Chapter 13: Marketing Channels

Explain the 4 Utilities that channels provide.

1) Form Utility- The elements of the composition & appearance of a product that make it desirable (producer) . 2) Time utility- The increase in customer satisfaction gained by making a good or service available at the appropriate time. 3) Place utility- The usefulness of a good or service as a function of the location at which it is made available (transport). 4) Exchange utility- The increased value of a product that is created as its ownership is transferred (Retailer)

Before choosing a marketing channel , marketing managers must consider which 3 factors?

1)Market factors: -Customer profiles. -Consumer or industrial customer. -Size of market. - Geographic Location Distinction between consumer or industrial customers, the geographic location, & size of the market are also important factors in the selection of channels. 2) Product Factors: - Complexity= Customized, & expensive benefit from shorter & more direct marketing channels & through a direct sales force. - Price= Standardized products can be sold through longer distribution channels with greater numbers of intermediaries. -Customization -Standardization -Life Cycle = Product stage in the life cycle is also an important factor in deciding on the selection of channels. As products become more common, producers turn from a direct channel to more alternative channels. 3) Producer Factors: - Producer Resources= Producers with larger financial, managerial, & marketing resources are able to use more direct channels. - Number of product lines= Producers with several products in a related area choose channels that are more direct, & sales expenses can be spread over more products. - Desire for channel control= A producer's desire to control pricing, positioning, brand image, & customer support may influence channel selection. Manufacturers of upscale products products may sell only in expensive store to maintain an image of exclusivity.

Define Channel members

All parties in the marketing channel who negotiate with one another, buy and sell products, and facilitate the change of ownership between buyer and seller in the course of moving the product from the manufacturer into the hands of the final consumer. -AKA intermediaries, resellers, & middleman. -As products move toward the final consumer, channel members facilitate the distribution process by providing specialization and division of labor, overcoming discrepancies, and providing contact efficiency.

How does demand management serve customers in the most cost-effective manner?

By managing inventory through collaborative planning to reduce costs

Explain Omnichannel marketing.

Companies that use omnichannel marketing allow customers to reserve items online for pickup at nearby stores, offer a web-based find-in-store feature that displays real-time stock information and prevents unnecessary trips to the store, and provide in-store computer terminals or iPads that customers can use to search company websites for products that local stores may not carry. •Helps unify retail interfaces so that all customers receive equal and efficient service •Helps retailers merge their distribution channels -By making their inventory data available to customers in real time •Creates greater customer control over the shopping experience, leading to greater satisfaction and loyalty

In which of the following do businesses put customers at the center, manage every contact with them, and leverage this to better serve them and increase sales?

Customer relationship management

which of the following is an element of supply chain management?

Demand-supply integration

Explain the direct channel structure.

Direct Channel-a distribution channel in which producers sell directly to consumers. E.g.- Telemarketing, catalog shopping, online shopping, & shop-at-home television networks.

Which of the following has facilitated order processing?

Electronic data interchange

Explain the growth of digital channels.

In response to the growth of digital channels, customers are turning to droves to M-Commerce, whereby a mobile device is used to assess, compare, &/or buy products. Digital channels- Are pathways for moving product & information toward customers such that they can be sent &/or received with electronic devices, such as computers, smartphones, tablets, or video game consoles. M-Commerce-= The ability to conduct commerce using a mobile device for buying or selling goods or services. - many customers use these website to find product information or get information on special deals. Social shopping allows multiple retailers to sell products to customers through social media sites.

In which of the following, is there a goal for complete synergy between channel members?

Integrated

Explain how intermediaries in a channel function?

Intermediaries in a channel negotiate with one another, facilitate the change of ownership between buyers and sellers, & physically move products form the manufacturer to the final consumer.

Define & explain Marketing Channel AKA ( Channel of distribution)

Marketing Channel- A set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer. - Marketing channel can be viewed as a canal or pipeline through which products, their ownership, communication, financing & payment, & accompanying risk flow to the consumer. -MC represent the place or distribution element of the marketing mix, in that they provide a route for company products & services to flow to the consumer. "considered downstream portion of the supply chain"

Explain how the channels work.

Marketing channels attain economies of scale through specialization & division of labor by aiding upstream producers in marketing to end users or consumers. -Aid producers in creating time, place, & exchange utility for customers.

Explain the 3 activities of channel intermediaries (hint: merchant wholesaler/ agents & brokers)

Merchant wholesaler- An institution that buys goods from manufacturers and resells them to businesses, government agencies, and other wholesalers or retailers, and that receives and takes title to goods, stores them in its own warehouses, and later ships them. -Facilitate the movement of products & services from the manufacturer to producers, resellers, governments, institutions, & retailers. Agents & brokers- Wholesaling intermediaries who do not take title to a product, but facilitate its sale from producer to end user by representing retailers, wholesalers, or manufacturers. Retailer- a channel intermediary that sells mainly to consumers. - Reduce the #N of transactions required by consumers. - Make an assortment of goods available in one location.

What is 3PL?

Outsourcing an entire logistical function

What is customer integration?

Providing long-lasting-value-added offerings to customers.

Which of the following maintains relationships with key suppliers?

Supplier relationship management.

What is business logistics?

The physical movement of products through the supply chain.

Why would an American company prefer to partner up with a company in Mexico than a company in Singapore?

To reduce transportation costs.

Explain the types and number of intermediaries the producer should use ?

Types & number of intermediaries the producer should use are determined by : -Product characteristics include such aspects of a product as standardization, customization, & complexity. - Buyer considerations include purchase frequency & customer wait time. - Market characteristics include the number of buyers & buyer concentration at a certain location.

Explain the alternative channel arrangements. (hint there are 6 )

Usually a producer employees several different or alternative channels. 1)Dual or multiple distribution- The sue of 2 or more channels to distribute the same product to target markets. -As consumers shop online, more retailers are employing a multiple distribution strategy. 2) Nontraditional channels- Non-physical channels that facilitate the unique market access of products & services. - Includes approaches as mail orders, television, video channels, or infomercials. - May be able to provide additional information about products. 3) Strategic Channel Alliances- A cooperative agreement between business firms to use the other's already established distribution channel. 4) Gray Marketing channels- Secondary channel that are unintended to be used by the producer, & which often flow illegally obtained or counterfeit product toward customers. 5) Reverse channels- Channels that enable customers to return products or components for reuse or re-manufacturing. 6) Drop & shop- A system used by retailers that allows customers to bring used products for return or donation at the entrance of the store.

Explain the 3 options for intensity of distribution.

a) Intensive Distribution- A form of distribution aimed at having a product available in every outlet where target customers might want to buy it. b) Selective distribution- A form of distribution achieved by screening deals to eliminate all but a few in any single area. c)Exclusive distribution- A form of distribution that establishes one or few dealers within a given area.

When there is little or no relationship between channel members, it is called?

arm's-length

Which of the following integrations delivers materials and services to offer better value?

material & service integration

Which of the following is not a type of distribution system?

matrix

Who do wholesalers sell to?

retailers

What are the three groups of functions we talked about here?

source, make , & deliver

How are companies protecting themselves in case of a natural calamity?

supply chain security.

How do intermediaries add value to the customer?

they reduce the number of transactions

What are companies in marketing channels also referred to as?

trade members

Explain the channel structures for agent/broker, retailer, & wholesaler.

•An agent/broker channel may be used in markets with small manufacturers/retailers who lack the resources to find each other -The agents or brokers bring the manufacturers and wholesalers together for negotiations, but they do not take title to merchandise •Retailer channel common when retailer is large and can buy in large quantities directly from the manufacturer •Wholesaler channel is commonly used for low-cost items that are frequently purchased -Most consumer products are sold through distribution channels similar to the retailer channel and the wholesaler channel

Explain multichannel marketing

•Selling through multiple channels is typically accompanied by the construction of multiple, parallel supply chains, each with its own inventory, processes, and performance metrics. •Each channel would operate different transportation and distribution systems, hold and account for its own inventory, and otherwise act as an independent sales and profit center with little knowledge of the other. •Many companies have begun to employ a multichannel marketing strategy, whereby customers are offered information, goods, services, and/or support through one or more synchronized channels •More engaged during the purchase process •The exception is when customers are buying simple, utilitarian products that are well known and intended for frequent use •Create redundancy and complexity in the firm's distribution system

What is prominent difference in intermediaries?

•The most prominent difference separating intermediaries is whether they take title to the product. Taking title means they own the merchandise and control the terms of the sale.