Modules 25 and 26

What is the point of Module 25?
What are the five areas in the channel decisions?
Channel organization, channel structure, channel intensity, channel member selection, and channel management
What is channel member selection?
Choosing partners (or intermediaries) that perform wholesaling or reselling activities. It buys products that it intends to resell without adding value. It sells to an end user or a consumer.
What is wholesaling?
The execution of activities involved in servicing and/or selling to retailers and other businesses or intermediates that adds no value.
What are the seven basic types of intermediaries?
Wholesaling – wholesalers, brokers/agents, manufacturing reps, selling tasks, branch/sales offices. Other – retailers and direct marketing.
What is the purpose of wholesaling?
To address any inherent market discrepancies or separations through the effective and efficient execution of one or more of the universal marketing functions.
Do wholesalers add costs?
Not from the macro perspective. From the firm’s perspective, wholesalers add value.
What functions do wholesalers perform for suppliers?
Market coverage, sales contact, inventory holding, order processing, market information, and customer support.
What functions do wholesalers add for the customer?
Assortment, allocation, product information, credit, customer service, and technical support.
What does wholesaling impact?
Directly tasks, time, and place utilities. Indirectly possession and experience.
What types of organizations can marketers choose from?
Merchant, broker/agent, manufacturer’s rep, sales agent, branch/sales office.
What criteria is this decision based on?
Channel structure (direct or indirect), universal marketing functions (customer priorities, market efficiencies, and market effectiveness), competitive advantages, and product line/mix.
How can wholesalers be categorized?
The depth of product lines, the marketing functions the wholesaler is proficient in, and the power of ownership / possession.
Who take titles to goods and services?
Merchants and wholesalers – not manufacturing reps, brokers and agents, or selling agents. These represent the marketers goods and services for a fee or commission.
What are the four categories of wholesalers?
Full-line (who carry a wide and deep product line mix), limited-line (who have a narrow product mix that is only one or two product lines – but deep), full service (includes all universal marketing functions), limited service (includes some universal marketing functions). One full service retailer is a rack jobber, who provides all universal marketing functions and organize products.
What is cash and carry?
It doesn’t provide delivery or financing services.
What is a drop shipper or desk jobber?
It doesn’t provide warehousing. A drop shipper simply arranges for delivery.
What is a truck dropper?
They just handle warehousing, transportation, and market information.
What are agents and brokers?
They do not take title, they have proficiency in marketing functions, they bring buyers and help facilitate a market transaction. They operate on a long-term contractual basis.
What is a retailers impact on value creation?
Through the interactions they provide and the environments they create to contribute to functional, symbolic, and experiential values.
What are retailer alternatives?
Store, direct marketing, and internet.
What are decision criteria?
channel structure, environment, allocation and assortment, positioning, image, and the experience.
How is a retailer selected?
Based on its ability to contribute to value creation through its interactions and environment, and the congruence of its positioning strategy and customer relationships and the positioning and customer relationships desired by the organization.
Appreciate the economic importance of wholesalers
Wholesalers are intermediaries who take title to the products they carry and make the majority of their sales to businesses. Wholesalers purchase large amounts of merchandise from a variety of suppliers and offer it for resale in smaller quantities. They often provide credit, extensive information on product benefits, training on product use, and technical assistance. They are needed because small to medium-sized companies in many industries do not buy in sufficient quantity to deal directly with manufacturers. Many large companies also buy from wholesalers because of convenience, lower personnel costs and better customer service
A wholesaler function that entails purchasing products in large quantities and reselling them in smaller quantities.
A wholesaler function that entails selling a range of merchandise from a variety of sources.
Automated vending
The use of machinery operated by coins or credit cards to dispense goods.
Big Box Retailer
A large retail establishment, usually part of a chain, selling either general merchandise or specialty items (such as electronics) and focusing on large sales volume.
Chain Store
One of a group of centrally owned and managed retail stores that handle the same product lines.
Convenience Store
A small retailer with moderately low breadth and depth of merchandise.
Department Store
A retailer with merchandise of broad variety and moderate depth and with a relatively high level of customer service.
Direct Marketing
The use of various communication media to interact directly with customers and generally calling for them to make a direct response.
Discount Store
A retailer offering a broad variety of merchandise with limited service and low prices.
Full-service wholesaler
An intermediary who performs a wide range of functions or tasks for its customers.
A giant shopping facility with a wide selection of food and general merchandise at low prices.
A programmatic advertisement of considerable length that resembles a documentary.
Limited-service wholesaler
An intermediary who performs only some of the traditional channel functions, either eliminating others or passing them on to someone else.
Mail-order catalog
A collection of product and price information that is published in paper form.
Off-price retailer
A seller of brand-name clothing at low prices.
Private Label Merchandise
Products with brand names owned by the retailer
The activities involved in selling of products to end users for use and consumption by the purchaser.
Scrambled merchandising
A retail strategy that entails carrying an array of product lines that seem to be unrelated.
Specialty store
A retailer offering merchandise in one primary product category in considerable depth.
A large, departmentalized, food-oriented retail establishment that sells beverages, canned goods, dairy products, frozen foods, meat, produce and such nonfood items as health and beauty aids, kitchen utensils, magazines, pharmaceuticals and toys.
A retailer that focuses on a single product category but offers a huge selection and low prices; also called a category killer.
Using the telephone to contact leads (potential customers) from a list.
Variety store:
A retailer offering a variety of low-priced merchandise of low to moderate quality.
Warehouse club
A large, no-frills store that carries a revolving array of merchandise at low prices.
Wheel of retailing
A descriptive theory about how retailers emerge, evolve and sometimes fade away.
Selling of goods for resale or use to retailers and other businesses.”
A firm that does not take title to the goods it handles but actively negotiates the sale of goods for its clients.
Channel levels
The number of distinct units (producers, intermediaries and customers) in a distribution channel.
Sorting and loading an incoming shipment from a supplier for delivery to customers without its being stored in any warehouse.
Direct channel
A distribution channel in which the producer uses its own employees and physical assets to distribute the product directly to the end user.
Distribution center
A location where inventory is maintained before being routed to individual sales outlets or customers.
Distribution intensity
The number of locations through which a company sells its product in a given market area.
Efficient consumer response (ECR) programs
Programs to improve the efficiency of replenishing, delivering and stocking inventory in the distribution channel, while promoting customer value.
Electronic data interchange (EDI)
Intercompany computer-to-computer exchange of orders and other business documents in standard formats.
Exclusive dealing:
Restricting intermediaries from carrying competitive lines.
Exclusive distribution
Distributing a product through only one sales outlet in each trading area
Freight forwarders
Service companies specializing in the movement of cargo from one point to another, often country to country.
Full-line forcing
Requiring intermediaries to carry and sell the company’s complete line.
Indirect channel:
A distribution channel in which the producer makes use of independent organizations to distribute the product to end users.
Integrated logistics management
The coordination of all logistical activities in a company
Intensive distribution
Making the product available through every possible sales outlet in a trade area.
Independently owned organization that acts as a link to move products between the producer and the end user.
Intermodal transportation
The combination of two or more modes in moving freight.
Inventory control
Management of stock levels.
The movement of raw materials, components and finished products within and between companies.”
Marketing/distribution channel
A set of interdependent organizations involved in making a good available for purchase.
Materials handling:
The moving of products in and around a warehouse in the process of filling orders
Multiple channel systems
The use of more than one channel to access markets for the same product.
Order management
The means by which a company receives, fills and delivers orders to customers.
Physical distribution
The movement of finished products through channels of distribution to customers.
Private warehouse
A storage facility owned and operated by the company
Public warehouse
A storage facility owned and operated by businesses that rent space.
A firm that takes title to products for resale to ultimate consumers.
Reverse Channel
A distribution channel that flows from the end user to the wholesaler and producer
Selective Distribution
The use of a limited number of sales outlets per trade area
Supply chain management
Incorporation of all activities concerned with planning, implementation, and control of sourcing, manufacturing, and delivery of products or services
Tying arrangment
The purchase of a superior product is conditioned on the purchase of a second product of lower quality
The storage of inventory in the physical distribution system
A firm that takes title to products for resale to businesses, or other wholesalers or distributors, and sometimes consumers
Types of Retailers
Nature of Format (In-store/Nonstore)
Ownership structure
Level of Services Provided
Level of Merchandising
Task Fullfillment
the extent the purpose of the shoping activity was achieved successfully and in a timely manner
The extent any ‘humans’s are involved in the experience; and that they are polite, genuinely caring and interested in helping, acknowledging and listening
Executional Excellence
The extent that patiently explained product information is provided along with advising, checking stock, helping to find products, and providing unexpected product quality
Is being sensitive to customers’ time on long check-out lines, being proactive in helping speed the shopping process
Problem recovery
helping resolve and compensate for problems, upgrading quality and ensuring complete satisfaction
Brand Experience
the extent to which products have consistently great quality, and staff make customers feel they’re special and that they always get a deal
having an exciting store design and atmosphere that impact customers physically and emotionally
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