marketing ch 10
three types of channel conflict
1. horizontal conflict 2. vertical conflict 3. multi-channel, hybrid, or intertype
pop-up stores
A retail store that is opened temporarily to take advantage of a trend or a seasonal product. Demand for products sold in pop-up retail is typically short-lived
manufacturer sponsored wholesaler example
Coke licenses bottlers in various markets who can bottle and sell the finished product to retailers locally
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
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 (ex. John Deere)
Corporate VMS
a vertical marketing system that combines successive stages of production and distribution under single ownership (ex. Kroger owns 39 manufacturing plants); resolves conflict through ownership
manufacturer sponsored retailer example
car dealerships
vertical channel conflict
conflict between different levels of the same channel (ex. KFC franchisees don't like new KFC decision)
supply chain
consists of upstream and downstream partners to produce a product and make it available to buyers
indirect channel
containing one or more intermediary levels
disintermediation
cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones (ex. Barnes & Noble vs. online booksellers and e-books)
service retailer example
fast food; franchisee operated restaurants
exclusive distribution
giving a limited number of dealers the exclusive right to distribute the company's products in their territories (ex. Breitling watches)
contractual VMS
independent firms at different levels join together through contracts (franchise organization is most common type); resolves conflict through legal contracts
functions of distribution channels
information, promotion, contact, matching, negotiation, physical distribution, financing, risk taking
3 levels of distribution intensity
intensive distribution, selective distribution, exclusive distribution
three types of franchises
manufacturer sponsored retailer, manufacture sponsored wholesaler; service
value delivery network
network composed of the company, suppliers, distributors, and ultimately customers who partner to help the entire system deliver better customer value
direct marketing channel
no intermediary levels; company sells directly to consumers (ex. Mary Kay)
horizontal channel conclict
occurs among the same level of the channel (ex. Holiday Inn franchiser complaining about other Holiday Inn operators)
Vertical Marketing System (VMS)
producers, wholesalers, and retailers act as a unified system to accomplish the work of a channel; one channel member owns the others, has contracts with them, or has so much power that they all cooperate
why do companies use VMS?
provide channel leadership; to resolve conflict
reverse distribution
recall, error in order, repair, reuse, recycling, refurbish, customer returns
marketing or distribution channel
set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user; downstream side of supply chain
intensive distribution
stocking the product in as many outlets as possible
administered VMS
system that coordinates successive stages of production and distribution through the size and power of one of the parties; resolves conflict through channel captain- power
selective distribution
the use of more than one but fewer than all of the intermediaries that is willing to carry the company's products; in between intensive and exclusive distribution
Horizontal Marketing System
when two or more companies at one level join together to follow a new marketing opportunity (ex. express McDonalds in Walmart stores)
