Chapter 15 Flashcards
decisions and activities that make products available to customers when and where they want to purchase them
distribution
all the activities associated with the flow and transformation of products from raw materials through to the end customer
supply chain
total set of managerial activities used by an organization to transform resource inputs into products
operations management
planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers’ needs and wants
logistics management
in its broadest form, regers to the processes that enable the progress value from raw material to final customer and back to redesign and final disposition
supply management
set of approaches used to integrate the functions of operations management, logistics management, supply management, and marketing channel management so products are produced and distributed in the right quantities, to the right locations, and at the right time
supply-chain management
technology is a supply chain management issue
- information technology has created almost seamless distribution processes
- information sharing has reduced costs
- increased speed, flexibility, and cooperation
a group of individuals and organizations that direct the flow of products from producers to customers within the supply chain
marketing channel
middlemen that link producers to other intermediaries or ultimate consumers through contractual arrangement or through the purchase and reselling of products
marketing intermediaries
marketing activities performed by channel members
- marketing information
- marketing management
- facilitating exchanges
- promotion
- price
- physical distribution
why marketing channels are significant
- marketing channel decisions influence the rest of the marketing mix
- Channel decisions determine:
- -a products market presence
- -buyer’s accessibility to the product
- effective marketing channels required for organizational success
- entail long term commitments among variety of firms
- -difficult to change/undo marketing channel decisions
having products available when the customer wants them (movies on demand)
time utility
created by making products available in locations where customers wish to purchase them (sock vending machine at bowling alley)
place utility
the customer has access to the product to use or to store for future use (ownership)
possession utility
assembling, preparing, or otherwise refining the product to suit individual customer needs
form utility
an independent business that takes title to products and carries inventories
- usually sells standardized items, although some carry a wide variety of items
- cost effective when a product has a broad market appeal, is easily stocked and services, is sold in small quantities and is needed on demand
industrial distributor
independent businessperson who sells complementary products of several producers in assigned territories and is compensated through commissions
manufacturers’ agent
the use of two or more marketing channels to distribute the same products to the same target market
dual distribution
an agreement whereby products of one organization are distributed through the marketing channels of another
strategic channel alliance
components to selecting marketing channels:
- customer characteristics
- product attributes
- type of organization
- competition
- environmental forces
- characteristics of intermedediaries
using all available outlets to distribute a product (convenience products such as coke, pringles)
intensive distribution
using only some available outlets in an area to distribute a product (shopping products–iPods, televisions)
selective distribution
using a single outlet in a fairly large geographic area to distribute a product (specialty products–haute couture, BMWs)
exclusive distribution
dominant leader of a marketing channel or supply channel
channel captain
ability of one channel member to influence another member’s goal achievement
channel power
- enables retailers, wholesalers, suppliers, and logistics providers to:
- –speed up inventory replenishment
- –improve customer service
- –cut the costs of bringing products to cus
- a marketing channel should be viewed as a unified supply chain
- members should work toward common objectives
- channel member tasks must be clearly defined
channel cooperation
_____________occurs when:
- self-interest creates misunderstanding about role expectations of channel members
- communication is poor between channel members
- there is increased use of multiple channels has increased the chance for miscommunication and conflict
channel conflicts
combines 2 or more stages of the marketing channel under one management
vertical integration
marketing channel managed by a single channel member to achieve efficient, low-cost distribution aimed at satisfying target market customers (corporate, administered, contractual)
vertical marketing systems
- combining organizations at the same level of operation under one management
- creates economies of scale
- not the best method for improving distrbution
horizontal channel integration
activities used to move products from producers to consumers and other end users
physical distribution
the contracting of physical distribution tasks to third parties
outsourcing
the time needed to complete a process
cycle time
the receipt and transmission of sales order information
order processing
computerized means of integrating order processing with production, inventory, accounting, and transportation
electronic data interchange (EDI)
developing and maintaining adequate assortments of products to meet customers’ needs
inventory management
shortages in products that can result in brand switching, lower sales, loss of customers
stockouts
the inventory level that signals the need to place a new order
reorder point
the average time lapse between placing the order and receiving it
order lead time
rate at which a products inventory is used or sold during a specific time period
usage rate
amount of extra inventory a firm keeps to guard against stockouts resulting from above-average usage rates and/or longer-than-expected lead times
safety stock
inventory-management approach in which supplies arrive just when needed for production or resale
Just-in-time (JIT)
physical handling of tangible goods, supplies, and resources
- involves transportation from points of production to points of consumption
- efficient materials handling can reduce costs, the number of times a good is handled, improve customer service and increase customer satisfaction
- RFID–radio waves used to track materials
material handling
one or more boxes are placed on a pallet or skid; these units then can be loaded efficiently by mechanical means such as forklifts, trucks, or conveyer systems
unit loading
the consolidation of many items into a single, large container that is sealed at its point of origin and opened at its destination
containerization
the design and operation of facilities for storing and moving goods
warehousing
company-operated facilities for storing and shipping products
private warehouses
storage space and related physical distribution facilities that can be leased by companies
public warehouses
runs the risk of being viewed as anti-competitive
dual distribution
courts have conflicting opinions on restricted intermediaries to certain sales territories
restricted sales territories
a supplier furnishes a product to a channel member with the stipulation that the channel member must purchase other products as well
–courts only accept these when the supplier is the only one able to provide products of a certain quality and the intermediary can also carry competing products
tying agreement
a manufacturer forbids an intermediary to carry products of competing manufacturers
–only considered legal if the deal blocks competitors from less than 15% of the market, the sales volume is small and the producer is smaller than the retailer
exclusive dealing
producers have the right to choose channel members
refusal to deal
