Chapter 12 Flashcards
What does place mean in distribution?
Means making the goods and services available where and when customers need them.
What is a distribution channel?
A series of firms or individuals that help in the movement of a product from the producer to the final customer
Includes:
- manufacturers
- wholesalers
- retailers
What is a channel level?
A layer of intermediaries that perform some work in bringing the product closer to the buyer
What are 5 reasons for choosing a direct channel?
1) greater control
2) lower cost
3) direct contact with customer needs
4) quicker response or change in marketing mix
5) suitable middleman not available
Why are marketing intermediaries used?
1) Greater efficency in making foods available to target markets
2) The manufacturer can achieve more on its own
3) match supply and demand
What are functions of the Distribution Channel? (8)
1) Risk taking
2) Information
3) promotion
4) contact
5) matching (S&D)
6) negotiation
7) physical distribution
8) financing
What are 4 regrouping activities?
1) Allocating (bulk-breaking)
- start with large quantity, convert to smaller
2) Assorting
- Creating variety
3) Sorting
- Separate products based on a quality
4) Accumulating (making bulk)
- small quantities to large
What are two types of channel systems?
1) Direct
2) Indirect
-vertical marketing
-traditional
What are 3 types of vertical marketing systems?
1) corporate
- common ownership at different levels of the channel
2) contractual
- contractual agreement among channel members
3) Administered
- Leadership is assumed by one or a few dominant members
When will the channel be the most effective?
When all members cooperate to attain overall goals and satisfy the target market
When does conflict occur in the channels?
1) horizontal conflict
- at the same channel level, retailer to retailer
2) vertical conflict
- cuts between different levels, manufacturer to retailer
Conflict must be managed for channel to perform well
What types of conflict arise?
1) Differences in goals
2) Drive for autonomy
3) excessive use of power and influence attempts
4) communication problems
5) disagreements over resource allocation
What are the 3 degrees of market exposure?
1) selective
2) exclusive
3) intensive
What’s a Horizontal Marketing System?
Two or more companies at the same channel level working together
- McDonald’s inside a Walmart
What are the steps of the Logistics System?
Total Cost
Warehousing
Inventory
Order Processing
Transportation
What’s the most important step in the logistics system?
Minimizing the cost of transportation
What are the three goals of the Logistics system?
1) Provide a targeted level of customer service at the lowest cost
2) Higher dist. cost/higher customer. service levels
3) Lower dist. cost/higher customer service levels
What are the 5 transportation methods?
1)Rail
- bulk, inexpensive
2) Trucks
- door-to-door
3) Water
- low cost, low value, slow
4) Pipeline
- reliable, limited
5) Air
- high cost, fast, high-value
What is intermodel transportation?
Combining two or more transportation methods
Piggyback = rail + truck
BirdyBack = air + truck
FishyBack = truck + water
How are transportation rates influenced?
1) distance
2) volume/weight
3) value
What’s time utility?
When companies make sure customers get their items at the right time
What’s a private warehouse?
Company owns the property
What’s a public warehouse?
Company rents the property
What are carrying costs?
Capital Costs
Storage costs
Service costs
What’s the Economic Order Quantity? (EOQ)
Right amount of products you should order to minimize total inventory costs.
What are distribution centers?
Special warehouses designed to speed up the flow of product movement into and out of the facility
