Session 6 Delivering Value Flashcards
What are distribution channels?
Sets of interdependent organizations participating in the process of making a product or service available for use or consumption
Most producers do not sell their goods directly to the final users; between them stands a set of ________ performing a variety of functions.
intermediaries
What kind of intermediaries are there?
Merchants: Wholesalers and retailers buy, take title to, and resell the merchandise; they are called merchants.
Agents: Brokers, manufacturers´ representatives, sales agents, search for customers and may negotiate on the producer´s behalf but do not take title to the goods
Facilitators: Transportation companies, independent warehouses, banks, advertising agencies, assist in the distribution process but neither take title to goods nor negotiate purchases or sales
What are three common characteristics of channel functions?
- Use up scarce resources
- can often be performed better through specialization
- can be shifted among channel members
What are the five marketing flows in the marketing channel?
- Physical flow:
Suppliers -> Transporters -< Manufacturer -> Transporters -> Dealers -> Transporters -> Customers - Title Flow:
Suppliers -> Manufacturer -> Dealers -> Customers - Payment Flow:
Customers -> Banks -> Dealers -> Banks -> Manufacturer -> Banks -> Suppliers - Information Flow:
Same as Physical Flow but from both sides - Promotion Flow:
Suppliers -> Advertising agency -> manufacturer -> Advertising agency -> Dealers -> Customers
(Advertising agency also goes straight to the customers)
What does multichannel distribution mean?
Using two or more marketing channels to reach customer segments in one market area
What are the benefits of multichannel distribution?
Increased market coverage, lower channel cost and customized selling options
What kind of different channel members are there?
- Exclusive distribution
- Selective distribution
- intensive distribution
what is exclusive distribution?
Exclusive distribution severely limits the number of intermediaries. It is appropriate when the producer wants to ensure more knowledgeable and dedicated efforts by the resellers, and it often requires a closer partnership with them.
Exclusive distribution is used for new automobiles, luxury apparel and accessories.
Both channel partners benefit from exclusive arrangements: The producer obtains more loyal and dependable outlets, and the retailer gets a steady supply of special products and stronger seller support.
what is selective distribution?
Selective distribution relies on some but not all of the intermediaries willing to carry a particular product. Selective distribution might include retailers that compete for the same customers.
what is intensive distribution?
Intensive distribution places the goods or services in as many outlets as possible. This strategy works well for snack foods, soft drinks, newspapers, candies, and gum - products that consumers buy frequently or in a variety of locations.
What is a franchising system?
In a franchising system, individual franchisees are a tightly knit group of enterprises whose systematic operations are planned, directed, and controlled by the operation´s owner, the franchisor.
What are the three main characteristics of franchising?
- The franchisor owns a trade of service mark and licenses it to franchisees in return for royalty payments
- the franchisee pays for the right to be part of the system
- the franchisor provides its franchisees with a system for doing business
Which franchise formats are there?
- Manufacturer sponsored retail franchise (Ford licenses independent businesspeople who agree to meet specified conditions of sales and services)
- manufacturer sponsored wholesale franchise (Coca-Cola licenses bottlers (wholesalers) in various markets that buy its syrup concentrate and then carbonate, bottle, and sell it to retailers in local markets)
- service firm sponsored retailer franchise (organized by a service firm to bring its service efficiently to consumers)
What is retailing?
All the activities in selling goods or services directly to final consumers for personal, nonbusiness use
The retail marketing environment is dramatically different today from what it was just a decade or so ago. The retail market is very dynamic, and a number of new types of competitors and competition have emerged in recent years. To better satisfy customers´ need for convenience, a variety of new retail forms have emerged.
- Retailer Consolidation: Giant retailers such as Walmart are able to deliver good service and immense volumes of product to mases of consumers at appealing prices.
- Growth of Mobile Retailing: Consumers are fundamentally changing they way they hop, increasingly using a cell phone to text a friend or relative about a product while shopping in stores.
- Growth of Omnichannel Retailing: Retailing has evolved from a purely brick-and-mortar format to a scenario in which retailers have augmented their physical locations with online stores designed to cater to consumers who prefer shopping online.
- Growth of fast retailing: Retailers develop completely different supply chain and distribution systems in order to offer consumers constantly changing product choices.
- Increasing Role of Technology: Nearly all now use technology to produce forecasts, control inventory costs, and order from suppliers, reducing the need to discount and run sales to clear out products.
- Decline of Middle-Market Retailers: The retail market today is hourglass shaped: Growth seems to be centered at the top (luxury offerings) and at the bottom (discount pricing).
What are brick and mortar retailers?
The term “brick-and-mortar” refers to a traditional street-side business that offers products and services to its customers face-to-face in an office or store that the business owns or rents. The local grocery store and the corner bank are examples of brick-and-mortar companies.
What is a Private Label?
Private label is also called a reseller, store or house brand.
Essentially, it is a proprietary brand that retailers and wholesalers develop.
Why do retailers sponsor their own brands?
First, these brands can be more profitable. Retailers may be able to use manufacturers with excess capacity that will produce private-label goods at low cost. Other costs (such as research and development, advertising, sales promotion, and physical distribution) are also much lower, so private labels can generate a higher profit margin.
Retailers also develop exclusive store brands to differentiate themselves from competitors. Many price-sensitive consumers prefer store brands in certain categories. These preferences give retailers increased bargaining power with marketers of national brands.
We should distinguish _________ or store brands from ________.
private label, generics.
What are generic store brands?
Generics are unbranded, plainly packaged, less expensive versions of common products such as spaghetti, paper towels, and canned peaches. They offer standard or lower quality at a price that may be as much as 20 percent to 40 percent lower than nationally advertised brands. The lower price is made possible by lower-cost labeling and packaging and minimal advertising, and sometimes by lower-quality ingredients.
Wholesalers (also called distributors) differ from retailers in a number of ways.
- Wholesalers pay less attention to promotion, atmosphere, and location because they are dealing with business customers rather than final consumers.
- Wholesale transactions are usually larger than retail transactions, and wholesalers usually cover a larger trade area than retailers.
- Wholesalers and retailers are subject to different legal regulations and taxes.
Based on their transactions with buyers and sellers, wholesalers can be divided into two main groups:
- Merchant wholesalers: Buy directly from the manufacturer, take title to the merchandise they handle, store the product, and then sell it to the customer
- Brokers and agents: Do not take ownership of the goods they buy and sell
