chapter 12 Flashcards
marketing channels
sets of interdependent organisations participating in the process of making a product or service available for use or consumption. it performs the work of moving goods from producers to consumers. it overcomes the time, place, and possession gaps that separate goods and services from those who want or need them.
the marketing channel system
the particular set of marketing channels a firm employs, and decisions about it are among the most critical ones management faces.
push strategy
uses the manufacturer’s sales force, trade promotion money, or other means to induce intermediaries to carry, promote, and sell the product to end users. this strategy is appropriate when there is low brand loyalty in a category, brand choice is made in-store, the product is an impulse item, and product benefits are well understood.
pull strategy
when the manufacturer uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries, thus inducing the intermediaries to order it. this strategy is appropriate when there is high brand loyalty and high involvement in the category, when consumers are able to perceive differences between the brands, and when they choose the brand before they go to the store.
multichannel marketing
using two or more marketing channels to reach customer segments in one market area. multichannel customers can be more valuable to marketers. companies are increasingly employing digital distribution strategies, selling directly online to customers or through e-merchants who have their own websites.
omnichannel marketing
occurs when multiple channels work seamlessly together and match each target customer’s preferred ways of doing business, delivering the right product information and customer service regardless of whether customers are online, in-store, or on the phone.
integrated marketing channel system
the strategies and tactics of selling through one channel reflect the strategies and tactics of selling through one or more other channels. adding more channels gives companies three important benefits;
1. increased market coverage
2. lower channel cost
3. ability to do more customised selling
however, it can introduce conflict and problems with control and cooperation or two channels may compete for the same customers.
demand chain planning
refers to first thinking about the target market and then designing the supply chain backward from that point.
value network
a system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings. it includes a firm’s suppliers and its suppliers’ suppliers and its immediate customers and their end customers. it also incorporates valued relationships with others such as university researchers and government approval agencies.
forward flow
forward flow of activity from the company to the customer. functions such as storage and movement, title, and communications.
backward flow
backward flow of activities from the consumer to the company. functions such as ordering and payment.
manufacturer selling physical products/services require three channels
- sales channel
- delivery channel
- service channel
zero-level channel/direct marketing channel
consists of a manufacturer selling directly to the final customer.
one-level channel
contains one selling intermediary, typically a retailer.
two-level channel
contains two selling intermediaries, typically a wholesaler and a retailer.
three-level channel
contains three selling intermediaries, typically wholesalers, jobbers, and retailers.
reverse-flow channels
are important to:
1. reuse products or containers
2. refurbish products for resale
3. recycle products
4. dispose of products and packaging
reverse-flow intermediaries include recycling centres, trash-collection specialists, etc.
marketing channel service outputs
- desired lot size
- waiting and delivery time
- spatial convenience
- product variety
- service backup
providing more service outputs means increasing channel costs and raising prices.
desired lot size
the number of units the channel permits a typical customer to purchase on one occasion.
spatial convenience
the degree to which the marketing channel makes it easy for customers to purchase the product.
service backup
add-on services provided by the channel.
channel alternatives differ in three ways
- types of intermediaries (merchants, agents, and facilitators)
- numbers of intermediaries (exclusive, selective, and intensive distribution)
- terms and responsibilities of channel members (elements: price policy, conditions of sale, distributors’ territorial rights, and mutual services and responsibilities)
merchants
are wholesalers and retailers. they buy, take title to, and resell the merchandise.
agents
are brokers, manufacturers’ representatives, and sales agents. they search for customers and may negotiate on the producer’s behalf but do not take title to the goods.
facilitators
are transportation companies, independent warehouses, banks, and advertising agencies. they assist in the distribution process but neither take title to goods nor negotiate purchase or sales.
exclusive distribution
limits the number of intermediaries. is appropriate when the producer wants more knowledgable and dedicated resellers. this often includes exclusive dealing arrangements, especially in markets increasingly driven by price.
