Chapter 14 - Managing Marketing Channels and Supply Chains Flashcards
Define: Intermediary
any intermediary between manufacturer and end user markets.
Define: Marketing Channel
Individuals and firms in the process of making a product or service available for use or consumption by consumers or industrial users.
What do intermediaries do?
Perform a transactional function that involves buying, selling, and risk taking because they stock merchandise in anticipation of sales.
Define: Direct Channel
A marketing channel where a producer and ultimate consumers deal directly with each other.
Define: Indirect Channel
A marketing channel where intermediaries are inserted between the producer and consumers and perform numerous channel functions.
Define: Business distributor
Performs a variety of marketing channel functions, including selling, stocking, delivering a full product assortment, and financing for business goods and services.
Define: Electronic marketing channels
Employ the internet to make goods and services available for consumption or use by consumers or business buyers.
Define: Direct marketing channels
Allow consumers to buy products by interacting with various advertising media without a face to face meeting with a salesperson.
Define: Multichannel distribution
An arrangement whereby a firm reaches buyers by employing two or more different types of marketing channels.
Define: Strategic Channel Alliances
A practice whereby one firms marketing channel is used to sell another firms products.
Define: Merchant wholesalers
Independently owned firms that take title to the merchandise they handle.
Define: Manufacturers Agents
Work for several producers and carry non-competitive, complementary merchandise in an exclusive territory; also called manufacturers representatives.
Define: Selling Agents
Represent a single producer and are responsible for the entire marketing function of that producer.
Define: Brokers
Independent firms or individuals whose principal function is to bring buyers and sellers together to make sales.
Define: Vertical Marketing Systems (VMS)
Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.
Define: Corporate Systems (Corporate Vertical Marketing Systems)
The combination of successive stages of production and distribution under a single ownership is a corporate verticle marketing system.
Define: Contractual Systems (Contractual Vertical Marketing System)
Under a contractual vertical marketing system, independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone.
Define: Franchising
Contractual arrangement between a parent company (a franchisor) and an individual or firm (a franchisee) that allows the franchise to operate a certain type of business under an established name and according to specific rules.
Give 4 factors effecting channel choice with brief descriptions.
Environmental factors - factors such as technological advancements, society changes, and trends.
Consumer factors - Who are the customers? When, where, and how do they buy?
Product Factors - how sophisticated is the product? How easy to cut off unnecessary market channels with this product?
Company factors - a firms financial, human, or technological capabilities affect channel choice.
Give three aspects of “Channel Design Considerations”
Target Market Coverage - Intensive distribution (many outlets), exclusive distribution (solo outlets), selective distribution (few outlets)
Satisfying Buyer Requirements - Information, convenience, variety, and attendant services.
Profitability - Margin minus cost
Define: Channel Conflict
Arises when one channel member believes another channel member is engaging in behaviour that prevents it from achieving its goals.
Define: Disintermediation
Channel conflict that arises when a channel member bypasses another member and sells or buys products direct.
Define: Dual distribution
It’s a situation where a manufacturer distributes through its own vertically integrated channel in direct competition with wholesalers and retails that also sell its products. This may violate the competition act.
Vertical integration: is it legal?
Like dual distribution, not illegal, but could be taken legal action if seen as a way to unduly eliminate competition.
Exclusive dealing: is it legal?
Occurs when a supplier requires channel members to sell only its product or restricts distributors from selling directly competitive products. This action is prohibited under the competition act.
Tied Selling: what is it, and is it legal?
occurs when a supplier requires a distributor purchasing some products to buy others from the supplier. This action is prohibited under the Competition Act.
Resale of Market Restrictions: what is it and is it legal?
Refers to the suppliers attempt to stipulate to whom distributors may resell the suppliers products and in what specific geographical areas they may be sold. This practice is subject to review under the Competition Act if they are deemed to be restraining or lessening competition.
Define: Logistics Management
The practice of organizing the cost effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements.
Define: supply chain
a sequence of firms that perform activities required to create and deliver a good or service to consumers or industrial users.
Define: supply chain management
the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to customers.
Define: Total logistics cost
Expenses associated with transportation, materials handling and warehousing, inventory, stock outs, order processing, and return goods handling.
Define: Customer service
The ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience.
Transporting goods by rail: relate 3 advantages and 3 disadvantages
Advantages: full capability, extensive routes, low cost
Disadvantages: some reliability (damage problems), not always complete pickup and delivery, can be slow
Transportation by truck: 3 advantages and 3 disadvantages
Advantages: complete pickup and delivery, extensive routes, fairly fast
Disadvantages: size and weight restrictions, higher cost, more weather sensitive
Transportation by Air: 3 advantages and 2 disadvantages
Advantages: fast, low damage, frequent departures
Disadvantages: high cost, limited capability
Transportation by Pipeline: 3 advantages and 2 disadvantages
Advantages: low cost, very reliable, frequent departures
Disadvantages: limited accessibility, slow
Transportation by water: 2 advantages and 3 disadvantages
Advantages: low cost, huge capacities
Disadvantages: slow, limited routes and schedules, more weather sensitive.
Define: Materials handling
moving goods over short distances into, within, and out of warehouses and manufacturing plants.
Define: Just-in-time concept
an inventory supply system that operates with very low inventories and requires fast, on-time delivery.
Define: Vendor-managed inventory
an inventory management system whereby the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items.
Define: reverse logistics
a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistributing, or disposal.
