9 - Marketing Channels

Question 1

partners in the supply chain

Answer 1

upstream partners: firms that supply the materials needed to create a product/service

downstream partners: marketing + distribution channels

Question 2

difference between supply chain and demand chain view

Answer 2

supply chain = “make and sell”
- raw materials, productive inputs, factory capacity…

demand chain = “sense and response”
- planning starts w/ needs of target customer

-> both may be too limited, instead = value delivery network

Question 3

value delivery network

Answer 3

composed by the company, suppliers, distributors and ultimately, customers who partner with each other to improve the performance of the entire system

Question 4

marketing channel

Answer 4

set of interdependent organizations that help make a product/service available for use or consumption by the consumer

Question 5

how channel members add value

Answer 5

• transform products into products wanted by consumers

- bridge time, place and possession gaps that separate goods and services from users

Question 6

key functions of channel members (8)

Answer 6

information (market research)
promotion (persuasive communication)
contact
matching (fitting offer to buyer)
negotiation
physical distribution
financing
risk taking

Question 7

channel levels

Answer 7

direct marketing channels

indirect marketing channels (1+ level of intermediaries)

-> longer channel = less control + greater complexity

Question 8

flows in channels (5)

Answer 8

flow of:

• products
• payment
• promotion
• ownership
• information

Question 9

channel conflict

Answer 9

horizontal conflict - among firms at same level

vertical conflict - among firms in different levels
- more common

Question 10

types of channel arrangements

Answer 10

conventional distribution systems

multichannel distribution systems

vertical marketing systems (VMS)

horizontal marketing systems

Question 11

conventional distribution systems

Answer 11

each separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole

Question 12

vertical marketing system (VMS)

Answer 12

producers, wholesalers and retailers acting as a unified system

3 types of VMS
- corporate = stages combined under single leadership

• contractual - independent firms at different levels who join together through contracts (eg. franchise)
• administered = leadership is assumed by one or a few dominant members

Question 13

types of franchises

Answer 13

manufacturer-sponsored retailer franchise system (eg. Ford)

manufacturer-sponsored wholesaler franchise system (eg. Coca Cola syrup concentrate)

service-firm-sponsored retailer franchise system (eg. Burger King)

Question 14

horizontal marketing systems

Answer 14

two or more companies at one level join together to follow a new marketing opportunity

• combined resources allow to accomplish more

Question 15

multichannel distribution systems

Answer 15

single firms set up 2+ marketing channels to reach different customer segments

Question 16

direct store delivery (DSD)

Answer 16

method of selling and distributing products for a large variety of industries directly to retail stores

• bypassing the retailer’s distribution center

Question 17

disintermediation

Answer 17

1. cutting out of marketing channel intermediaries

2. displacement of traditional resellers by new intermediaries.

Question 18

channel design decisions

Answer 18

analyzing consumer needs

setting channel objectives

identifying channel alternatives

evaluating channel alternatives

Question 19

analyzing consumer needs

Answer 19

identify market segments

what they from the channel

determine the best channels to use

Question 20

setting channel objectives

Answer 20

determine targeted levels of customer service

balance consumer needs against costs and customer price preferences

Question 21

identifying channel alternatives

Answer 21

types of intermediaries:

1. intensive distribution - stock products in as many outlets as possible
2. selective distribution - few intermediaries who are willing to carry a company’s product (home electronics)
3. exclusive distribution - limited number of dealers w/ exclusive right to distribute its products in their territories (luxury brands)

Question 22

responsibilities of channel members

Answer 22

price policies

sale conditions

territory rights

specific services

Question 23

evaluating channel alternatives

Answer 23

economic criteria (likely costs, profitability…)

control issues (company prefers to keep as much control as possible)

adaptability criteria (keep channel flexible so that it can adapt to environmental changes)

Question 24

public policy and distribution decisions

Answer 24

exclusive distribution

exclusive dealing (sellers shouldn’t handle competitors’ products)

exclusive territorial agreement

tying agreements (dealer must take most or entire line)

Question 25

marketing logistics

Answer 25

involves planning, implementing, and controlling the physical flow of goods/services from points of origin to points of consumption

• meet consumer requirements at a profit
• aka physical distribution

Question 26

goal of marketing logistics

Answer 26

provide targeted level of customer service at the lowest cost

Question 27

supply chain management

Answer 27

involves managing upstream and downstream flows among channel members

Question 28

major logistics functions

Answer 28

warehousing (storage warehouses or distribution centers)

inventory management (JIT, RFID)

transportation

logistics information management

Question 29

integrated logistics management

Answer 29

recognition that providing customer service and trimming distribution costs requires internal and external teamwork