marketing lecture 8 (place) Flashcards
marketing channels
or channel of distribution –> individuals or firms that are involved in the process of making a product or service available for use or consumption for customers or industrial users
channel members is called
market intermediaries
terms for market intermediaries
- middleman –> any intermediary that comes in between manufacturers and end-users markets
- agent or broker –> any intermediary with legal authority acting on behalf of the manufacturer
- wholesaler –> an intermediary that sells to another intermediary, usually to retailers; usually acts on the consumer market
- retailers –> an intermediary that sells to customers
- distributors –> an impresice term –> intermediaries that performs distribution functions; acts on business market but can refer to wholesalers
- dealers –> a more imprecise term than distributor, same meaning as distributor, wholesaler, retailer, etc
functions performed by the intermediaries
- transactional functions
- logistical functions
- facilitating functions
transactional functions
- buying : buying inventory for resale or as an agent for supply of a product
- selling : contacting potential customers, seek orders, and promoting the product
- risk taking : assuming business risks of ownership as inventory can become obsolete or deteriorate
logistical functions
- assorting : make product assortments from several sources to serve customers
- storing : keeping and protecting products in a convenient place to offer better customer service
- sorting : order products in huge amounts and then breaking them down to smaller amount desired by customers
- transporting : physically moving the products to customers
facilitating functions
- financing : extending credits to customers
- grading : inspecting, testing, and judging products and assigning them quality grades
- marketing information and research : providing information to suppliers and customers, as well as about competitive conditions and trends
direct vs indirect marketing channels
direct : a producer and customer interact directly with each other
indirect : intermediaries in between the customer and producers
ex : producer –> agent –> wholesaler –> retailer –> customer
types of marketing channels
- digital marketing channels
- direct-to-customer marketing channels
- dual distribution
digital marketing channels
- advancement of electronic commerce allows new avenues for reaching buyers and creating customer value
- combine the internet and traditional intermediaries to create time, place, form, and possession utility for buyers
- cheaper than traditional intermediaries because of information technology efficiency
direct-to-customers marketing channels
allows customers to buy product by interacting with various advertising media without direct face-to-face interactions with a salesperson
dual distribution
a firm reaches different buyers by employing 2 or more types of channels for product distribution
vertical marketing system (VMS)
a coordinated distribution system where manufacturers, wholesalers, and retailers work together as a unified system to increase sale and distribution of products
- the goal of a VMS is to increase efficiency, reduce costs, and enhance customer satisfaction by integrating various levels of distribution channels
key types of VMS
- corporate VMS –> one single firm owns multiple distribution channels
- contractual VMS –> multiple firms on different distribution levels works together on a contractual agreement to coordinate their activities
- administered VMS –> one distribution channel exerts more power than others without ownership or contractual agreements
3 questions marketers ask before choosing a channel or intermediaries
- which will give the best coverage of target market ?
- which will be most profitable?
- which will best fulfill the buying requirements of target market?
3 degree of distribution density (which will give best coverage of target market)
- intensive distribution : when a firm puts its products in as many retail outlets as possible (convenient store products)
- exclusive distribution : when there is only one retail outlet in a spesific geographical area that carry the firm’s products (unique mercedes car only in zungfu)
- selective distribution : when there is a few retail outlets in a spesific geographical area that carry the firm’s products (most common)
which is the most profitable?
- profitability is measured by the margins earned (revenue minus cost) of each channel member and the channel as a whole
- channel costs includes distribution, advertising, and selling expenses
- the extent of which channel members share the expenses determines the profitability of each channel member and the channel as a whole
which will best satisfy buying requirements of the target market
satisfy some of the interest that buyers might want to be fulfilled when purchasing products or services :
- information : receive communication support
- convenience : abandon the need of locateing or finding the product
- variety : competing or complementary products to choose from
- pre or post purchase services : delivery, installation, credit
channel conflicts can be about
- who will perform which channel functions
- how the profit will be distributed
- who makes which products and services
- who makes critical channel-related decisions
two types of channel conflicts
- vertical conflict
- horizontal conflict
vertical channel conflict
occurs when a conflict happens between a different level of channel members in a marketing channel, like between a manufacturer and retailer
- disintermediation happens when a channel member bypass another member and sells or buys the product directly
horizontal channel conflict
happens between two or more same-level intermediaries at the same marketing channel
- betwee 2 or more wholesalers or 2 or more retailers of the same manufacturer’s brand e.g. pricing conflict
cross-channel customers
exihibit complex and dynamic behavior that is influenced by convenience, research, and desire for integrated experiences
firms that understands this behavior and create a seamless and cohesive shopping experience across channels can engage this customer group and increase customer satisfaction and loyalty
multi-channel marketing or omnichannel marketing
the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with customers that buy and shop through traditional intermediaries and online
