Distribution Flashcards
What is a distribution channel?
A set of independent organizations that help make a product or service available for use or consumtion by consumer or business user
What is order processing?
The physical moving and distribution of goods
What are intermediaries
Certain channels that you distribute through
What percentage of retail price does distribution channels account for?
15-40%
What are the four external determinants of channel decisions?
- customer characteristics
- nature of the product
- nature of demand/location
- competition
- legal regulations
- local business practices
Why is distribution different for low-priced and high-priced goods?
Low-priced high turnover convenience products need intensive distribution
High value/priced products are adapted to a shorter narrower channel
What are the three types of market coverage?
intensive, selective, and exclusive
What is involved in controlling a channel?
When one member in the vertical distribution channel has its ability to control and influence the decisions and actions of other channel members
What is channel integration?
- vertical: controlling members at different levels of the channel, aka a distributor
- horizontal: controlling members at the same level of the channel, aka a competitor
What are the market and product factors of short channels?
- market: business users, geographically concentrated, large orders
- product: perishable, complex, expensive
What are market and product factors of long channels?
- market: consumers, geographically diverse, small orders
- product: durable, standardized, rather inexpensive
What are producer and competitive factors of short channels?
- producer: manufacturer has adequate resources to perform channel functions, broad product line, channel control is important
- competitive: manufacturer is satisfied with intermediaries’ performance in promotion
What are producer and competitive factors of a long channel?
- producer: manufacturer lacks adequate resources to perform channel functions, limited product line, channel control isn’t important
- competitive: manufacturer dissatisfied with intermediaries’ performance in promotion
What must a distribution contract consist of?
- contract duration
- geographical boundaries
- payment methods
- product and conditions of sale
- means of communication
How do you control a distribution channel?
- define performance objectives (ie sales turnover, market share growth rate, etc)
- evaluate continuously
- terminate contracts if they are not performing well
What is important in managing logistics?
- order handling
- export documents (transportation, banking, commercial, governmental)
- transportation
- freight forwards (DHL, FedX, etc)
- inventory at factory base
- storage/warehousing
- packaging
- third party logistics
What is the fastest growing market sector in Europe?
online retail, about 8-9% of total retail in Europe, US and China
What is the main reason for lack of growth in large scale retailing?
Legislation, in Europe and Japan retailing is subject to drastic legislation
What are some special issues in international retailing?
- legislation
- internationalization of retailing
- trade marketing
- cross-border alliances in retailing
How do channel members add value?
They add value by bridging major time, place, and possession gaps that separate the products from the people who want them
What is a vertical marketing system?
It provides channel leadership and consists of producers, wholesalers, and retailers acting as a unified system. It consists of:
- corporate marketing systems
- contractual marketing systems
- administered marketing systems
What is a corporate marketing system?
It integrates successive stages of production and distribution under single ownership
What is a contractual marketing system?
It consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies of scale impact that each could not obtain alone.
The most common type is the franchise organization, where a channel member called a franchiser links several stages in the process
What is an administered marketing system?
Where leadership is not assumed through common ownership or contractual ties but through the size and power of one or a few of the dominant channel members
What is a horizontal marketing system?
When two or more companies at one level join together to follow a new marketing opportunity
By working together they can combine financial, marketing, or production resources to accomplish more together than once could do alone
What is a multi-channel distribution system?
This occurs when a single firm sets up two or more marketing channels to reach one or more customer segments
