chapter 14 Flashcards
economic utility
form
time
place
possession
horizontal integration
the process of a company increasing production of goods or services at the same part of the supply chain. A company may do this via internal expansion, acquisition or merger.
vertical integration
degree of ownership a firm has of its marketing channel. The firm may own distributors and orgs that provide ancillary services
example, might hold a farm, a produce distribution business and a green grocery.
marketing channel
is the people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption.
primary channel partipants
intermediaries such as wholesalers, distributors, retailers, agents and brokers who are part of the proactive marketing design for the channel
ancillary channel members
businesses and services whose efforts have been generic but would not work without them.
ex: transportation (trucking)
direct channel
formed when the supplier markets and sells directly to the buying organization or end user. No additional primary intermediates are involved.
channel pattern
particular design or arrangement of various intermediates that perform channel functions.
ex: instead of going right to end user it would go through sales and marketing flow for large accounts
trade credit
payment term provided to end users by distributors and other channel intermediary to finance purchases
functional spin off
alternative to vertical integration
ancillary services are provided most efficiently by experets in each service.
logistics
the management of the movement, sorting, and storage of goods in the marketing channel
supply chain management goal
create value for customers through effective and efficient flow of materials, components, finished goods, and services.
physical distribution center
system designed aimed at minimizing costs while maintaining a given level of customer service through the simultaneous management of three elements
- inventory
- transportation
- warehousing
distribution center
channel designs that focus on rapid movement of goods rather than on storage of large quantities of goods
warehouses
slow movement of goods and focus on storage
materials requirements planning
knows the storage, movement, and assortment of goods in business logistics system
inventory management
largest cost is often associated with logistic system
intensity of distribution
how many distributors in a territory
competitive edge in supply chain
design it “the way a customer buys” in that the marketing channel is deferentially invisible to the customer
Dual distribution
channel pattern that uses more than one channel design, each intended to reach a different tarket market.
ex: Goodyear tire can go to a logistics provider which then goes to integrated retailers such as franchised dealers, or to a multi-brand distributor that goes to independent retailers such as sears, or a large customer direct channel such as honda
multi-distrubtion
multiple channels of the same design in a given territory—customers within a segment with similar needs will expect locational convenience
when to NOT use distributor
product is highly customized
- new or innovative
- technically sophisticated
- missionary selling is required
- large buyers are geographically concentrated
soft bases of power
qualitative
expert power: expertise, information
referent power: identification
hard bases of power
quantitative and specific
reward power: margins, incentives, monetary promotions
coercive power: only effective in asymmetric relationships
legitimate power: contractual obligation
horizontal competitors
intermediaries at the same level in a channel, usually existing in multi distribution
contractual channels
aim to control through biding agreements with otherwise independent intermediaries
affiliate network
sales channel more than it is a distribution channel
ex: link on a website that refers to a product or service supplier site
hubs
are a generic class of web sites that make markets—bring buyers and sellers together to facilitate transactions
