Chapter 14: Marketing Channels and Supply Chain Management Flashcards
Define Marketing Channel
The people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption.
What are Several Trends of Competitive Advantage
- If it is done right = efficient
- growth for company
- increased power of retailers
- greater role of info technology
Who are Channel Members
All parties in the marketing channel that negotiate with one another to buy and sell products. They facilitate the change of ownership between buyers and sellers and they move products from the manufacturer into the hands of the customers
Define the Supply Chain
A connected chain of all the business entities; internal and external to the company; in which they perform or support the marketing channel functions
Define Quantity as Overcome Discrepancies
The difference between the amount of products produced and the amount an end user (customer) wants to buy
Define Assortment as Overcome Discrepancies
When the consumer does not have all the items needed to receive full satisfaction; marketing channels assemble all products in one location
Define Temporal as Overcome Discrepancies
When the product is produced but consumers are not ready to buy; inventories are maintained in anticipation of demand
Define Spatial as Overcome Discrepancies
Buyers are all over buy producers are concentrated; making products available in convenient locations
Who are Channel Intermediaries and what are their functions?
Taking title, and owning the merchandise and control the terms of sale (Retailers and Merchant Wholesalers take this title)
Define Product Characteristic as a Factor in Deciding what Type of Channel to use
Whether the product is standardized or customized, the complexity of the product, and the gross margin of the product
Define Buyer Considerations as a Factor in Deciding what Type of Channel to use
How often the product is purchased and how long the buyer is willing to wait to receive the product. Affects the channel members used and the length of channel
How many channel functions are performed
Three basic functions, although, channel members may come and go, the channel is quite fluid, but these 3 must be performed
Define Contacting and Promoting as a Transitional Function
Contacting potential customers, promoting products, and soliciting orders
Define Negotiating as a Transitional Function
Determining how many goods or services to buy and sell, the type of transportation to use, when to deliver, and method and timing of payment
Define Risk Taking as a Transitional Function
Assuming the risk of owning inventory
Define Physically Distributing as a Transitional Function
Transporting and sorting goods to overcome temporal and spatial discrepancies
Define Storing as a Transitional Function
Maintaining inventories and protecting goods
Define Sorting as a Transitional Function
Overcoming discrepancies of quantity and assortment
Define Sorting Out as a Transitional Function
Breaking down a heterogeneous supply into separate homogeneous stocks
Define Accumulating as a Transitional Function
Combining similar stocks into la larger homogeneous supply
Define Allocating as a Transitional Function
Breaking a homogeneous supply into smaller and smaller lots (breaking bulk)
Define Assorting as a Transitional Function
Combining products into collections or assortments that buyers want available at one place
Define Researching as a Facilitating Function
Gathering information about other channel members and customers
Define Financing as a Facilitating Function
Extending credit and other financial services to facilitate the flow of goods through the channel to final consumers
What are the Three Types of Marketing Channels
- Consumer Product Channel
- Business and Industrial Product Channel
- Alternative Channel Arrangements
Define Direct Marketing Channels as a way to reach consumers (In Consumer Product Channel)
- No intermediaries
- Ex. Producer-Owned Stores
Define Indirect Marketing Channels as a way to reach consumers (In Consumer Product Channel)
- Can vary in number of intermediaries
- Agents and Brokers do not take this title
Define Retail Channel as a way to reach consumers (In Consumer Product Channel)
Very common; as retail is large and can buy in large quantities direct from the manufacturer
Define Wholesale Channel as a way to reach consumers (In Consumer Product Channel)
Used for low-cost items that are frequently purchased
Define Direct Channels that is common in business and industrial markets
Typically in these markets
- Ex. Manufacturers that buy large quantities of raw material, equipment, etc. directly from other manufacturers
Define Indirect Channels that is common in business and industrial markets
Industrial Distributor: Companies that sell standardized items of moderate or low value, often use an industrial distributors. Or companies that cannot afford their own sales force will rely on manufacturer’s representatives or selling agents to sell to industrial distributors
Define Multiple Channels as an Alternative Channel Arrangement
Dual Distributor; more than one channel used
Define Non Traditional Channels as an Alternative Channel Arrangement
Help to differentiate a product such as the internet, mail orders, infomercials, vending machines
Define Strategic Channel Alliances
Cooperative agreements between firms to use one of the manufacturer’s already established channels, particularly useful in global markets
What are some factors affecting channel choice
Supply chain managers use answer many questions before choosing a marketing channel. The final choice depends on their desired distribution channel objectives in terms of coverage, costs, and control of their products. To determine the final choice, means, first analyzing several factors that often interact with each other. These factors can be grouped as
Define Market Factors as a Factor affecting Channel Choice
- Who (consumer or industrial buyer)
- What (product quantity)
- Where (geographic location, size of market)
- When (seasonal or not)
- How (large or small quantities)
Define Product Factors as a Factor affecting Channel Choice
- Complexity (complex, customized and expensive use more of a direct channel)
- Product Life Cycle (can change over the life cycle as the product gains acceptance)
- Delicacy of the product (perishables require shorter channels - quicker)
Define Producer Factors as a Factor affecting Channel Choice
Direct Channel (more resources, financial, managerial, marketing, more control, more control desired with pricing, positioning, image, customer support with manufacturer, wishes to provide more)
Define the Levels of Distribution Intensity
- Intensive
- Selective
- Exclusive
Define Intensive Level of Distribution
- Product availability in every outlet, where potential customers will want to buy
- Very easily accessible
- Manufacturers sell to a large percentage of wholesalers willing to stock their products
Define Selective Level of Distribution
- Few chosen, so customers must see out the product
- Manufacturer’s desire to maintain a superior product image to be able to charge a premium price
Define Exclusive Level of Distribution
Buyers must search, so generally, these are speciality goods; exclusive image is reinforced
Define Channel Power
Channel members’ capacity to control or influence the behaviour of other channel members
Define Channel Control
When one channel member intentionally affects another member’s behaviour; control is achieved when one member assumes leadership
Define Channel Leadership
Channel captain (which channel member it is, depends on the channel); varies by channel.
Define Channel Conflict
Inequitable channel relationships can lead to channel conflict; clash of goals and methods amongst distribution members (not always a bad thing)
Define Horizontal (Type of Conflict)
Among channel members at the same level; when manufacturers practise dual distribution
Define Vertical (Type of Conflict)
This is more serious; between different levels in a marketing channel; most typically between manufacturer and wholesaler or manufacturer and retailer
Define Channel Partnering or Cooperation
Joint effort of channel members to create a supply chain that serves customers and creates a competitive advantage
- Because everyone wins; channel alliances and partnerships help supply chain managers to create channels that work
Define Supply Chain Management
The broad range of activities required to plan, control and execute a product’s flow, from acquiring raw materials and production through distribution to the final customer, in the most streamlined and cost-effective way possible.
Define Customer Driven Focus as to Supply Chain Management
Focuses on pulling products into the marketplace and partnering with supply chain members to increase customer value.
What is the Supply Chain Management Goal?
Being to coordinate and integrate all the activities performed by supply chain members into a seamless process from the source to point of consumption
What are the benefits of Supply Chain Management
Lowers the cost, Greater flexibility, improved customer service, higher revenues. (Lower costs in inventory, transportation, warehousing, and packaging)
Define Managing Logistics
Logistics is the process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption. The link connecting the logistical components is the logistical information system (Inventory Control, Order Processing, Production Scheduling, and Sourcing and Procurement)
Define the Logistics Information System
The Logistics Information System is the link connecting all the logistic components of the supply chain. Working together, the components of the logistics information system are the fundamental enablers of successful supply chain management.
Define the Supply Chain Team
Together, with the logistics information system, orchestrates the movement of goods, services, and information from source to consumer. Should include the external participants in the chain too
Define Sourcing and Procurement
Purchasing professionals are on the front lines of supply chain management. Biggest Contribution are the vendor relationships
- Plan strategies
- Develop Specifications
- Select Suppliers
- Negotiate Price and Service Levels
Define Production Scheduling
As more companies move toward mass customization, and away from mass marketing of goods, the need to stay on top of consumer demand is forcing manufacturers to make their supply chains more flexible. Flexibility is critical to a manufacturer’s success when responding to dramatic swings in demand. To meet consumers’ demand for customized products, companies must adapt their manufacturing approach or even create a completely new process.
- Order is placed by consumer, then production scheduled (mass customization, build to order, pulling product through)
Define Order Processing
Becoming more automated through the use of computer technology known as Electronic Data Interchange (EDI). The basic idea of EDI is to replace the paper documents that usually accompanies the business transactions, such as purchase orders and invoices, with electronic transmissions of the needed information
- Proper order processing is critical for good service
Define Inventory Control
Inventory Control System develops and maintains an adequate assortment of materials or products to meet a manufacturer’s or a customer’s demand.
- Goal: To keep inventory as low as possible while maintaining an adequate supply
