PCM Key Terms - 6.1

Question 2

Administered Vertical Marketing System

Answer 2

Vertical marketing system in which coordination is achieved at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.

Question 3

Buyer Requirements

Answer 3

The interests buyers might want fulfilled when they purchase a firm’s products or services. These fall into four broad categories: Information, Convenience, Variety, and Pre- or Postsale Services

Question 4

Channel Conflict

Answer 4

Arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals

Question 5

Containerization

Answer 5

The consolidation of many items into a single, large container that is sealed at its point of origin and opened at its destination. The items may be transported by rail (piggyback), air (birdyback), ship (fishyback)

Question 6

Contractual Vertical Marketing System

Answer 6

Vertical marketing system in which independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone

Question 7

Corporate Vertical Marketing System

Answer 7

Vertical marketing system in which the successive stages of production and distribution are combined under a single ownership

Question 8

Customer Service

Answer 8

The ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience

Question 9

Direct Marketing Channels

Answer 9

Marketing channels in which the producer and the ultimate consumers deal directly with each other

Question 10

Distributor

Answer 10

A type of reseller or marketing intermediary that resells manufactured products without significantly altering their form. Distributors often buy from manufacturers and sell to other businesses like retailers in a B2B transaction.

Question 11

Dual Distribution

Answer 11

The use of two or more marketing channels to distribute the same products to the same target market

Question 12

Exclusive Distribution

Answer 12

Distribution strategy in which only one retailer in a specified geographical area carries a firm’s products

Question 13

Franchising

Answer 13

A form of licensing in which a franchiser, in exchange for a financial commitment, grants a franchisee the right to market its product in accordance with the franchiserês standards

Question 14

Indirect Marketing Channels

Answer 14

Marketing channels in which intermediaries are inserted between the producer and the consumer and perform numerous channel functions

Question 15

Intensive Distribution

Answer 15

Distribution strategy in which a firm tries to place all its products and services in as many outlets as possible

Question 16

Intermediary

Answer 16

Those who make possible the flow of products from producers to ultimate consumers by performing transactional, logistical, and facilitating functions

Question 17

Inventory Reorder Point*

Answer 17

The inventory level that signals the need to place a new order. Reorder Point = (Order Lead Time X Usage Rate) + Safety Stock

Question 18

Just-In-Time (JIT)

Answer 18

An inventory-management approach in which supplies arrive just when needed for production or resale

Question 19

Logistics (Physical Distribution)

Answer 19

Those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost

Question 20

Marketing Channel

Answer 20

Individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users

Question 21

Materials Handling

Answer 21

Physical handling of tangible goods, supplies, and resources

Question 22

Middleman

Answer 22

An intermediary between the manufacturer and end-user markets

Question 23

Order Cycle Time (Replenishment Time)

Answer 23

The time between the ordering of an item and when it is received and ready for use or sale

Question 24

Order Lead Time

Answer 24

The average time lapse between placing an order and receiving it

Question 25

Order Processing

Answer 25

The receipt and transmission of sales order information. This most likely involves three main tasks: Order Entry, Order Handling, and Order Delivery

Question 26

Retailer

Answer 26

An organization that purchases products for the purpose of reselling them to ultimate consumers

Question 27

Safety Stock

Answer 27

The amount of extra inventory a firm keeps to guard against stockouts resulting from above average usage rates and/or longer-than-expected lead times

Question 28

Selective Distribution

Answer 28

Distribution strategy in which a firm selects a few retailers in a specific geographical area to carry its products

Question 29

Stockouts

Answer 29

Shortages of products. Can result in brand switching, lower sales, and loss of customers.

Question 30

Strategic Channel Alliance

Answer 30

A recent innovation in marketing channels, whereby one firm’s marketing channel is used to sell another firm’s products

Question 31

Supply Chain Management

Answer 31

A set of approaches used to integrate the functions of operations management, logistics management, supply chain management, and marketing channel management so products are produced and distributed in the right quantities, to the right locations, and at the right times

Question 32

Total Logistics Cost

Answer 32

Expenses associated with transportation, materials handling and warehousing, inventory, stockouts, order processing, and return products handling

Question 33

Usage Rate

Answer 33

The rate at which a product’s inventory is used or sold during a specific time period

Question 34

Vendor-Managed Inventory (VMI)

Answer 34

An inventory-management system whereby the supplier determines the product amount and assortment a customer (such as the retailer) needs and automatically delivers the appropriate items

Question 35

Vertical Channel Integration

Answer 35

Combining two or more stages of the marketing channel under one management

Question 36

Vertical Marketing System (VMS)

Answer 36

A marketing channel managed by a single channel member to achieve efficient, low-cost distribution aimed at satisfying target market customers

Question 37

Vertical Marketing Systems

Answer 37

Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact

Question 38

Wholesaler

Answer 38

An individual or organization that sells products that are bought for resale, for making other products, or for general business operations