Marketing mix: Place

Question 1

What does supply chain consist of?

Answer 1

• Upstream partners are firms that supply raw materials, components, parts, information, finances, and expertise that are needed to create a product or service.
• Downstream partners include the marketing channels (or distribution
  channels) that look toward the customer, including retailers and wholesalers

Question 2

Marketing (Distribution) channels

Answer 2

MARKETING CHANNEL is a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.

Question 3

Traditional distribution model

Answer 3

Consists of:
* one or more independent producers, wholesalers, and retailers.
* The producer develops and manufactures the product.
* Wholesalers source the product.
* Retailer they sell directly to the consumer

Question 4

How Channel Members Add Value

Answer 4

Information: Gathering and distributing marketing research and intelligence information about actors and
forces in the marketing environment needed for planning and aiding exchange.
Promotion: Developing and spreading persuasive communications about an offer.
Contact: Finding and communicating with prospective buyers.
Matching: Shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing,
grading, assembling, and packaging.
Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or possession
can be transferred.
Physical distribution:
Transporting and storing goods.
Financing: Acquiring and using funds to cover the costs of the channel work.
Risk taking: Assuming the risks of carrying out the channel work

Question 5

VALUE DELIVERY NETWORK

Answer 5

VALUE DELIVERY NETWORK is composed of the company, suppliers, distributors, and ultimately customers who partner with each other
to improve the performance of the entire system

Question 6

CHANNEL LEVEL

Answer 6

• Direct marketing channel is a marketing channel that has no intermediary levels.
• Indirect marketing channel is a marketing channel containing one or more intermediary levels.

Question 7

Channel conflict

Answer 7

Channel conflict refers to disagreement among channel members over goals, roles, and rewards.
* Horizontal conflict - occurs among firms at the same level of the channel (e.g. car dealerships within one location)
* Vertical conflict - conflict between different levels of the same channel, is even more common. (e.g. company and dealers/franchise partners)

Question 8

Conventional distribution systems

Answer 8

Conventional distribution systems consist of one or more independent producers, wholesalers, and
retailers, each separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole.

Question 9

Vertical marketing systems

Answer 9

Vertical marketing systems (VMSs) provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system.
* Corporate marketing systems
* Contractual marketing systems
* Administered marketing systems

Question 10

Corporate vertical marketing systems

Answer 10

Corporate vertical marketing
systems combine successive
stages of production and distribution under single ownership

Question 11

Contractual vertical marketing systems

Answer 11

Contractual vertical marketing systems consist of independent firms at different levels of production and distribution who join together through contracts.

• Franchise organization is a contractual vertical marketing system in which a
  channel member, called a franchisor, links several stages in the production distribution process.

Question 12

3 types of franchises

Answer 12

There are three types of franchises:
* The manufacturer-sponsored retailer
franchise system— e.g. Ford
* The manufacturer-sponsored wholesaler
franchise system—Coca-Cola licenses bottlers (wholesalers)
* The service-firm-sponsored retailer franchise system—e. g. McDonald’s (fast-food service business), Hertz (car
rental), Holiday Inn (hotel

Question 13

Vertical Marketing Systems: administered vertical marketing system

Answer 13

An administered vertical
marketing system is a VMS
that coordinates successive
stages of production and
distribution through the size
and power of one of the parties.

Question 14

Horizontal marketing system

Answer 14

Horizontal marketing system
is a channel arrangement in which two or more companies at one level join
together to follow a new marketing opportunity.

Question 15

Multichannel Distribution
Systems

Answer 15

Multichannel Distribution
Systems are systems in which a single firm sets up two or more marketing channels to
reach one or more customer
segments.

Question 16

Marketing channel design

Answer 16

Designing effective marketing channels by

Analyzing customer needs:
* Find out what target consumers
want from the channel
* Identify market segments
* Determine the best channels to use
* Minimize the cost of meeting customer service requirements

Setting channel objectives:
* Determine targeted levels of customer service
* Balance consumer needs against costs and customer price preferences

Identifying major channel alternatives

Evaluating those alternatives

Question 17

Types of intermediaries

Answer 17

Types of intermediaries refers to channel members available to carry out channel work.
Most companies face many channel member choices.

Intensive distribution:
a strategy in which they stock their products in as many outlets as possible.

Exclusive distribution:
the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories.

Selective distribution:
the use of more than one but fewer than all of the intermediaries who are willing to carry a company’s products.