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middleman

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Any intermediary between manufacturer and end-user markets

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agent or broker

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any intermediary with legal authority to act on behalf of the manufacturer

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wholesaler

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an intermediary who sells to other intermediaries, usually to retailers; -term usually applies to consumer markets.

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retailer

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An intermediary who sells mainly to consumers

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distributor

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an imprecise term, usually used to describe intermediaries who perform a variety of distribution functions, including selling, maintaining inventories, extending credit, and so on; a more common term in business markets but may also be used to refer to wholesalers.

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marketing channel

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individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users. -marketing channel of distribution -the goal is to attract, retain, and build relationships with buyers who use various channels.

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transactional function

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-buying; purchasing products for resale as an agent for supply of a product -selling: contacting potential customers, promoting products, and seeking orders -risk taking: assuming business risks in the ownership of inventory become obsolete of detoriate

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logistical function

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-Assorting: Creating product assortments from several sources to serve customer -Storing: Assembling and protecting products at a convenient location to offer better customer service -Storing: Purchasing in large quantities and breaking into smaller amounts desired by customers -Transporting: Physically moving a product to customers

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facilitating function

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Financing, Grading, Marketing information and research functions of channel intermediaries that make the purchase process easier for customers and manufacturers

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Time utility

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refers to having a product or service when you want it. -For example, FedEx provides next-morning delivery.

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Place utility

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means having a product or service available where consumers want it -such as having a Chevron gas station located on a long stretch of lonely highway.

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Form utility

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involves enhancing a product or service to make it more appealing to buyers. -Consider the importance of bottlers in the soft-drink industry

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Possession utility

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entails efforts by intermediaries to help buyers take possession of a product or service, such as having airline tickets delivered by a travel agency.

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What are the three basic functions performed by intermediaries?

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transactional, logistical, and facilitating

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direct channel

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a distribution channel in which producers sell directly to consumers -SCHWAN FOODS, consumer

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indirect channel

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-is one or more intermediaries between the manufacturer and the customer. -because intermediaries are inserted between the producer and consumers and perform numerous channel functions. Channel B, with a retailer added, 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. -TOYOTA, retailer, consumer

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channel C

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-Mars -Mars, wholesaler, retailer, consumer candy, magazines

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channel D

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-MANSAR PRODUCTS -MANSAR PRODUCTSS-agent wholesaler, retailer, consumer jewelry retailers

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The four most common channels for business products and services are

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direct channel, indirect channel, channel c, channel d

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the four most common marketing channels for consumer products and services

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direct channel, indirect channel, channel c, channel d A. producer-industrial user IBM B. producer-industrial distributor, industrial user- Toyota C. producer-agent- industrial user STAKE FASTENER CO D. producer-agent-industrial distributor, industrial user HARKMAN ELECTRIC

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electronic marketing channels

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which employ the Internet to make products and services available for consumption or use by consumers or organizational buyers. AMAZON

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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. -mail-order selling, direct-mail sales, catalog sales, telemarketing, interactive media, and televised home shopping

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multichannel marketing

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The blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers.

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dual distribution

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An arrangement whereby a firm reaches different buyers by using two or more different types of channels for the same basic product.

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strategic channel alliances

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-recent innovation -whereby one firm's marketing channel is used to sell another firm's products. -popular in global marketing, where the creation of marketing channel relationships is expensive and time-consuming

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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 marketing system

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The combination of successive stages of production and distribution under a single ownership

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backward integration

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when a retailer might own a manufacturing operation -Process through which a manufacturer attempts to gain greater control over inputs in its production process, such as raw materials

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three major types of vertical marketing systems

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corporate, contractual, and administered

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contractual vertical marketing system

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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 -most popular -Three variations of contractual systems exist

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Wholesaler-sponsored voluntary chains

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involve a wholesaler that develops a contractual relationship with small, independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management efforts.

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Three variations of contractual systems exist

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Wholesaler-sponsored voluntary chains Retailer-sponsored cooperatives

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Retailer-sponsored cooperatives

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when small, independent retailers form an organization that operates a wholesale facility cooperatively.

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Franchising

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a contractual arrangement between a parent company (a franchisor) and an individual or firm (a 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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Four types of franchise arrangements are most popular

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Manufacturer-sponsored retail franchise systems Manufacturer-sponsored wholesale franchise systems Service-sponsored retail franchise systems Service-sponsored franchise systems

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Manufacturer-sponsored retail franchise systems

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prominent in the automobile industry, where a manufacturer such as Ford licenses dealers to sell its cars subject to various sales and service conditions.

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Manufacturer-sponsored wholesale franchise systems

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exist in the soft-drink industry, where PepsiCo licenses wholesalers (bottlers) that purchase concentrate from PepsiCo and then carbonate, bottle, promote,

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Service-sponsored retail franchise systems

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used by firms that have designed a unique approach for performing a service and wish to profit by selling the franchise to others.

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Service-sponsored franchise systems

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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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3 Questions when Choosing a Marketing Channel

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1.Which channel and intermediaries will provide the best coverage of the target market? 2. Which channel and intermediaries will best satisfy the buying requirements of the target market? 3. Which channel and intermediaries will be the most profitable?

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intensive distribution

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When a firm tries to place its products or services in as many outlets as possible. -candy, fast food, newspapers, and soft drinks

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exclusive distribution

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When only one retail outlet in a specific geographical area carries the firm's products. -specialty products or services, such as some women's fragrances and men's and women's apparel and accessories

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selective distribution

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When a firm selects a few retail outlets in a specific geographical area to carry its products. -weds some of the market coverage benefits of intensive distribution to the control over resale evident with exclusive distribution

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Buyer Requirements

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(1) information, (2) convenience, (3) variety, and (4) pre- or post sale services.

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Convenience

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proximity or driving time to a retail outlet -Candy and snack-food firms benefit by gaining display space in these stores

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Variety

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reflects buyers' interest in having numerous competing and complementary items from which to choose.

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Pre- or postsale services

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provided by intermediaries are an important buying requirement for products such as large household appliances that require delivery, installation, and credit. -Whirlpool

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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 from achieving its goals.

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disintermediation

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A channel conflict that arises when a channel member bypasses another member and sells or buys products direct. -American Airlines decided to terminate its relationship with Orbitz and Expedia

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Vertical conflict

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occurs between different levels in a marketing channel—between a manufacturer and a wholesaler or retailer or between a wholesaler and a retailer.

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Two types of conflict occur in marketing channels

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vertical conflict and horizontal conflict.

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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)

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channel captain

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a channel member that coordinates, directs, and supports other channel members. -producers, wholesalers, or retailers.

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logistics

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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.

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logistics management

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the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements -flow, cost effective, customer requirements

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flow

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decisions needed to move a product from the source of raw materials to consumption

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supply chain

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The various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users. - time, dependability, communication, and convenience.

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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 a Supply Chain with Marketing Strategy

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1. Understand the customer 2. Understand the supply chain 3. Harmonize the supply chain with the marketing strategy

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cross-docking

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a practice that involves unloading products from suppliers, sorting products for individual stores, and quickly reloading products onto its trucks for a particular store.

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total logistics cost

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Expenses associated with transportation, materials handling and warehousing, inventory, stockouts, 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.

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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, re manufacturing, redistribution, or disposal.

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Which two of the following are intermediaries that have legal authority to act on behalf of the manufacturer?

answer

agent and broker

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In addition to Macy's having its own retail outlets in various locations, the retailer alow has its own website and catalog. This represents a move toward___ marketing.

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Multichannel

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The inbound portion of the supply chain incorporates which tow of the following?

answer

the flow of raw materials and the supplier.

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The outbound portion of the supply chain incorporates which tow of the following?

answer

the flow of finished products and the marketing channel

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Which of the following should be considered a part of total logistics cost?

answer

expenses associated with transportation, materials handling and warehousing, inventory, stock outs (being out of inventory), order processing, and return product handling.

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Firms that buy products from manufacturers and resell them to retailers are know as

answer

Wholesalers

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Which two of the following combine to describe the objective of logistics management for a customer-driven supply chain?

answer

minimize logistics costs and maximize customer service

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Direct and indirect are types of

answer

marketing channels

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Suppose a large retail chain is considering increasing the number of distribution centers that serve its retail stores from 6 to 20. If the number of suppliers, retail outlets, and customers remain unchanged, which of the following statements accurately describes what will happen as a result of this expansion?

answer

total inventory in the warehouse system will increase.

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The channel strategy demonstrated when Hallmark sells its Hallmark brand greeting cards through Hallmark stores and select department stores and its Ambassador brand of cards through discount and drugstore chains is referred to as __________.

answer

dual distribution

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Meyers, Inc. is an American company that manufactures and distributes coffee products in the U.S. Because of the popularity of its products, Meyers Inc. wants to enter new global markets. As a result, the firm decided to develop an international distribution network as soon as possible. The most efficient distribution arrangement in terms of cost and time for Meyers, Inc. would be to use __________.

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a strategic channel alliance

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Kroger supermarkets operate manufacturing facilities that produce everything from aspirin to cottage cheese for sale under the Kroger label. This example shows that Kroger uses

answer

backward integration.

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Marketing executives typically consider three questions when choosing a marketing channel and intermediaries. These include: (1) which channel and intermediaries will provide the best coverage of the target market, (2) which channel and intermediaries will best satisfy the buying requirements of the target market, and (3) which channel and intermediaries will be the

answer

most profitable.

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Quick response systems refer to

answer

inventory management systems that are designed to reduce a retailer's lead time for receiving merchandise, which then lowers its inventory investment, improves its customer service levels, and reduce its total logistics expense.

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Adding a wholesaler to the marketing channel for consumer products is most common for

answer

low-cost, low unit value items.

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A wholesaler-sponsored voluntary chain refers to

answer

a contractual relationship between a wholesaler and small independent retailers to standardize and coordinate buying, merchandising, and inventory management efforts.

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The ability of a logistics system to satisfy users in terms of time, dependability, communications, and convenience is referred to as __________.

answer

customer service

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Which of the following is the most popular type of vertical marketing system?

answer

contractual vertical marketing systems

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