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cHAPTER 4 Flashcards

1
Q

will require defining the customer needs, clarifying objectives, looking at alternative systems that can meet these objectives, the cost of the channel and finally evaluating the various alternatives to hone in on the ideal channel system

A

Designing a suitable channel system

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2
Q

very similar to any other marketing task and has to start with segmentation-putting customers in similar groups based on their needs.

A

channel design and planning process

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3
Q

a plan for the distribution and movement of products and services from the producer to the customer.

A

Channel Design

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4
Q

also understood as the process involved in the development of new marketing channels that no one has tried before

A

Channel Design

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5
Q

it can also refer to the strategy of modifying existing channels.

A

Channel design

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6
Q

defined as “a chain of linked businesses or individuals through which a product or service passes from one person or firm to another.”

A

channel

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7
Q

first step in channel design decisions is to analyze the consumer needs and desires of the channel.

A

Step 1: Analyzing Consumer Needs

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8
Q

This involves understanding customers’ preferences, expectations, and behaviors regarding how they want to access and purchase products or services

A

Step 1: Analyzing Consumer Needs

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9
Q

It can be done by answering the following questions:
Do the customers want to buy from a nearby location, or are they willing to go to a place away from their homes to buy the product or service?
Do they want to purchase the product or service online, in person, or by phone?
Do they want specialized products or services or value breadth of assortment?
Do the consumers want add-on services with the main product, such as delivery, installation, repair, etc., or are they ready to get these services from some other place?

A

Step 1: Analyzing Consumer Needs

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10
Q

After analyzing consumer needs, the next step is to establish clear channel objectives

A

Step 2: Setting Channel Objectives

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11
Q

It means that the company, in this step, will have to state its marketing channel objectives according to the targeted level of customer service

A

Step 2: Setting Channel Objectives

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12
Q

For this, a company has to first identify different segments of consumers who want different service levels and then decide which segment they should serve along with the best channel for each of the selected segments.

A

Step 2: Setting Channel Objectives

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13
Q

The basic motive of the company for each segment is to minimize the total channel cost of meeting the requirements of customer service

A

Step 2: Setting Channel Objectives

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14
Q

Other factors that influence the channel objectives of a company include the company’s nature, its products, marketing intermediaries, competitors, and the environment.

A

Step 2: Setting Channel Objectives

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15
Q

For example, a company can decide between which marketing function to handle itself and which to give to the intermediaries through its size and financial situation. Besides, the companies selling perishable products may use more direct marketing so they can avoid delays and too much handling of the product.

A

Step 2: Setting Channel Objectives

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16
Q

In this step, businesses need to identify major alternatives for their distribution channel.

A

Step 3: Identifying Major Alternatives

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17
Q

This involves considering the types of intermediaries, determining the number of marketing intermediaries, and defining the responsibilities of channel members.

A

Step 3: Identifying Major Alternatives

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18
Q

STAGES IN CHANNEL PLANNING

A

Step 1: Analyzing Consumer Needs
Step 2: Setting Channel Objectives
Step 3: Identifying Major Alternatives
Step 4: Evaluating the Major Alternatives

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19
Q

can be considered based on the nature of the product, target market, and distribution strategy.

A

Different types of intermediaries

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20
Q

These can include brick-and-mortar stores, online retailers, department stores, supermarkets, or specialty shops

A

Retailers

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21
Q

These purchase products in bulk from manufacturers and distribute them to retailers or other businesses.

A

Wholesalers

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22
Q

Act as intermediaries between manufacturers and retailers, specializing in specific industries or geographical areas.

A

Distributors

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23
Q

facilitate transactions between buyers and sellers without taking ownership of the products.

A

Agents/Brokers

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24
Q

They earn commissions or fees for their services.

A

Agents/Brokers

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25
also known as clearing and forwarding agents (CFAs) or freight forwarders
Carrying & Forwarding Agents
26
they are intermediaries that handle the logistics of transporting goods, including customs clearance and arranging for the movement of cargo across borders.
Carrying & Forwarding Agents
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Carrying & Forwarding Agents: also known as
clearing and forwarding agents (CFAs) or freight forwarders
28
also known as third-party logistics (3PL) providers
Logistics service providers
29
are companies that specialize in managing and optimizing various aspects of a company's supply chain, including transportation, warehousing, and distribution.
Logistics service providers
30
Logistics service providers - also known as
third-party logistics (3PL) providers
31
Types of Intermediaries
Retailers Wholesalers Distributors Agents/Brokers Carrying & Forwarding Agents Logistics service providers
32
Number of Marketing Intermediaries
Intensive Distribution Exclusive Distribution Selective Distribution
33
The decision depends on various factors, such as the complexity of the product, target market coverage, and distribution efficiency
Number of Marketing Intermediaries
34
This involves placing products in as many outlets as possible to maximize market coverage.
Intensive Distribution
35
The basic aim of this strategy is to make the products available where and when the consumers want
Intensive Distribution
36
This approach suits low-cost or convenience products.
Intensive Distribution
37
It involves granting exclusive rights to a single intermediary or a limited number of intermediaries in a particular geographic area or market segment.
Exclusive Distribution
38
This strategy is often employed for luxury or specialized products.
Exclusive Distribution
39
It involves selecting a limited number of intermediaries based on their ability to effectively reach specific market segments.
Selective Distribution
40
This strategy is often used for products with unique characteristics or targeted customer segments
Selective Distribution
41
Each channel member has specific roles and responsibilities within the distribution process.
Responsibilities of Channel Members
42
The producer and the intermediaries must agree on the terms and responsibilities of each of the channel members.
Responsibilities of Channel Members
43
The two must agree on the terms and responsibilities of each of the channel members.
The producer and the intermediaries
44
They should agree with each other on the price policies, sale conditions, services to be performed by each party, and territorial rights.
Responsibilities of Channel Members
45
For this, the producer has to first prepare a list price and set a fair discount rate for the intermediaries.
Responsibilities of Channel Members
46
Also, it is important to carefully spell out the mutual duties and services (especially in the case of franchise and exclusive distribution channels).
Responsibilities of Channel Members
47
It is essential to define the territory of each channel member and be careful while placing new sellers.
Responsibilities of Channel Members
48
Once the major alternatives have been identified, businesses need to evaluate them based on factors, such as cost, efficiency, market reach, customer satisfaction, and compatibility with overall business objectives.
Evaluating the Major Alternatives
49
This evaluation helps in selecting the most suitable channel design alternative
Evaluating the Major Alternatives
50
it is essential to check each alternative against economic, control, and adaptive criteria.
Evaluating the Major Alternatives
51
With the help of this criteria, a company can compare the likely sales, profitability, and cost of different alternatives.
Economic Criteria
52
If a company is using intermediaries for distributing its products to consumers, it generally means giving the intermediaries some control over the marketing of the product
Control Criteria
53
Some intermediaries have more control over the marketing than others. Besides, keeping other things equal, a company always prefers to keep as much control as possible over itself.
Control Criteria
54
Even though the channels involve long-term commitments, a company tries to keep the channel as flexible as possible so that it can easily adapt to environmental changes.
Adaptive Criteria
55
Enumerate Step 4: Evaluating the Major Alternatives
Economic Criteria Control Criteria Adaptive Criteria
56
Change circumstances
Addition and elimination of products Additional service support required New territory coverage New institutional business lead Price increases and adverse consumer reactions Rationing of stock due to limited availability
57
ultimately gets reflected in the price the end-user or consumer the product or service has to pay.
COST OF THE CHANNEL SYSTEMS
58
Cost elements of the channel network include:
Margins of the channel partners Cost of transportation of goods between the company and the end user Cost of order booking and execution Cost of stock returns/date expired stocks taken back from the market Cost of any reverse logistics required- for example, getting empties back
59
SELECTING CHANNEL PARTNERS
1. Alignment with Business Objectives and Values 2. Market Reach and Customer Access 3. Reputation and Reliability 4. Financial Stability and Growth Potential 5. Technical and Support Capabilities 6. Industry Expertise and Capabilities 7. Sales and Marketing Capabilities 8. Commitment to Collaboration and Communication 9. Compliance and Ethical Standards 10. Flexibility and Adaptability
60
includes efforts in designing capacity-building programmers, training, promotion support, marketing research, hand of course working along with the company sales personnel
MOTIVATING CHANNEL MEMBERS
61
Enumerate MOTIVATING CHANNEL MEMBERS
Align your goals Develop an online training program Introduce a tiered system Provide certification incentives Communicate frequently and keep them up to date Offer high-level support Track and report progress
62
are all businesses or individuals involved in the process of moving products from the manufacturer to the end consumer.
Channel members
63
sometimes called intermediaries or middlemen
Channel members
64
work together to complete the various tasks it takes to get a product from production through to sale
Channel members
65
Channel members, sometimes called _____ or _____
intermediaries or middlemen
66
While a producer could decide to market and sell products directly to consumers, usually they use channel members to make the process more efficient.
Channel members
67
are companies that collaborate with manufacturers or producers to market and sell their products or services, acting as a distribution network rather than internal sales teams.
Channel partners
68
This starts at the time the channel member is recruited & continues right through the time that the channel member is associated with the company.
TRAINING CHANNEL PARTNERS
69
TRAINING CHANNEL PARTNERS
Product knowledge Sales Techniques Customer Service Brand Messaging Industry Regulations
70
THE POWER OF MOTIVATION
Referent Power Expert Power Legitimate Power Support Power Competition Power Reward Power Coercive Power
71
this power emanates (derive) out of the eminent position that the company holds in the industry.
Referent Power
72
implies that the company has some special knowledge that is value-adding to the channel partner.
Expert Power
73
enforcing any task expected of the intermediary as per the agreement or contract signed with the company.
Legitimate Power
74
using the channel partners for the distribution of its goods and services has the ability to give additional support to help increase volumes.
Support Power
75
competition faced by the firm in the market.
Competition Power
76
companies provide the incentives to the channel partners to perform additional tasks at specific points of time.
Reward Power
77
the power of ‘threat’ used by the company.
Coercive Power
78
CHANNEL DESIGN COMPARISON FACTORS
Efficiency Effectiveness Capacity Agility Consistency Reliability Integrity
79
the standard definition of input vs. output applies here also.
Efficiency
80
the analysis of how well the channel system meets its objectives.
Effectiveness
81
channel has been designed for a current volume of business handling a specific number of customers.
Capacity
82
the ability to handle changing demand patterns.
Agility
83
The channel network should deliver the same level of service day after day or month after month without fail.
Consistency
84
a measure of the commitment to the performance of obligations and the certainty with which commitment is met.
Reliability
85
channel system may have all qualities described above, but it still have to do business in a fair and above board manner.
Integrity
86
is a strategy that companies use to streamline their operations.
Vertical integration
87
It involves taking ownership of various stages of its production process.
Vertical integration
88
Companies achieve ______ through mergers or acquisitions or by establishing suppliers, manufacturers, distributors, or retail locations rather than outsourcing them.
vertical integration
89
often requires significant initial capital investment.
Vertical integration
90
TYPES OF VERTICAL INTEGRATION
Backward integration Forward Integration Balanced Integration
91
happens when a company moves a process in-house so as to take control of earlier, or upstream, steps in the supply chain process.
Backward integration
92
by contrast, forward integration is when a company takes ownership of processes further along, or downstream, in the supply chain, perhaps by taking control of distribution or sales of finished goods and services
Forward Integration
93
When a company vertically integrates processes both upstream and downstream, it’s pursuing balanced integration.
Balanced Integration
94
Naturally, this can occur only when a company sits somewhere in the middle of a supply chain (rather than at one end or the other).
Balanced Integration
95
can be trickier to pull off but can also offer greater benefits when executed well.
Balanced integration
96
employing existing channel partners like wholesalers & retailers or developing partners like C&F agents and distributors.
Outsourcing
97
OUTSOURCING DISTRIBUTION
Core competence Motivation Flexibility in operations Local Strengths Independent Operations Threat of replacement High local knowledge
98
their main job is distribution and hence, there is a focus.
Core competence
99
they are independent, and they are eligible to get all benefits of their operations.
Motivation
100
they are not bound by the strict rules of operations that a firm has to follow.
Flexibility in operations
101
can manage their customers and environment better as he has built up relationships over a period of time.
Local Strengths
102
he is answerable to himself to start with and if he is abiding by the rules set by the company, he can do well.
Independent Operations
103
the 3P operator knows that if he does not perform well, he can be replaced.
Threat of replacement
104
he knows his territory and its nuances extremely well and can keep a sharp lookout for his competitor’s activities.
High local knowledge
105
refers to selling goods and services outside of traditional brick-and-mortar stores.
Non-store retailing
106
Non-store retailing includes:
Selling door-to-door Selling through Vending Machines Selling through tele-shopping networks Selling through catalogues Other forms of direct selling Selling through electronic channels
107
are those that use the Internet to sell goods to consumers directly.
Electronic channels
108
Electronic channels as selling tools are dependent on the following:
Access of consumers to computers Access of consumers to the internet The arrangements are made by the companies to market their goods on the internet.
109
ADVANTAGES OF ON-LINE BUYING:
Buying is possible 24/7 May still take less time than going to a store and buying Good value for money in terms of pricing and other promotions Access to a wide assortment of goods
110
DISTRIBUTOR’S EARNING
The distributor’s earning depends on: The markup they get on the products they buy from the company and sell directly to the consumers. A commission is also paid on each such sale made by the distributor. A commission is also paid on the sales made by all the additional distributors recruited by each distributor. The ability or ease for the consumer to pay for the goods bought by him on the internet The ability of the producer of the goods to deliver the goods to the online buyers with the least waiting time.

distribution management (4 decks)

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