Marketing and Business for Comm Chapter 12

What are upstream partners?
Upstream partners include raw material suppliers, components, parts, information, finances, and expertise to create a product or service
What are downstream partners?
Downstream partners include the marketing channels or distribution channels that look toward the customer, including retailers and wholesalers
What is a supply chain?
Supply chain “make and sell” view includes the firm’s raw materials, productive inputs, and factory capacity
What is a demand chain?
Demand chain “sense and respond” view suggests that planning starts with the needs of the target customer, and the firm responds to these needs by organizing a chain of resources and activities with the goal of creating customer value
What is value delivery network?
Value delivery network is the firm’s suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system
What are intermediaries?
Intermediaries offer producers greater efficiency in making goods available to target markets. Through their contacts, experience, specialization, and scale of operations, intermediaries usually offer the firm more than it can achieve on its own.
How do channel members add value?
▪ From an economic view, intermediaries transform the assortment of products into assortments wanted by consumers
▪ Channel members add value by bridging the major time, place, and possession gaps that separate goods and services from users
▪ Intermediaries offer the firm more than it can achieve on its own
What are the 5 types of flows that channel levels connect by?
▪ Physical flow of products
▪ Flow of ownership
▪ Payment flow
▪ Information flow
▪ Promotion flow
What is a marketing channel?
Marketing channel consists of firms that have partnered for their common good with each member playing a specialized role
What is channel conflict?
Channel conflict refers to disagreement over goals, roles, and rewards by channel members
▪ Horizontal conflict
▪ Vertical conflict
what are conventional distribution systems?
Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers. Each seeks to maximize its own profits, and there is little control over the other members and no formal means for assigning roles and resolving conflict.
What are vertical marketing systems?
Vertical marketing systems (VMSs) provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system and consist of:
▪ Corporate marketing systems
▪ Contractual marketing systems
▪ Administered marketing systems
what is a corporate vertical marketing system?
Corporate vertical marketing system integrates successive stages of production and distribution under single ownership
▪ Zara
What is a contractual vertical marketing system?
Contractual vertical marketing system consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies or sales impact than each could achieve alone. The most common form is the franchise organization
What is a franchise organization?
Franchise organization links several stages in the production distribution process
▪ Manufacturer-sponsored retailer franchise system
▪ Manufacturer-sponsored wholesaler franchise system
▪ Service firm-sponsored retailer franchise system
What is an administered vertical marketing system?
Administered vertical marketing system has a few dominant channel members without common ownership
▪ Leadership comes from size and power.
▪ Costco & Lysol, Walmart & Clorox
What is a horizontal marketing system?
Horizontal marketing systems are when two or more companies at one level join together to follow a new marketing opportunity
▪ Companies combine financial, production, or marketing resources to accomplish more than any one company could alone.
What are multichannel distribution systems (hybrid marketing channels) ?
Multichannel Distribution systems (Hybrid marketing channels) are when a single firm sets up two or more marketing channels to reach one or more customer segments
What is disintermediation?
Disintermediation occurs when product or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones
What are the 4 channel design decisions?
1. analyzing consumer needs
2. setting channel objectives
3. identifying major channel alternatives
4. evaluation
What are the 4 steps in analyzing consumer needs?
-Find out what target consumers want from the channel -What segments to serve
-Best channels to use
-Minimize the cost of meeting customer service requirements
What are the 2 steps in setting channel objectives?
-Determine targeted levels of customer service
-Balance consumer needs not only against the feasibility and costs of meeting these needs but also against customer price preferences
What are the 3 factors in identifying major alternatives?
▪ Types of intermediaries
▪ Number of marketing intermediaries
▪ Responsibilities of channel members
What are the 3 major types of distributions? describe each
Intensive distribution
• Candy and toothpaste
Exclusive distribution
• Luxury automobiles and prestige clothing
Selective distribution
• Television and home appliance
What are the 3 things each alternative should be evaluated against?
▪ Economic criteria
▪ Control
▪ Adaptability criteria
Describe the process of Designing International distribution channels
▪ Channel systems can vary from country to country
▪ Must be able to adapt channel strategies to the existing structures within each country

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