CHAPTER 14 MKTG 351 (marketing channels and supply chain mgmt)

vertical marketing systems

-VMSs -single channel member coordinates or manages channel activities to achieve low-cost distribution aimed at satisfying target market customers -takes on corporate, administered, or contractual forms

supply chain

-activities associated with the flow and transformation of product from raw materials through to the end consumer -includes all entities that facilitate product distribution

manufactures agent

-also called a manufactures rep -an independent businessperson who sells complementary products and is compensated by commissions -does not acquire title or take possession

channel captain

-channel leader -dominant leader of a marketing channel or supply chain -may be a producer, wholesaler, or retailer

horizontal channel integration

-combines orgs at the same level of operation under one mgmt -creates economies of scale -increases sale -does not the directly improve distribution efficiency -may let you afford vertical integration

vertical channel integration

-combines two or more stages of the marketing channel under one management -participants coordinated efforts to reach a desired target market -effective against competition because of increased bargaining power and shared info and responsibilities

outsourcing

-contracting of physical distribution tasks to third parties -most distribution activities can be outsourced to firms with expertise in specific areas

intensive market coverage

-convenience products -available in many retail outlets

warehousing (distribution centers)

-design and operation of facilities for storing and moving goods -creates time utility -helps stabilize prices and the availability of seasonal items -choice of warehouse is an important strategic consideration -correct warehouse can reduce transportation and inventory costs and improve customer service

technology has improved service

-fewer stockouts (and lost sales) -reduced cost of logistics

marketing channel

-group of individuals & organizations that direct the flow of products from producers to customers within the supply chain -facilitate exchange efficiencies

industrial distributor

-independent business that takes title to products and carries inventories -cost effective when a product has broad market appeal, is easily stocked and serviced, is sold in small quantities and is needed on demand

technology

-info tech has created the potential for almost seamless distribution -info sharing has reduced costs -increased speed, flexibility, and cooperation

physical distribution

-logistics -activities used to move products from producers to consumers and other end users

exclusive dealing

-manufacture forbids an intermediary to carry products of competing manufactures -usually legal unless a large manufactures blocks smaller competitors and significantly reduces competition

transportation

-movement of products from where they are made to intermediaries and end users -most expensive physical distribution function -railroads -trucks -waterways -airways -pipelines

materials handling

-physical handling of tangible goods, supplies and resources -involves transportation from points of production to points of consumption -efficient materials handling can reduce costs, the #of times a good is handled, improve customer service and increase customer satisfaction -radio frequency ID

refusal to deal

-producers have the right to choose channel members -suppliers cannot legally refuse to do business with existing dealers just because they offer lower prices than suggested

channel decisions determine

-products market presence -buyers accessibility to the product -entail long term commitments among a variety of firms -difficult to change/undo marketing channel decisions

channel conflicts

-self interest creates misunderstanding about role expectations of channel members -communication is poor between channel members -increased use of multiple channels has increased the chance for miscommunication and conflict

selective market coverage

-shopping products -available in some outlets

exclusive market coverage

-specialty products -available in very few outlets

tying agreement

-supplier furnishes a product to a channel member with the stipulation that the channel member purchases other products -courts only accept tying agreements when the supplier is the only one able to provide products of certain quality and the intermediary can also carry competing products

intermodal transportation

-two or more transportation modes are used in combination -containerization -piggyback (truck and rail) -fishyback (truck and water) -birdyback (truck and air)

channel cooperation

-vital if each channel member is to gain something from others -enables retailer, wholesalers, suppliers, and logistics providers too: -speed up inventory -improve customer service -cut the costs of bringing products to customers -should be viewed as a unidentified supply chain -members should work toward common objectives

competitive priorities

-well managed supply chain can provide a competitive advantage -7% manage effectively

channel power

ability of one channel member to influence other channel members goal achievements

order lead time

average time lapse between placing the order and receiving it

restricted sales territories

courts have conflicting opinions on restricting intermediaries to certain sales territories

significance of marketing channels

decisions influence the rest of the marketing mix

inventory mgmt

developing and maintaining adequate assortment of products to meet customers' needs

safety stock

extra inventory a firm keeps

form utility

formed by assembling, preparing, or otherwise refining the product to suit customer needs

megacarriers

freight transportation companies that offer several shipment methods

time utility

having products available when the customer wants them

reorder point

inventory level that signals the need to place a new order

just-in-time (JIT)

inventory mgmt approach in which supplies arrive just when needed for production or resale

possession utility

making it easy to buy

place utility

making products available in locations where customers wish to purchase them

marketing intermediaries

middlemen (resellers) that link producers to other intermediaries or ultimate consumers through contractual arrangement or through the purchase and reselling of products

freight forwarders

organizations that consolidate shipments from several firms into efficient lot sizes

logistics management

planning, implementing and controlling the efficient and effective flow & storage of products and information from the point of origin to consumption

strategic channel alliance

products of one organization are distributed through the marketing channels of another

radio frequency ID

radio waves are used to track materials using scanners

usage rate

rate at which inventory is used/sold

dual distribution

runs the risk of being viewed as anti-competitive

stockouts

shortages of products that can result in loss of customers

cycle time

time needed to complete a process

dual distribution

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