Ch. 10, 11 - Marketing Channels & Retailing Flashcards
Marketing Channel
A set of interdependent organizations that help make a product or service available for use by consumers or business users
Supply Chain
A sequence of firms that perform activities required to create and deliver a good or service to customers
What happens when there is a supply-side problem when distributing a product?
Retailers have little inventory. A product becomes scarce
What happens when there is a demand-side problem (e.g. large change in demand) when distributing a product?
It takes time for a channel to respond to large changes in demand. Some goods experience only small changes in demand so retailers will not keep excess inventory which becomes problematic when demand increases significantly…
What are the different types of marketing channels for consumer products?
- Direct Channel
- Retail Channel
- Wholesale Channel
- Agent Channel
Direct Channel
Producer manufactures product and sells it directly to consumers
What is the advantage of using a direct marketing channel?
The company gets to keep all profit from selling their product
What are the disadvantages of using a direct marketing channel?
- The company takes on all risk associated with inventory until inventory is sold
- Tougher to get product to the final consumer
Intermediaries
Individuals or firms performing a role in the marketing channel, involved in making a product available to consumers
Retail Channel
Producer manufactures product and sells it to a retailer. The retailer sells the product to consumers
Wholesale Channel
Producer manufactures product and sells it to a wholesaler. The wholesaler sells inventory to a retailer who sells the product to consumers
Wholesaler/Distributor
Any intermediary who sells to other intermediaries, usually to retailers
Agent Channel
An agent/broker brings together the producer and a wholesaler so the producer can sell their product to the wholesaler. The wholesaler sells inventory to a retailer who sells the product to consumers
Agent/Broker
Any intermediary with legal authority to act on behalf of another channel member (e.g. producer)
Retailer
An intermediary who sells to consumers
What are the five steps of brand acquisition discussed by the guest speaker in class (Moose Imports)?
- Market Research
- Contract Negotiation
- Ensure Compliance to laws
- Supply Chain Management
- Marketing
Multichannel Distribution
Blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with customers
What is the main issue of using a conventional marketing channel (e.g. direct, retail, wholesale, agent)?
Each player works for their own benefit. For instance, a player may choose to raise the price they charge for a product to increase their profit (i.e. they engage in price gouging).
Vertical Marketing System (VMS)
Manufacturers, wholesalers, and retailers work together to distribute a product to consumers. Essentially, everyone is on the same “team”.
What is a desirable result of using vertical marketing systems?
Lower final price for consumers
What are the 3 types of vertical marketing systems?
- Corporate VMS
- Contractual VMS
- Administered VMS
Corporate Vertical Marketing System
Occurs when a member of the marketing channel owns other members of the channel (common ownership)
Contractual Vertical Marketing System
Occurs when independent production and distribution firms combine their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone
Administered Vertical Marketing System
Occurs when a member of the marketing channel is a big player in their respective industry and they have buyer and/or supplier power. This power can be used to influence channel members to do what they want.
Horizontal Marketing System
Two or more companies at one channel level join together to follow a new marketing opportunity
Franchises
Created when a company sells rights to use their brand, marketing material, and royalties
Why is it beneficial for companies to engage in franchising rather than creating a new establishment
Franchising can help offload the cost of opening a new establishment to another individual or firm
Channel Conflict
Disagreement among channel members on goals, roles, and rewards (who should do what and for what rewards). Channel conflicts can be horizontal or vertical.
Horizontal Conflict
Occurs between intermediaries at the same level in a marketing channel
Vertical Conflict
Occurs when a channel member believes that another channel member is engaged in behaviour that prevents it from achieving its goals
Disintermediation
Vertical channel conflict that arises when a channel member bypasses another member and sells directly to consumers (someone gets left out of the marketing channel)
What are the potential sources of channel conflict?
- Profit Margins
- Disintermediation
- Attention
What factors impact a company’s marketing channel choice?
- Environmental Factors
- Consumer Factors
- Product Factors
- Company Factors
Retailing
Any activities involved in selling goods or services to final consumers
Category Killer
A retailer that has deep product depth in one product type. Competitors need niche products to appeal to consumers. Example: ToysRUs
One-stop shop
A retailer that has very large product width (largest on the market) while sacrificing product depth. Example: Walmart
Discount Retailer
A retailer that sells low quality products for cheap prices. Example: Dollarama
Off-price Retailer
A retailer that scoops up excess inventory from other companies to sell at lower prices. Example: Winners
Factory Outlet
A retailer that is located in a lower cost of living location. They specifically sell excess/imperfect inventory for less. Example: GAP Outlet
Warehouse Club
A retailer that requires its customers to have a membership to buy products from them (often at a discount). Example: Costco
What elements of store design can companies use to influence consumer behaviour?
- Layout
- Placement
- Atmospherics
What is the main goal of store design?
Maximize a consumer’s exposure to products and time spent in the store
True or False: All areas of a store a equally visited by customers on average?
False. Some places in a store are visited more/less often than others.
Grid Store Layout
- Long aisles with products on both sides
- Need to walk to the end of the aisle to leave an aisle
Example: Safeway
Race Track Layout
A layout that guides customers to take a specific route to maximize exposure to products. However, it is easy for customers to get lost
Example: IKEA
Free-form Layout
- Merchandise is placed on the edges of the store
- Consumers decide the path they take
- Tables/displays in the center of the store
- Example: Gamestop
Planograms
Used to organize which products appear on what shelf and how many products
True or False: To maximize exposure, your product should be placed at eye level to ensure customers can easily see your product
False. It is actually best to place your product just below eye level.
Atmospherics
Factors that affect retail environments by influencing a consumer’s senses. Includes:
- Colour
- Music
- Lighting
- Highlight Merchandise
- Scent
What are some new technology developments in the retail industry?
- Beacons
- Face recognition
- Robot assistants
- Auto check out
- Smart displays
