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marketing intermediaries aka middlemen

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organizations that assist in moving goods and services from producers to businesses (B2B) and from businesses to consumers (B2C)

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marketing intermediaries and middlemen

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organizations that assist in moving goods and services from producers to businesses (B2B) and from businesses to consumers (B2C)

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channel of distribution

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a whole set of marketing intermediaries, such as agents, brokers, wholesalers, and retailers, that join together to transport and store goods in their path (or channel) from producers to consumers

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a channel of distribution ensures

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- flow of communication throughout the channel - flow of money and title to goods - correct assortment and quantities available as needed

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agents / brokers

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marketing intermediaries who bring buyers and sellers together and assist in negotiating an exchange but don't take title to the goods do not carry inventory, provide credit, or assume the risks of ownership of the goods

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manufacturer's agent

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represents several non competing manufacturers in a specific territory

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sales agent

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represents a single producer in a large territory

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wholesaler

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a marketing intermediary that sells to other organizations a firm whose main purpose is to sell to other businesses, manufacturers, and hospitals, who then resell the products or use them in a product or service that is resold

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retailer

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an organization that sells to ultimate customers / consumers

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some economists have said that intermediaries add costs and should be eliminated

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marketers say intermediaries add value, and that value greatly exceeds the cost

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basic points about intermediaries (p 410)

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1) marketing intermediaries can be eliminated, but their activities can't, this is you can eliminate some wholesalers and retailers, but then consumers or someone else would have to perform the intermediaries tasks, including transporting and storing goods, finding suppliers, and establishing communication with suppliers 2) intermediary organizations have survived because they perform marketing functions faster and more cheaply than others can 3) intermediaries add costs to products, but these costs are usually more than offset by the values they create

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utility

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in economics, the want satisfying ability or value that organizations add to goods or services when something has the ability to satisfy a want, ability, or value to goods or services

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form utility

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a manufacturer who assembles the components of a computer for sale provided by producers rather than intermediaries ex: assembling a computer from components

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information utility

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adding value to products by opening two-way flows of information between marketing participants a customer who asks questions and receives answers from a salesperson about a new computer exemplifies information utility

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time utility

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adding value to products by making them available WHEN they're needed ex: 24 hour deli, internet websites

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place utility

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adding value to products by having them WHERE people want them the utility that places the product where it is wanted ex: 7-eleven, gas stations

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possession utility

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doing whatever is necessary to transfer ownership from one party to another, including providing credit, delivery, installation, guarantees, and follow-up service the utility that makes it possible to own it ex: 48-month auto loans

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service utility

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adding value by providing fast, friendly service during and after the sale and by teaching customers how to best use products over time ex: software updates

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merchant wholesalers

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independently owned firms that take title to the goods they handle about 80% of wholesalers take title to the goods they handle as either full service or limited function merchant wholesalers two types: - full service wholesalers: perform all the distribution functions - limited function wholesalers: perform only selected functions

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rack jobbers

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wholesalers that furnish racks or shelves full of merchandise to retailers, display products, and sell on consignment

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cash and carry wholesalers

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wholesalers that serve mostly smaller retailers with a limited assortment or products

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drop shippers

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wholesalers that solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer a wholesaler who would most likely handle a shipment of lumber for a new building drop shipper does NOT: - handle the merchandise - stock the merchandise - deliver the merchandise handle products such as coal and lumber

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types of retail stores (examples p 415)

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department: sells variety such as clothes, furniture, and housewares usually at higher prices than discount stores - sears, jcpenney, nordstrom discount: sells many diff products at lower prices - walmart, target supermarket: mostly food w/ other nonfood - safeway, kroger, albertson's warehouse: sells food and general merch in larger facilities - costco, sam's club convenience store: sells food and other often needed items at convenient locations - 7-eleven category killer: sells huge variety of one type of product to dominate that category of goods - toys r us, office depot, nordstrom rack, nike, tj maxx outlet store: sells directly from manufacturer at reduced prices, although some merch many be flawed or "seconds" specialty store: sells a wide selection of goods in one category - jewelry stores, shoe stores, bike shops

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storage warehouse

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seasonal goods such as christmas or thanksgiving decorations would be held here

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brick and click store

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traditional store that has added online outlets is an existing retail store that adds online outlets

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online retailing

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difficulties: - handling complaints and returns - providing personal help

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intensive distribution

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distribution that puts products into as many retail outlets as possible products like: gum, candy, cigarettes, popular magazines

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selective distribution

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distribution that sends products to only a preferred group of retailers in an area products like: appliances, furniture, clothing (shopping goods) benefits: - ensuring producers of quality service for customers - ensuring producers of a quality sales force

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exclusive distribution

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distribution that sends products to only one retail outlet in a given geographic area products like: luxury cars, skydiving equipment, fly fishing products benefits: - giving exceptional service - exclusive rights to sell the product - limited competition in a geographic area

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electronic retailing

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selling goods and services to ultimate customers (e.g. you and me) over the internet problems associated with electronic retailing have included: - responsiveness to complaints - having sufficient inventory to meet demand

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RFID

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the tracking system that uses radio frequencies to track merchandise goal of RFID manufacturers would be to increase their use to lower their cost from 10 cents to one cent

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telemarketing

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the sale of goods and services by telephone type of nonstore marketing that uses toll free numbers to supplement online or catalog sales many nonstore catalog retailers use telemarketing to take orders over the phone a form of direct marketing

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vending machines, kiosks, and carts

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- vending machines dispense convenience goods when consumers deposit money - carts and kiosks have lower overhead costs than stores do, so they can offer lower prices on items such as t shirts, purses, watches, and cell phones

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direct selling

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selling to consumers in their homes or where they work or a house party ex: cosmetic products, vacuum cleaners

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multilevel marketing

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over 1000 US companies have had success using multilevel marketing and salespeople who work as independent contracts advantage: low cost of entry monavie--a fruit juice in a wine bottle for $39 salespeople earn commissions on their own sales, create commissions for the upliners who recruited them and receive commisions from downliners they recruit to sell (pyramid scheme)

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direct marketing

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any activity that directly links manufacturers or intermediaries with the ultimate customer consumer catalog companies: ll bean, land's end, etc.. activities include: - telemarketing - catalog sales - online sales

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direct marketing is increasingly popular form of retailing because it

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is more convenient to shop from home or work

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corporate distribution system

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a distribution system in which all the organizations in the channel of distribution are owned by one firm ex: sherwin williams owns its own retail stores and coordinates everything: display, pricing, promotion, inventory control, etc...

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contractual distribution system

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a distribution system in which members are bound to cooperate through contractual agreements, but they are independent three forms: - FRANCHISE SYSTEMS: mcdonald's, kfc, baskin-robbins, AAMCO-- franchisee agrees to all the rules, regulations, and procedures established by the franchisor. results in consistent quality and level of service you find in most franchised organizations - WHOLESALER SPONSORED CHAINS: ace hardware, iga food stores. each store signs an agreement to use the same name, participate in chain promotions, and cooperate as a unified system of stores, even though each is independently owned and managed - RETAIL COOPERATIVES: such as associated grocers. this arrangement is much like wholesaler sponsored chain except it is initiated by the retailers. the same degree of cooperation exists, and the stores remain independent.

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administered distribution system

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a distribution system in which producers manage all of the marketing functions at the retail level retailers get a lot of free help with display, inventory control, pricing, and promotion without signing an agreement

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supply chain (value chain)

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the sequence of linked activities that must be performed by various organizations to move goods from the sources of raw materials to ultimate consumers

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overall supply chain

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the channel of distribution deals with functions that occur between the producer of goods and services and the consumer

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supply chain management

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the process of managing the movement of raw materials, parts, work in progress, finished goods, and related information through all the organizations involved in the supply chain; managing the return of such goods, if necessary; and recycling materials when appropriate

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if you were choosing a means of transportation for oil, the cheapest and most dependable would be by

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pipeline

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factory processes

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the transformation of raw materials, parts, and other inputs into finished goods such as shoes, cars, or clothes is done by this

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supply chain management adds value to the channel of distribution by

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- increasing efficiency - providing an overview of the entire supply chain - lowering costs

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traditional store retailers were used to shipping from manufacturers to warehouses to the retail store, except for large purchases such as furniture. they have had to:

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- outsource distribution functions to specialists such as fedex and ups - develop systems to deliver directly to customers' homes

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logistics

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the marketing activity that involves 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 getting goods to consumers efficiently

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logistics is about the physical movement of materials through the supply chain. an equally important part of the logistics systems is to:

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have accurate information on the location of materials, finished goods, and transportation options

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inbound logistics

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the area of logistics that involves bringing raw materials, packaging, other goods and services, and information from suppliers to producers

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materials handling

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the movement of goods within a warehouse, from warehouses to the factory floor, and from the factory floor to various workstations

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outbound logistics

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the area of logistics that involves managing the flow of finished products and information to businesses buyers and ultimate consumers (people like you and me) area of logistics involved in managing the shipment of shoes to retailer

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reverse logistics

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the area of logistics that involves bringing goods back to the manufacturer because of defects or for recycling materials

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third party logistics

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the use of outside firms to move goods from one place to another

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comparing transportation modes

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mode: railroad, trucks, pipleline, ships, airpline cost: medium, high, low, lowest, highest speed: slow, fast, medium, slowest, fastest on time dependability: med, high, low, lowest, highest flexibility handling products: high med low highest low frequency of shipments: low high highest lowest medium reach: high highest lowest low medium

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the second largest surface transportation mode because of their ability to deliver to more locations:

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- vans - trucks (motor vehicles)

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freight forwarder

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an organization that puts many small shipments together to create a single large shipment that can be transported cost effectively to the final destination may also offer customs assistance and warehousing

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intermodal shipping

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the use of multiple modes of transportation to complete a single long distance movement of freight

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pros and cons

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trucks are good for small shipments to remote locations water transportation: inexpensive, but slow pipelines: fast and efficient (cheap and fast) air transportation: fast but expensive

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railroads

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the method of transportation carries the largest percentage by volume of all goods shipped within the united states

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storage warehouses

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warehouses used to keep goods for a longer time

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distribution warehouses

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facilities used to gather and redistribute products fedex or UPS

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tracking goods

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with RFID, bar codes

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fishyback

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when truck trailers are placed on ships to travel long distances at lower rates

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birdyback

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when shipping containers are moved by truck and by airplanes to travel long distances

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piggyback

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type of shipping that combines trucks and railroads to move goods

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more accurate technology developed by specialized logistics firms can:

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- maintain specialized databases on international requirements - provide needed information on laws and regulations - provide information comparing transportation costs

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small businesses can use nonstore retailing methods such as the internet to

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open new channels of distribution

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the least expensive way to send goods overseas is by

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ship

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supply chain management has become very complex, as many firms outsource functions, purchase from many sources, and market around the world. as a result, supply chain management is

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interfirm and international

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Approximately 2.3 million retail stores in the united states

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- are major employers of marketing graduates - employ more than 5 million people

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the fourth P of marketing, which includes shipping, transportation, storage, logistics, and supply chain management is known as

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place or distribution

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marketing intermediaries perform the six marketing utilities by getting products and services to consumers

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- when and where they are wanted - in the form they are wanted - with needed information and service - at affordable prices

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which method of transportation would you use to move a small load of automobile parts from the manufacturer in north carolina to an assembly plant in tennessee that uses just in time inventory control?

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truck

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companies such as Copart in the Spotlight on Small Business shows us that the supply chain process does not end until

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materials used are recycled into other goods

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interactive video has added a new dimension to direct marketing because it enables consumers to:

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- compare prices - order goods and services online - ask questions

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companies who use organizations such as SAP or PeopleSoft to manage complex supply chains recognize that they are actually value chains because:

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their goal is to provide consumers with the best possible value at the lowest cost to the company

Intro to Business: Chapter 15 – Distributing Products – Flashcards

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