MARK 3336 EXAM 3 CH 12

Contractual VMS

A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than each could achieve alone; Channel members coordinate their activities and manage conflict through contractual agreements

Marketing channel management

Selecting, managing, and motivating individual channel members and evaluating their performance over time

Franchise organization

A contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process

horizontal marketing system

A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity

vertical marketing system

A channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate.

Multichannel distribution system

A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments; With each new channel, the company expands its sales and market coverage and gains opportunities to tailor its products and services to the specific needs of diverse customer segments

Distribution center

A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible

Value delivery network

A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value

marketing channel (or distribution channel)

A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user; Producers use intermediaries because they create greater efficiency in making goods available to target markets. Through their contacts, experience, specialization, and scale of operation, intermediaries usually offer the firm more than it can achieve on its own channel members add value by bridging the major time, place, and possession gaps that separate goods and services from those who use them

Administered VMS

A vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties

third-party logistics (3pL) provider

An independent logistics provider that performs any or all of the functions required to get a client's product to market; also called outsourced logistics or contract logistics

Multimodal transportation

Combining two or more modes of transportation

Marketing channel design

Designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives

exclusive distribution

Giving a limited number of dealers the exclusive right to distribute the company's products in their territories; often found in the distribution of luxury brands

Members of the marketing channel perform many key functions (8)

Information Promotion Contact Matching Negotiation Physical Distribution Financing Risk-taking

Supply chain management

Managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers

Marketing logistics (physical distribution)

Planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit

Intensive distribution

Stocking the product in as many outlets as possible to provide maximum brand exposure and consumer convenience

Disintermediation

The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries

Integrated logistics management

The logistics concept that emphasizes teamwork—both inside the company and among all the marketing channel organizations—to maximize the performance of the entire distribution system

Selective distribution

The use of more than one but fewer than all of the intermediaries that are willing to carry the company's products; Most consumer electronics, furniture, and home appliance brands are distributed in this manner

conventional distribution channel

a channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole; No channel member has much control over the other members, and no formal means exists for assigning roles and resolving channel conflict

Channel Level

a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer; The number of intermediary levels indicates the length of a channel

Indirect Marketing Channel

a marketing channel containing one or more intermediary levels

Direct Marketing Chanel

a marketing channel that has no intermediary levels

exclusive dealing

a situation in which a manufacturer forbids an intermediary from carrying products of competing manufacturers

corporate vertical marketing system (VMS)

a vertical marketing system that combines successive stages of production and distribution under single ownership-channel leadership is established through common ownership; Coordination and conflict management are attained through regular organizational channels

Vertical conflict

conflict between different levels of the same channel; more common

Channel Conflict

disagreements among marketing channel members on goals, roles, and rewards - who should do what and for what rewards

2 types of channel arrangements

conventional distribution channel vertical marketing system (VMS)

3 major types of VMS

corporate contractual administered

3 strategies in selecting number of marketing intermediaries

intensive distribution, exclusive distribution, and selective distribution

Horizontal conflict

occurs among firms at the same level of the channel

downstream side of the supply chain

the marketing channels (or distribution channels) that look toward the customer

Upstream from the company

the set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service

supply chain consists of

upstream and downstream partners

4 major logistics functions

warehousing, inventory management, transportation, and logistics information management