Chapter_12_distribution and logistic Flashcards
What is marketing channel?
organized system of marketing institutions through which products, resources, information, funds, and/or product ownership flow from the point of production to the final user.
What is supply chain?
The connection and integration of all members of the marketing channel
Four factors that make supply chain management and distribution become the most important
- Have remained essentially invisible to the
customer. - If rank top of the list it has competitive advantage and true differentiation (Amazon).
- Important to provide time, place, and possession utility (enabling the ownership of product through providing credit) for buyers.
- It is expensive, must balance the needs of the customer with the needs of the firm
Definition of middle man
Someone between the customers and manufacturer (distributor, wholesaler)
What is financial advantage of middle man?
No need to incur cost to set store. Like corporate with Walmart.
Common mark up on food in store.
5%
Channel function
- Research
- Promotion
- Contact
- Matching
- Negotiating
- Physical Distribution
- Financing
- Risk Taking
Five marketing flows
- Physical flow
- Title flow
- Payment flow (reversed)
- Information flow (stakeholders between)
- Promotion flow
What is zero channel for customer marketing and industry marketing?
No intermediary （Dell website)
What is channel for customer buying product from Walmart?
level 1 channel
What is channel for customer buying product from small retailer?
Level 2 channel. The reason they buy from wholesaler because they don’t have big clout enough to buy from manufacturer directly.
What is Rack Jobber?
Additional intermediary, can be considered as independent wholesaler (newspaper/magazine bag in store)
Where is rack jobber in channels?
Can be level 2 channel as wholesaler or can be additional intermediary in level 3 channel
What is typical B2B marketing channel?
Level 0, manufacturer to industry customers
What is typical B2B marketing channel?
level 1
Industry distributor exists in level 1, 2, and 3 channels of B2B
True.
What involve in level 2 and 3 B2B marketing channel?
Manufacturer representative and manufacturer sales’ brunch
What is corporate VMS
Combined all the marketing channel under one ownership. For example Apple. owns the retailer stores.
What is contractural VMS
The store is owned by franchise system (Mcdonald’s) It has integrated contractural agreement.
What is administrate VMS
Conventional channel with one channel member (a manufacturer, wholesaler, or retailer) informally acting as the channel leader. (walmart)
How much percent of products in US using conventional marketing system?
60%
What are other marketing system?
Horizontal marketing system (integration horizontally, acquire competitors) and hybrid marketing system.
Forward integration and backward integration
Manufacturer owns retailer is forward, manufacturer owns supplier is backward. They belong to VMS
Example of hybrid marketing system
sears
Different between VMS and HMS
HMS acquires competitor, VMS acquires retailers/suppliers
Channel objectives and constrains
- Customer Characteristics
- Product Characteristics
- Middlemen Characteristics (luxury car for rural area)
- Competitive Characteristics (locations similar)
- Company Characteristics
- Environmental (laws and regulations)
What mean for intensity of market coverage?
How many retailers in same area.
• Intensive Distribution
• Selective Distribution
• Exclusive Distribution
Potential problems with channels members
- Price Policy
- Conditions of Sale ( product break, who gotta pay for that?)
- Territorial Rights (distributor wanna be your exclusive one)
- Mutual Services and Responsibilities
What problems wit price policy?
independent retailer will mark up the price. So have some agreement about the price is going to be.
What is example of territorial right?
If someone want to be your exclusive distributor, have some clause in contract.
How to tell if a distributor is qualified?
- Average Inventory Levels
- Customer Delivery
- Treatment of Lost and Damaged Goods • Cooperation
- Services
Dual distribution is acceptable unless you undermine he existing distribution channel
True
Tying contract is always illegal
True. Distributor can select goods they want to carry
What is the example of exclusive dealing?
Force retailer not carry competitor’s product. Unless retailers choose only carry one product as have a choice such as take money.
The legal issue of distribution channel
- Dual Distribution
- Restricted Sales Territories
- Tying Contracts
- Exclusive Dealing
- Refusal to Deal
Physical distribution definition
• Activities that deal with managing the movement of products within firms and through marketing channels.
What is the most expensive distribution elements in total distribution cost?
outbound transportation.
Logistics definition
Making right product in right place in right person with lowest cost.
Six elements in logistics
Transportation Materials Handling Order Processing Inventory Control Warehousing Packaging
Trucks is the most common transportation in US
True, about 75%
Criteria for Selecting Transportation
- Costs
- Transit Time • Reliability
- Capability
- Accessibility
Economic Order Quantity (EOQ)
see slide. When you get the result, that is the unit that keeps the lowest cost.
What is piggy-back?
Referring to truck and rail.
Birdie-back?
Air and truck
Trends in marketing channel
• Growth of Electronic Commerce
• Tremendous growth potential in consumer markets
• Shifting Power in the Channel
• Discount mass merchandise retailers,Walmart, Costco, and Target
• Category focused retailers (category killers),Home Depot and Lowe’s
• Outsourcing Channel Functions
• Growth of Direct Distribution and Non-store Retailing
Catalog and direct marketing
Direct selling
Home shopping networks
Online sales
Vending
• Growth of Dual Distribution
Allows manufacturers to offer the same merchandise through separate channels
