Chapter 10 Flashcards
Supply chains
Upstream partners- supply raw materials, components, parts, info, finances, and expertise needed to create a product or service
Downstream partners- Steve as distribution channels that link the firm and customers
Marketing channel or distribution
Set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user
Channel decisions
- affects every other marketing decision
- can lead to competitive advantage
- may involve long term commitments to other firms
Intermediaries/distributors
Can reduce the anon tic work done by both producer and consumers, less contacts needed
Why use intermediaries?
They create greater efficiency in making goods available to target markets. Marketing intermediaries transform the assortments of products made by producers into the assortments wanted by consumers.
Channel meme era add value by bridging the major time, place, and possession gaps that separate goods and services from those who use them.
Key functions performed by channel members
Gather and distribute information.
Develop and spread persuasive communications about an offer.
Find and engage customers and prospective buyers.
Shaping offers to meet the buyer’s needs, including activities such as manufacturing, grading, assembling, and packaging.
Negotiation- Reaching an agreement on price and other terms so that ownership or possession can be transferred.
To help fulfill complete transactions
Physical distribution- Transporting and storing goods
Financing- Acquiring and using funds to cover the costs of the channel work.
Assuming risks of carrying out the channel work.
Channel level
A layer of intermediaries that performs work in bringing the product and its ownership closer to the final buyer
Direct marketing channels
No intermediary levels
Indirect marketing channels
One or more intermediary levels
Types of flows that connect the institutions in the channel
Physical flow of products Flow of ownership Payment flow Information flow Promotion flow
Channel conflict
Disagreements among marketing channel members on goals, roles, and rewards
Horizontal conflict
Occurs among firms at the same level of the channel
Vertical conflict
Occurs between different levels of the same channel
Conventional distribution channel
Consists of one or more independent producers, wholesalers, and retailers. Each is a separate business seeking to maximize its own profits. No channel member has much control over the others and no formal means exists for assigning roles and resolving channel conflict
Vertical marketing system (VMS)
Consists of producers, wholesalers, and retailers acting as a unified system. One channel member owns the other, has contracts with them, or worlds so much power that they just all cooperate.
Three types:
- corporate
- contractual
- administered
Corporate VMS
Combines successive stages of production and distribution under single ownership
Contractual VMS
Consists of independent firms at differ levels of production and distribution that join together through contracts
Administered VMS
Coordinates successive stages of production and distribution through the size and power of one of the parties
Horizontal marketing system
Town or more companies at one level join together to follow a new marketing opportunity
Multi channel distribution system
Refers to a single firm that sets up toe or more marketing channels to reach one or more customer segments
Disintermediation
Occurs when product or service producers cut out marketing channel intermediaries or when radically new types of channel intermediaries displace traditional ones
Marketing channel design
Involves designing effective marketing channels by:
- Analyzing customer needs
- Setting channel objectives
- Identifying major channel alternatives
- Evaluating the alternatives
Major channel alternatives
Types of intermediaries refers to channel members available to carry out channel work
Number of intermediaries used at each level (three strategies)
Intensive distribution- producers of convenience products and common raw materials; stick their products in as many outlets as possible
Exclusive distribution- limited the number of intermediaries; producer gives only a limited number of dealers the exclusive right to distribute its products in their territories
Selective distribution- intensive and exclusive distribution; use of more than one but fewer than all fo the intermediaries who are willing to carry a company’s products
The responsibilities of each channel member must be determined.
Marketing channel management
Calls for selecting, managing, and motivating individual channel members and evaluating their performance over time
