Chapter 14

electronic data interchange (EDI)

A computerized means of integrating order processing with production, inventory, accounting, and transportation - Functions as an information system that links marketing channel members and outsourcing firms together

just in time (JIT)

An inventory-management approach in which supplies arrive just when needed for production or resale - Usually there is no safety stock - Requires a high level of coordination between producers and suppliers - Eliminates waste - Reduces inventory costs

marketing intermediaries

Middlemen that link producers to other intermediaries or ultimate consumers through contractual arrangements or through the purchase and resale of products - Play key roles in customer relationship management through distribution activities and by maintaining databases and information systems to help all members of the marketing channel maintain effective customer relationships

stockouts

Part of inventory management: A shortage of products

distribution

The decisions and activities that make products available to consumers when and where they want to purchase them

channel captain (channel leader)

The dominant leader of a marketing channel or a supply channel - May be a producer, wholesaler, or retailer - To attain desired objectives, the captain must possess channel power

procurement

(Sometimes called supply management) involves the processes to obtain resources to create value through sourcing, purchasing, and recycling, including materials and information

administered VMS

1 of 3 forms of vertical marketing system (VMS) Channel members are independent, but informal coordination achieves a high level of inter-organizational management - Ex: Walmart - Least restrictive form of VMS

marketing channel

A group of individuals and organizations that direct the flow of products from producers to customers within the supply chain - The major role is to make products available at the right time at the right place in the right quantities - Providing customer satisfaction should be the driving force behind marketing channel decisions - Least flexible component in the marketing mix

supply chain

All the organizations and activities involved with the flow and transformation of products from raw materials through to the end consumer - A distribution system involves firms that are "upstream" in the supply chain (e.g., producers and suppliers) and "downstream" (e.g., wholesalers and retailers) working together to serve customers and generate competitive advantage

operations management

Managing activities from production to final delivery through system-wide coordination

logistics management

Planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants

channel power

The ability of one channel member to influence another member's goal achievement

integration

channel _____: Various channel stages may be combined, either horizontally or vertically, under the management of a channel captain This may: - Stabilize supply - Reduce costs - Increase channel member coordination

intensity

variables that affect the ______ of market coverage: - Replacement rate - Product adjustment (services) - Duration of consumption - Time required to find the product

Contractual VMS

1 of 3 forms of vertical marketing system (VMS) Channel members are linked by legal agreements spelling out each member's rights and obligations - Less restrictive than corporate VMS but more restrictive than administered VMS

corporate VMS

1 of 3 forms of vertical marketing system (VMS) Combines all stages of the marketing channel, from producers to consumers, under a single owner - most restrictive form of VMS

vertical marketing system (VMS)

A marketing channel managed by a single channel member to achieve efficient, low-cost distribution aimed at satisfying target market customers Takes on one of three forms: - corporate VMS - Administered VMS - Contractual VMS

vertical channel integration

Combining two or more stages of the marketing channel under one management - May occur when one member of a marketing channel purchases the operations of another member or simply performs the functions of another member, eliminating the need for that intermediary - Can be more effective against competition because of increased bargaining power and the ease of sharing information and responsibilities

exclusive distribution

One of the levels of market coverage: Using a single outlet in a fairly large geographic area to distribute a product Is suitable for products: Purchased infrequently - Consumed over a long period of time - That require a high level of customer service or information - Is used for expensive, high-quality products with high profit margins Is not appropriate for convenience products and many shopping products - Is often used as an incentive to sellers when only a limited market is available for products

intensive distribution

One of the levels of market coverage: Using all available outlets to distribute a product Is appropriate for products that: - Have a high replacement rate - Require almost no service - Are bought based on price cues To satisfy consumers seeking to buy these products, they must be available at a store nearby and be obtained with minimal search time

selective distribution

One of the levels of market coverage: Using only some available outlets in an area to distribute a product - Is appropriate for shopping products - Is desirable when a special effort, such as customer service from a channel member, is important to customers - Is often used to motivate retailers to provide adequate service

supply chain management (SCM)

The coordination of all the activities involved with the flow and transformation of supplies, products, and information throughout the supply chain to the ultimate consumer - Integrates the functions of operations management, logistics management, supply management, and marketing channel management so that products are produced and distributed in the right quantities, to the right locations, and at the right times - Includes activities such as manufacturing, research, sales, advertising, and shipping - Involves all entities that facilitate product distribution and benefit from cooperative efforts

levels

____ of market coverage: - intensive - selective - exclusive