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Distribution

answer

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

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Supply Chain

answer

All the activities associated with the flow and transformation of products from raw materials through the end customer.

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Operations Management

answer

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

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Logistics Management

answer

Planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customer's needs and wants.

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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.

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Supply Chain Management

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. It includes activities like manufacturing, research, sales, advertising, and shipping.

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Marketing Channel

answer

A group of individuals and organizations that direct the flow of products from producers to customers within the supply chain. The major role of marketing channels is to make products available at the right time at the right place in the right quantities.

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Marketing Intermediaries

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Middlemen that link producers to other intermediaries or ultimate customers through contractual arrangements or through the purchase and resale of products.

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What are the four types of utility that marketing channels create?

answer

Time, place, possession, and form.

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Time Utility

answer

having products available when the customer wants them. EX: Netflix

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Place Utility

answer

is making the products available in locations where customers wish to purchase them. EX: Zappos lets people shop for shoes wherever they are as long as they have an internet connection.

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Possession Utility

answer

means that the customer has access to the product to use or to store for future use. Possession Utility can occur through ownership or through arrangements that give the customer the right to use the product, such as a lease or rental agreement.

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From Utility

answer

when channel members assemble, prepare, or otherwise refine a product to suit individual customer needs.

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What are the two types of marketing channels?

answer

Channels for consumer products and channels for business products

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Industrial Distributor

answer

An independent business organization that takes title to industrial products and carries inventories. Industrial distributors usually sell standardized items, such as maintenance supplies, production tools, and small operating equipment.

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Manufacturers agent

answer

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

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Dual distribution

answer

The use of two or more marketing channels to distribute the same products to the same market. EX: a firm sells its products through retail outlets and its own mail-to-order catalog or website.

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Strategic Channel Alliance

answer

An agreement whereby the products of one organization are distributed through the marketing channels of another. The products of the two firms are often similar with respect to target markets or uses, but they are not direct competitors. EX: A brand of bottled water might be distributed through a marketing channel for soft drinks.

question

What are the factors that affect market channel selection decisions?

answer

customer characteristics, product attributes, type of organization, competition, marketing environmental forces, and characteristics of intermediaries.

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What are the three major levels of market coverage?

answer

Intensive, selective, and exclusive distribution

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Intensive distribution

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using all available outlets to distribute a product. Intensive distribution is appropriate for products that have a high replacement rate, require almost no service, and are bought based on price cues. Most convenience products like bread, chewing gum, soft drinks, and newspapers are marketed through intensive distribution.

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Selective Distribution

answer

Using only some available outlets in an area to distribute a product. Selective distribution is appropriate for shopping products, which include durable goods like televisions or computers. Selective distribution is desirable when a special effort, such as customer service form a channel member is important to a customer. Selective distribution is often used to motivate retailers to provide adequate service. Most perfumes and colognes and some cosmetics are marketed using selective distribution in order to maintain a particular image.

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Exclusive distribution

answer

Using a single outlet in a fairly large geographic areas to distribute a product. This method is suitable for products purchased infrequently, consumed over a long period of time, or that require a high level of customer service or information. It is also used for expensive, high quality products with high profit margins, such as Porsche, BMW, and other luxury automobiles. A producer usign exclusive distribution expects dealers to carry a complete inventory, train personnel to ensure a high level of product knowledge and quality customer service, and participate in promotional programs.

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Channel Captain

answer

The dominant leader of a marketing channel or a supply channel. The captain may be a producer, wholesaler, or retailer.

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Channel Power

answer

the ability of one channel member to influence another members goal achievement.

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Vertical Channel Integration

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Combining two or more stages of the marketing channel under one management. This may occur when one member of a marketing channel purchases the operations of another member or simply performs the functions of another member, eliminating the need for that intermediary. EX: the steel industry, because of high costs and the need for reliable distribution channel intermediaries, tend to feature highly vertically integrated firms.

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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.

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What are the three forms of vertical marketing systems?

answer

Corporate, administered, or contractural

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Corporate VMS

answer

combines all the stages of the marketing channel, form producers to consumers, under a single owner.

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Administered VMS

answer

channel members are independent but informal coordination achieves a high level of inter-organizational management.

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Contractural 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.

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Horizontal Channel Integration

answer

Combining organizations at the same level of operation under one management. An organization may integrate horizontally by merging with other organizations at the same level in the marketing channel. EX: The owner of a dry cleaning establishment might buy and combine several other dry cleaning establishments.

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Physical Distribution

answer

Also known as logistics. Activities used to move products from producers to consumers and other end users.

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Outsourcing

answer

The contracting of physical distribution tasks to third parties.

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Cycle Time

answer

The time needed to complete a process

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Order Processing

answer

The receipt and transmission of sales order information

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What are the three main tasks of order processing?

answer

order entry, order handling, and order delivery

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Electronic Data interchange (EDI)

answer

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

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Inventory Management

answer

Developing and maintaining adequate assortments of products to meet customers needs.

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Reorder point

answer

the inventory level that signals the need to place a new order

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Order lead time

answer

the average time lapse between placing an order and receiving it.

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Usage rate

answer

the rate at which a products inventory is used or sold during a specific time period.

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Safety stock

answer

the amount of extra inventory a firm keeps to guard against stockouts resulting from above average usage rates and/or longer than expected led times.

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Just in Time (JIT)

answer

An inventory management approach in which supplies arrive just when needed for production or resale.

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Materials Handling

answer

Physical handling of tangible goods, supplies, and resources.

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What are two common methods of material loading?

answer

Unit loading and containerization

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Unit Loading

answer

one or more boxes are placed on a pallet or a skid.

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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.

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Warehousing

answer

the design and operation of facilities for storing and moving goods.

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What are the two categories of warehouses?

answer

private and public

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Private warehouses

answer

Company-operated facilities for storing and shipping products

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Public Warehouses

answer

Storage space and related physical distribution facilitates that can be leased by companies.

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Bonded storage

answer

a warehousing arrangement in which imported or taxable products are not released until the products owner pays U.S customs duties, taxes, and other fees.

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Distribution centers

answer

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

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Transportation

answer

the movement of products form where they are made to intermediaries and end users. This is the most expensive physical distribution function.

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Intermodal Transportation

answer

Two or more transportation modes used in combination

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Piggy back

answer

using truck trailers and railway flatcars

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Fishyback

answer

using truck trailers and water carriers

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Birdy back

answer

using truck trailers and air carriers

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Freight Forwarders

answer

Organizations that consolidate shipments from several firms into efficient lot sizes

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Megacarriers

answer

freight transportation firms that provide several modes of shipment

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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

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Full line forcing

answer

a supplier requires that channel members purchase the suppliers entire line to obtain any of the suppliers products

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Exclusive dealing

answer

A situation in which a manufacturer forbids an intermediary from carrying products of competing manufacturers.

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