Chapter 3 Flashcards
5 External Environment Factors
Consists of all external uncontrollable factors within which marketing channels exist
- Economic
- Sociocultural
- Competitive
- Technological
- Legal
Major Economic Forces
- Recession
- Inflation
- Deflation
Channel Strategy during a recession
Manufacturers provide channel member support by financing high inventory costs.
Spending is down= reduced sales/profits & firms caught with high inventories
Channel Strategy during Inflation
- Reduce manufacturer’s product mix from higher-price to lower-price products
- Reduce inventory burden on members with:
- Streamlined product line
- Faster order processing & delivery
- Higher inventory turnover through stronger promotional support
* *Drop-offs in spending, fuel recessions**
Channel Strategy during Deflation
Pass cost-induced price increases through channel
when built-in cost pressures from labor contracts
were negotiated several years earlier
Prices decrease
Types of competition
- Horizontal
- Vertical
- Intertype
- Channel System
The Sociocultural Environment
- Pervades all aspects of a society
- Influences both national and international marketing channels
- Influences wide variations among channel structures worldwide
Sociocultural Developments
- Population Age Patterns
- Ethnic Mix
- Educational Trends
- Family or Household Structure
- Role of Women
The Technological Environment
Scanners & EDI (electronic data interchange), Computerized inventory management & Portable computers
*Helping retailers & wholesalers closely monitor success or failure of products they handle
The Legal Environment
The set of laws that impact marketing channels
• Continually evolving
• Affected by changing values, norms, politics, & precedents
• Knowledge of basics helps channel manager avoid serious & costly legal problems
Sherman Antitrust Act
1890; Fundamental antimonopoly law Public welfare best served through competition
Clayton Act
1914; Strengthen Sherman Antitrust Act; Prohibits specific practices among competing firms
Federal Trade Commission Act
1914; Established FTC
Power to investigate & enforce
Robinson-Patman Act
1936; Amendment to Clayton Act
Prohibits price discrimination
Allows price differentials to different customers under specific circumstances
Celler-Kefauver Act
1950; Amendment to Clayton Act
Prohibits vertical mergers & acquisitions
Dual Distribution, or multi-channel distribution
Producer or manufacturer uses 2 or more different channel structures for distributing the same product
Exclusive Dealing
Supplier requires its channel members to sell only its products or to refrain from selling directly to competitive suppliers
Full-line forcing
Supplier requires channel members to carry a full-line of its products in order to sell any particular products in supplier’s line
Price Discrimination
Supplier sells at different prices to the same class of channel members
Price Maintenance
Supplier dictates prices charged by channel members to their customers
Refusal to Deal
Supplier has right to refuse to deal with whomever they want as channel members
Resale Restrictions
Manufacturer attempts to stipulate to whom and in what geographical market channel members may resell the manufacturer’s products
Tying Agreements
Supplier sells a product to a channel member on condition that the channel member also purchase another product
Vertical Integration
Firm owns and operates organizations at other levels of the distribution channel
