Chapter 10: Distribution Strategy Flashcards
Administered System
A vertical marketing system with a higher degree of interorganizational planning than a conventional channel often brought about by having a strong channel leader.
Backward Integration
The purchase by wholesalers or retailers of channel members above them.
Channel of Distribution
The combination of institutions through which a seller markets products to organizational buyers or ultimate consumers.
Contractual System
A vertical marketing system that involves independent production and distribution companies entering into formal contracts to perform designated marketing functions.
Convenience Stores
Retailers whose primary advantages to consumers are location convenience, close-in parking, and easy entry and exit. They typically stock a limited number of items that consumers want to buy in a hurry, such as milk or soft drinks and include stores like 7-Eleven and PDQ.
Corporate System
A vertical marketing system involving single ownership of two or more levels of a channel such as a manufacturer owning a wholesale operation.
Direct Channels
Channels in which the manufacturer sells directly to a market without the use of intermediaries.
Direct Marketing
A direct channel in which the seller uses direct mail, telemarketing, direct-action advertising, catalog selling, cable selling, online selling, or direct selling through demonstrations at home or place of work to reach buyers.
Exclusive Distribution
An approach to distribution that involves the manufacturer providing exclusive rights to intermediaries in particular territories.
Forward Integration
A manufacturer’s purchase of wholesalers or retailers who distribute its products.
Indirect Channels
Distribution channels with one or more intermediaries.
Intensive Distribution
An approach to distribution that involves using as many wholesalers and retailers as possible to get broad distribution. It is commonly used with convenience goods.
Mass Merchandisers
Large retailers that carry broad product assortments and compete on the basis of a good selection in a number of different categories (e.g., Macy’s, Kroeger) or on the basis of lower prices on products in their large assortment (e.g., Walmart, Costco).
Multichannel Marketing
The use of traditional channels, such as stores and catalogs, along with electronic exchanges to better serve customers and build relationships with them.
Relationship Marketing
Marketing with the conscious aim to develop and manage long-term and/or trusting relationships with customers, distributors, suppliers, or other parties in the marketing environment.
Selective Distribution
An approach to distribution in which the manufacturer limits the use of intermediaries to the best available in a geographic area.The intermediaries are commonly selected on the basis of the service or sales organization available or reputation.
Specialty Stores
Stores that handle deep assortments in a limited number of product categories, such as The Gap, Batteries Plus, or Best Buy.
Total Distribution Costs
Concept that suggests that a channel of distribution should be viewed as a total system composed of interdependent subsystems and that objective of the system (channel) manager should be to optimize total system performance. This typically means the total system should minimize costs for a given level of service.
Vertical Marketing Systems
Channels in which members are more dependent on one another and develop long-term working relationships in order to improve the efficiency and effectiveness of the system.
Middleman (Marketing Intermediary)
An independent business concern that operates as a link between producers and ultimate consumers or organizational buyers.
Merchant Middleman (Marketing Intermediary)
A middleman who buys the goods outright and takes title to them.
Agent (Marketing Intermediary)
A business unit that negotiates purchases, sales, or both but does not take title to the goods in which it deals.
Wholesaler (Marketing Intermediary)
A merchant establishment operated by a concern that is primarily engaged in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods (usually in smaller quantities) to retailers or to organizational buyers.
Retailer (Marketing Intermediary)
A merchant middleman who is engaged primarily in selling to ultimate consumers.
Broker (Marketing Intermediary)
A middleman who serves as a go-between for the buyer or seller. The broker assumes no title risks, does not usually have physical custody of products, and is not looked upon as a permanent representative of either the buyer or the seller.
Manufacturers’ Agent (Marketing Intermediary)
An agent who generally operates on an extended contractual basis, often sells within an exclusive territory, handles noncompeting but related lines of goods, and possesses limited authority with regard to prices and terms of sale.
Distributor (Marketing Intermediary)
A wholesale middleman especially in lines where selective or exclusive distribution is common at the wholesaler level in which the manufacturer expects strong promotional support; often a synonym for wholesaler.
Jobber (Marketing Intermediary)
A middleman who buys from manufacturers and sells to retailers; a wholesaler.
Facilitating Agent (Marketing Intermediary)
A business firm that assists in the performance of distribution tasks other than buying, selling, and transferring title (i.e., transportation companies, warehouses, etc).
Buying (Transaction Function)
Purchasing products for resale or as an agent for supply of a product.
Selling (Transaction Function)
Contacting potential customers, promoting products, and soliciting orders.
Risk Taking (Transaction Function)
Assuming business risks in the ownership of inventory that can become obsolete or deteriorate.
Assorting (Logistical Function)
Creating product assortments from several sources to serve customers.
Storing (Logistical Function)
Assembling and protecting products at a convenient location to offer better customer service.
Sorting (Logistical Function)
Purchasing in large quantities and breaking into smaller amounts desired by customers.
Transporting (Logistical Function)
Physically moving products to customers.
Financing (Facilitating Function)
Extending credit to customers.
Grading (Facilitating Function)
Inspecting, testing, or judging products, and assigning them quality grades.
Marketing Information and Research (Facilitating Function)
Providing information to customers and suppliers, including competitive conditions and trends.
