marketing ch16

channel conflict

If a marketing channel is to run efficiently, the participating members must cooperate. Often, however, supply chain members have conflicting goals, and this may result in ___. For instance, Stanley wants Home Depot to carry all its tools but not the tools of its competitors so that Stanley can maximize its sales. But Home Depot carries a mix of tool brands so it can maximize the sales in its tool category. When supply chain members that buy and sell to one another are not in agreement about their goals, roles, or rewards, VERTICAL CHANNEL CONFLICT OR discord results.

-FLOW 4 (STORE TO MANUFACTURER): Marketing information flow through marketing channels

In some situations, the sales transaction data are sent directly from the store to the manufacturer, and the manufacturer decides when to ship more merchandise to the distribution centers and the stores. In other situations, especially when merchandise is reordered frequently, the ordering process is done automatically, bypassing the buyers. By working together, the retailer and manufacturer can better satisfy customer needs.

just-in-time (JIT) inventory system

Inventory management system designed to deliver less merchandise on a more frequent basis than traditional inventory systems; the firm gets the merchandise "just in time" for it to be used in the manufacture of another product, in the case of parts or components, or for sale when the customer wants it, in the case of consumer goods; also known as quick response (QR) inventory system in retailing. The benefits of a JIT system include reduced lead time, increased product availability, and lower inventory investment.29

-FLOW 5 (STORE TO DISTRIBUTION CENTER): Marketing information flow through marketing channels

Stores also communicate with the Best Buy distribution center to coordinate deliveries and check inventory status. When the store inventory drops to a specified level, more HDTVs are shipped to the store, and the shipment information is sent to the Best Buy computer system.

- FLOW 2 (STORE TO BUYER): Marketing information flow through marketing channels

The POINT-OF-SALE (POS) terminal records the purchase information and electronically sends it to the buyer at Best Buy's corporate office. The sales information is incorporated into an inventory management system and used to monitor and analyze sales and decide to reorder more HDTVs, change a price, or plan a promotion. Buyers also send information to stores about overall sales for the chain, ways to display the merchandise, upcoming promotions, and so on.

lead time

The amount of time between the recognition that an order needs to be placed and the arrival of the needed merchandise at the seller's store, ready for sale.

electronic data interchange (EDI)

The computer-to-computer exchange of business documents from a retailer to a vendor and back.

-FLOW 3 (BUYER TO MANUFACTURER)Marketing information flow through marketing channels

The purchase information from each Best Buy store is typically aggregated by the retailer as a whole, which creates an order for new merchandise and sends it to Sony. The buyer at Best Buy may also communicate directly with Sony to get information and negotiate prices, shipping dates, promotional events, or other merchandise-related issues.

Marketing information flow through marketing channels

- Flow 1 (customer to store) - Flow 2 (Store to buyer) - Flow 3 (buyer to manufacturer) - Flow 4 (Store to manufacturer) - Flow 5 (Store to distribution center) -Flow 6 (Manufacturer to distribution center and buyer)

vendor-managed inventory (VMI)

An approach for improving supply chain efficiency in which the manufacturer is responsible for maintaining the retailer's inventory levels in each of its stores.

fulfillment centers

used to ship directly to customers

marketing channels add___

value

horizontal conflict

can also occur when there is disagreement or discord among members at the same level in a marketing channel, such as two competing retailers or two competing manufacturers.

Generally, relationships in supply chains exist because the parties

cantor need something from one another

Sales department must coordinate its delivery promises with the factory or ____ or ____

distribution, fulfillment centers

Mutual trust

holds a strategic relationship together. Trust is the belief that a partner is honest (i.e., reliable, stands by its word, sincere, fulfills obligations) and benevolent (i.e., concerned about the other party's welfare).

pick ticket

is a document or display on a screen in a forklift truck indicating how much of each item to get from specific storage areas.

Floor-ready merchandise

is merchandise that is ready to be placed on the selling floor. Getting merchandise floor-ready entails ticketing, marking, and, in the case of some apparel, placing garments on hangers (or maybe attaching RFID chips).

viral marketing program

is one that encourages people to pass along a marketing message to other potential consumers

Indirect marketing channel

one or more intermediaries work with manufacturers to provide goods and services to customers. In some cases, only one intermediary might be involved. Automobile manufacturers such as Ford and General Motors often use _____, such that dealers act as retailers

Marketing channel management affects____

other aspects of marketing

in a distribution system, "receiving" is

recording products that have been received as trucks deliver them to a distribution center

marketing channel management also called supply chain management

refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize systemwide costs while satisfying the service levels their customers require

dispatcher

schedules theme that merchandise will be delivered to a distribution center

independent (conventional) marketing channel

A marketing channel in which several independent members—a manufacturer, a wholesaler, and a retailer—each attempts to satisfy its own objectives and maximize its profits, often at the expense of the other members. None of the participants have any control over the others. Before any sort of relationship develops, or in one-time interactions, both parties likely try to extract as much profit from the deal as possible. After the deal is consummated, neither party feels any responsibility to the other.

direct marketing channel

A marketing channel in which there are no intermediaries between the buyer and seller; the manufacturer sells directly to the buyer.

power

A situation that occurs in a marketing channel in which one member has the means or ability to have control over the actions of another member in a channel at a different level of distribution, such as if a retailer has power or control over a supplier.

vertical marketing system

A supply chain in which the members act as a unified system; there are three types: administered, contractual, and corporate.

Strategic relationship OR partnering relationship

A supply chain relationship that the members are committed to maintaining long term, investing in opportunities that are mutually beneficial; requires mutual trust, open communication, common goals, and credible commitments.

administered- vertical marketing system

A supply chain system in which there is no common ownership and no contractual relationships, but the dominant channel member controls the channel relationship.

contractual vertical marketing system

A system in which independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and coordination and to reduce conflict.

corporate vertical marketing system

A system in which the parent company has complete control and can dictate the priorities and objectives of the supply chain; it may own facilities such as manufacturing plants, warehouse facilities, retail outlets, and design studios.

VERTICAL CHANNEL CONFLICT

A type of channel conflict in which members of the same marketing channel, for example, manufacturers, wholesalers, and retailers, are in disagreement or discord.

Referent power

A type of marketing channel power that occurs if one channel member wants to be associated with another channel member. The channel member with whom the others wish to be associated has the power and can get them to do what they want. EX if a supplier desperately wants to be associated with Walmart, because being known as an important Walmart supplier enables that supplier to attract other retailers' business. In this sense, P&G might be playing its retailer partners against one another to enhance its own performance.

legitimate power

A type of marketing channel power that occurs if the channel member exerting the power has a contractual agreement with the other channel member that requires the other channel member to behave in a certain way. This type of power occurs in an administered vertical marketing system. EX As Walmart deals with its suppliers, it likely exerts multiple types of power to influence their behaviors. If either party dislikes the way the relationship is going, though, it can simply walk away.

Expertise power

A type of marketing channel power that occurs when a channel member uses its expertise as leverage to influence the actions of another channel member. EX it relies on its vast experience and knowledge to decide how to market a particular supplier's products, without giving the supplier much of a say.

Coercive power

A type of marketing channel power that occurs when a member uses threats or punishment of the other channel member for not undertaking certain tasks. Delaying payment for late delivery would be an example. EX arises when Walmart threatens to punish or punishes the other channel member for not undertaking certain tasks, such as if it were to delay payment for a late delivery.

Reward power

A type of marketing channel power that occurs when the channel member exerting the power offers rewards to gain power, often a monetary incentive, for getting another channel member to do what it wants it to do. EX Walmart offers rewards, often a monetary incentive, if the wholesalers or manufacturers do what Walmart wants them to do. For example, it might promise to purchase larger quantities if a manufacturer will lower its wholesale price.

information power

A type of marketing channel power within an administered vertical marketing system in which one party (e.g., the manufacturer) provides or withholds important information to influence the actions of another party (e.g., the retailer). Because Walmart has vast information about the consumer goods market, it might exert ___ over P&G by providing or withholding important market information. At the same time, P&G might have its own information power that it could exert over Walmart, depending on which company has the most or most updated data.

- FLOW 1 (CUSTOMER TO STORE): Marketing information flow through marketing channels

The sales associate at Best Buy scans the Universal Product Code (UPC) tag on the HDTV packaging, and the customer receives a receipt. The UPC tag is the black-and-white bar code found on most merchandise. It contains a 13-digit code that indicates the manufacturer of the item, a description of the item, information about special packaging, and special promotions. In the future, RFID tags, discussed later in this chapter, may replace UPC tags.

radio frequency identification (RFID) tag

Tiny computer chip that automatically transmits to a special scanner all the information about a container's contents or individual products. Approximately as large as a pinhead, these RFID tags consist of an antenna and a chip that contains an electronic product code that stores far more information about a product than bar (UPC) codes can. The tags also act as passive tracking devices, signaling their presence over a radio frequency when they pass within a few yards of a special scanner.

cross-docking distribution center

Using a ____, merchandise cartons are prepackaged by the vendor for a specific store. The UPC or RFID labels on the carton indicate the store to which it is to be sent. The vendor also may affix price tags to each item in the carton. Because the merchandise is ready for sale, it is placed on a conveyor system that routes it from the unloading dock at which it was received to the loading dock for the truck going to the specific store—hence the name cross-docked.

-FLOW 6 (MANUFACTURER TO DISTRIBUTION CENTER AND BUYER): Marketing information flow through marketing channels

When the manufacturer ships the HDTVs to the Best Buy distribution center, it sends an advanced shipping notice to the distribution centers. An ADVANCED SHIPPING NOTICE (ASN) is an electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment. The center then makes appointments for trucks to make the delivery at a specific time, date, and loading dock. When the shipment is received at the distribution center, the buyer is notified and authorizes payment to the vendor.

Avoiding vertical channel conflicts

___ demands open, honest communication. Buyers and vendors all must understand what drives the other party's business, their roles in the relationship, each firm's strategies, and any problems that might arise over the course of the relationship.

franchasing

a contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet using a name and format developed and supported by the franchisor

Distribution center

a facility for the receipt, storage, and redistribution of goods to company stores, may be operated by retailers, manufacturers, or distribution specialists performs the following activities: managing inbound transportation; receiving and checking; storing and cross-docking; getting merchandise floor-ready; ticketing and marking; preparing to ship merchandise to stores; and shipping merchandise to stores.

Wholesalers

are firms that buy products from manufacturers and resell them to retailers; retailers sell products directly to consumers. EX: Walmart is a massive retailer, and many of its products come from massive partners such as Procter & Gamble (P&G)