Chapter 10: Marketing Channels

Vertical marketing system (VMS)

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

Franchise organization

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

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

Marketing channel management

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

Intensive distribution

Stocking the product in as many outlets as possible

Horizontal marketing system

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

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

Corporate VMS

A vertical marketing system that combines successive stages of production and distribution under single ownership---channel leadership is established through common ownership

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

Channel conflict

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

Exclusive distribution

Giving a limited number of dealers the exclusive right to distribute the company's products in their territories

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 (or 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

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

Distribution center

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

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

Channel level

A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer

Indirect marketing channel

A marketing channel containing one or more intermediary levels

Direct marketing channel

A marketing channel that has no intermediary levels

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

Contractual VMS

A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts

Administered VMS

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