Ch 12 - Managing Marketing Channels and Supply Chains Flashcards
Explain what is meant by a marketing channel of distribution and why intermediaries are needed.
A marketing channel of distribution, or simply a marketing channel, consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users. Intermediaries make possible the flow of products from producers to buyers by performing three basic functions. The transactional function involves buying, selling, and risk taking because intermediaries stock merchandise in anticipation of sales. The logistical function involves the gathering, storing, and dispensing of products. The facilitating function assists producers in making products and services more attractive to buyers. The performance of these functions by intermediaries creates time, place, form, and possession utility for consumers.
Distinguish among traditional marketing channels, electronic marketing channels, and different types of vertical marketing systems.
Traditional marketing channels describe the route taken by products and services from producers to buyers. This route can range from a direct channel with no intermediaries, because a producer and the ultimate consumer deal directly with each other, to indirect channels where intermediaries (agents, wholesalers, distributors, or retailers) are inserted between a producer and consumer and perform numerous channel functions. Electronic marketing channels employ the Internet to make products and services available for consumption or use by consumer or business buyers. Vertical marketing systems are professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact. There are three major types of vertical marketing systems (VMSs). A corporate VMS combines successive stages of production and distribution under a single ownership. A contractual VMS exists when independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone. An administered VMS achieves coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.
Describe factors that marketing executives consider when selecting and managing a marketing channel.
Marketing executives consider three questions when selecting and managing a marketing channel and intermediaries. (1) Which channel and intermediaries will provide the best coverage of the target market? Marketers typically choose one of three levels of market coverage: intensive, selective, or exclusive distribution. (2) Which channel and intermediaries will best satisfy the buying requirements of the target market? These buying requirements fall into four categories: information, convenience, variety, and pre- or postsale services. (3) Which channel and intermediaries will be the most profitable? Here marketers look at the margins earned (revenues minus cost) for each channel member and for the channel as a whole.
Explain what supply chain and logistics management are and how they relate to marketing strategy.
A supply chain refers to the various firms involved in performing the various activities required to create and deliver a product or service to consumers or industrial users. Supply chain management is the integration and organization of information and logistics across firms for the purpose of creating value for consumers. Logistics involves those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost. Logistics management includes the coordination of the flows of both inbound and outbound products, an emphasis on making these flows cost effective, and customer service. A company’s supply chain follows from a clearly defined marketing strategy. The alignment of a company’s supply chain with its marketing strategy involves three steps. First, a supply chain must reflect the needs of the customer segment being served. Second, a company must understand what a supply chain is designed to do well. Supply chains range from those that emphasize being responsive to customer requirements and demands to those that emphasize efficiency with the goal of supplying products at the lowest possible delivered cost. Finally, a supply chain must be consistent with the targeted customer’s needs and the company’s marketing strategy. The Dell and Walmart examples in the chapter illustrate how this alignment is achieved by two market leaders.
channel conflict
Arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals.
customer service
The ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience.
disintermediation
Channel conflict that arises when a channel member bypasses another member and sells or buys products direct.
dual distribution
An arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.
exclusive distribution
A level of distribution density whereby only one retailer in a specific geographical area carries the firm’s products.
intensive distribution
A level of distribution density whereby a firm tries to place its products and services in as many outlets as possible.
logistics
Those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost.
marketing channel
Consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.
multichannel marketing
The blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.
reverse logistics
A process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal.
selective distribution
A level of distribution density whereby a firm selects a few retailers in a specific geographical area to carry its products.
