(MKTG) Chapter 14: Marketing Channels and Retailing

marketing channel
channel of distribution
a set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer
channel members
all parties in the marketing channel who negotiate with one another, buy and sell products, and facilitate the change of ownership between buyer and seller
form utility
elements of the composition and appearance of a product that make it desirable
time utility
the increase in customer satisfaction gained by making a good or service available at the appropriate time
place utility
the usefulness of a good or service as a function of the location at which it is made available
exchange utility
the increased value of a product that is created as its ownership is transferred
a channel that sells mainly to customers
intermediaries in a channel…
negotiate with one another
facilitate the change of ownership b/w buyers and sellers
physically move products from the manufacturer to the final consumer
taking title
they own the merchandise and control the terms of the sale
merchant wholesaler
institution that buys goods from manufacturers and resells them to businesses, government agencies, other wholesalers/retailers
receives and takes title to goods
agents and brokers
wholesaling intermediaries
do not take title to a product
facilitate the sale of a product and earn commission based on sales volume
transactional functions
involve contacting and communicating with prospective buyers to make them aware of existing products
logistical functions
include transportation and storage of assets
includes research and financing
providing info about channel members and consumers by getting answers to key questions
direct channel
a distribution channel
producers sell directly to consumers
direct channels include…
mail order, catalogue shopping
electronic retailing
industrial distributors
wholesalers and channel members that buy and take title to products
keep inventories of their products and sell and service them
dual distribution
multiple distribution
the use of two or more channels to distribute the same product to target markets
nontraditional channels
nonphysical (electronic) channels that facilitate the unique market access of products and services
strategic channel alliances
cooperative agreement between business firms to use the other’s already established distribution channel
factors affecting channel choice
market factors
product factors
producer factors
levels of distribution intensity
intensive distribution
selective distribution
exclusive distribution
intensive distribution
aimed at having a product available in every outlet where target customers might want to buy it
selective distributing
screening dealers to eliminate all but a few in any single area
exclusive distribution
a form of distribution that establishes one or a few dealers within a given area
arm’s-length relationship
loose relationship between companies
low relational investment and trust
usually takes the form of a series of discrete transactions with no or low expectations of future interaction or service
cooperative relationship
takes the form of a informal partnership with moderate levels of trust and information sharing as needed to further each company’s goals
integrated relationship
tightly connected relationship
linked processes across and between firm boundaries and high levels of trust and inter firm commitment
mixes elements of cooperation and competition between two partners
vertical integration
all related channel members are owned by a single entity
supply chain
several companies act as one
gray marketing channels
products are distributed through unauthorized channel intermediaries
channel power
the capacity of a particular marketing channel member to control or influence the behavior of other channel members
channel control
a situation that occurs when one marketing channel member intentionally affects another member’s behavior
channel captain
a member of the marketing channel that exercises authority and power over the activities of other channel members
channel conflict
a clash of goals and methods between distribution channel members
horizontal conflict
a channel conflict that occurs among channel members on the same level
vertical conflict
a channel conflict that occurs between different levels in a marketing channel, most typically between the manufacturer and wholesaler/retailer
channel partnering
joint effort of all channel members to create a channel that serves customers and creates a competitive advantage
all the activities directly related to the sale of goods and services to the ultimate consumer for personal, nonbusiness use
retail establishments can be classified according to…
level of service
product assortment
ownership takes one of three forms:
independent retailer
chain store
independent retailer
owned by a single person or partnership
not operated as part of a larger retail institution
chain store
a store that is part of a group of the same stores owned and operated by a single organization
operator is granted a license to operate and sell a product under a larger supporting organization
gross margin
amount of money the retailer makes as a percentage of sales after the cost of goods sold is subtracted
department store
a store with several departments
specialty store
retail store specializing in a given type of merchandise
large, departmentalized, self-service retailer that specializes in food and some nonfood items
scrambled merchandising
offers a wide variety of nontraditional goods and services under one roof
stocks pharmacy-related products and services
convenience store
miniature supermarket
discount store
competes on the bases of low prices, high turnover, high volume

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