyer requirements
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1) information 2) Convenience 3) Variety 4) Pre or post sale services
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3) Profitability
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Determined by the margins earned (revenue minus cost) for each channel member and for the channel as a whole.
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Channel conflict
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Arises when one channel member believes another channel member is engaged in behavior that prevents it form achieving its goals. -vertical -horizontal
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Vertical conflict
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Occurs between different levels in a marketing channel. For example between a manufacturer and a wholesaler or retailer or between a wholesaler and a retailer 1) disintermediation- first conflict arises hone a channel member bypasses another member and sells or buys products direct. 2) conflict occurs due to disagreements over how profit margins are distributed among channel members 3) When manufacturers believe wholesalers or retailers are not giving their products adequate attention
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Horizontal conflict
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occurs between intermediaries at the same level in a marketing channel, such as between two or more retailers (target and kmart) or two or more wholesalers that handle the same manufacturers brands. 1) when a manufacturer increases its distribution coverage in a geographical area 2) dual distribution causes conflict when different types of retailers carry the same brands
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Channel captain
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A channel member that coordinates, directs, and supports other channel members. Can be producers, wholesalers, or retailers. -Become a channel captain because it is the channel member with the ability to influence the behavior of other members. 1) economic influence 2) expertise influence 3) identification influence 4) right of one channel member to direct the behavior of other members
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Logistics
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Involves those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost. -logistics management- the performance of these activities.
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Logistics management
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1) logistics deals with decisions needed to move a product from the source of raw materials to consumption- that is, the flow of the product. 2) Those decisions have to be cost effective 3) While it is important to drive down logistics cost, there is a limit: A firm needs to drive down logistics costs as long as it can deliver expected customer service, which means satisfying customer requirements.
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Supply Chain
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Refers to the various firms involved in performing the activities required to create and deliver a product or service to consumer or industrial users.
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Supply Chain management
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The integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering products and services that provide value to consumers.
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Aligning supply chain with a marketing strategy
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1) Understanding the customer 2) Understand the supply chain 3) Harmonize the supply chain with the marketing strategy
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Total logistics cost
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Expenses associated with transportation, materials handling and warehousing, inventory, stock outs (being out of inventory), order processing, and return products handling.
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Customer Service
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The ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience. 1) time- refers to order cycle of replenishment time for an item. Time between the ordering of an item and when it is received and ready for use or sale. (reordering-quick response, efficient consumer response delivery systems) 2) dependability- The consistency of replenishment 1) consistent lead time 2) safe delivery 3) complete delivery 3) Communication- between consumer and seller 4) Convenience- minimum effort on the part of the buyer in doing business with the seller. (vendor managed inventory)
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Vendor Managed inventory
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An inventory management system whereby the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items.
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Reverse Logistics
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A process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal.
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