Chapter 10: Marketing Channels Flashcards
A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value
Value delivery network
A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user
Marketing channel (distribution channel)
Gathering and distributing information about consumers, producers, and other actors and forces in the marketing environment needed for planning and aiding exchange
Information
Developing and spreading persuasive communications about an offer
Promotion
Finding and engaging customers and prospective buyers
Contact
Shaping offers to meet the buyers needs, including activities such as manufacturing, grading, assembling and packaging
Matching
Reaching an agreement on price and other terms so that ownership or possession can be transferred
Negotiation
Transporting and storing goods
Physical distribution
Acquiring and using funds to cover the costs of the channel work
Financing
Assuming the risks of carrying out the channel work
Risk taking
A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer
Channel level
A marketing channel that has no intermediary levels
Direct marketing channel
A marketing channel containing one or more intermediary levels
Indirect marketing channel
Disagreements among marketing channel members on goals, roles, and rewards—who should do what and for what rewards
Channel conflict
A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole
Conventional distribution channel
A channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or had so much power that they all cooperate
Vertical marketing system (VMS)
A vertical marketing system that combines successive stages of production and distribution under a single ownership—channel leadership is established through common ownership
Corporate VMS
A vertical marketing System in which independent firms at different levels of production and distribution join together through contracts
Contractual VMS
A contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process
Franchise organization
A vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties
Administered VMS
A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity
Horizontal marketing system
A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments
Multichannel distribution system
The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries
Disintermediation
Designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives
Marketing channel design
Stocking the product in as many outlets as possible
Intensive distribution
Giving a limited number of dealers the exclusive right to distribute the company’s products in their territories
Exclusive distribution
The use of more than one but fewer than all of the intermediaries that are willing to carry the company’s products
Selective distribution
Selecting, managing and motivating individual channel members and evaluating their performance over time
Marketing channel management
Planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet customer requirements at profit
Marketing logistics (physical distribution)
Managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
Supply chain management
A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible
Distribution center
Combining two or more modes of transportation
Multimodal transportation
The logistics concept that emphasizes teamwork—both inside the company and among all the marketing channel organizations—to maximize the performance of the entire distribution system
Integrated logistics management
An independent logistics provider that performs any or all of the functions required to get a clients product to market
Third party logistics (3PL) provider
