chapter 15 - distributing products

social commerce denotes a wide range of shopping, recommending, and selling behaviors.

1- peer to peer sales platforms 2- social network shops and shopping apps 3- group buyings and daily deals 4- peer recommendations 5- user-curated shopping 6- crowdfunding /crowdsourcing 7- social shopping

a large part of the cost of distribution is storage. -storage costs include:

-operating the warehouse facility -the cost of the warehouse facility -the cost of equipment to move goods in the warhouse

those in the supply chain who provide goods to consumers include

-parts suppliers -manufacturers -farmers

marketing intermediaries add value and create efficenies by:

-providing necessary activities such as storage and transportation -providing convenience -reducing the number of exchanges between producers and buyers

marketing intermediaries create value in the channel; of distribution by

-reducing the number of exchanges needed -creating the convenience of time and place -performing marketing functions more quickly and cheaply

the characteristics of a rack-jobber include

-retaining title to the goods -displaying the products -sharing profits with the reatiller when goods are sold

intermediaries who provide information utility do so through:

-salespeople -the internet -newspaper ads

the marketing function that provides place utility or distribution from the producer to the consumer includes

-shipping -inventory management -warehousing

outsourcing of supply chain management is the rise because

-supply chains have become increasingly complex and global -specialized firms have developed software to manage the process more effectively

in a franchise system, the franchise agrees to:

-the rules and regulations of the franchiser -the procedures of the franchisesr

retailers who offer updates and training to use complex products develop a competitive advantage over direct marketers because

-they can build customer relationships over time -service after the sale adds value to the product

today's logistics require sophisticated hardware and software systems to

-transmit consumer needs through the system to suppliers -provide information on the movement of goods in real time -relay inventory information to all in the supply chain

inbound logistics

Brings raw materials, packaging, other goods and services and information from suppliers to producers.

Today, only a small proportion of shipping goes by air. -But, transportation is a critical factor in many industries, carrying everything from small packages to luxury cars and elephants

It's primary benefit is speed - FedEx and UPS have used air transport to expand into global markets - the air freight industry is starting to focus on global distribution

The second largest surface transportation mode is

Motor vehicles ( trucks and vans) -trucks reach more locations than trains and can deliver almost any commodity door-to-door

The largest percentage of goods in the US ( by volume) is shipped by

Rail. - they offer a relatively energy-efficient way to move goods and could experience significant gains especially if fuel prices climb again.

When sending goods overseas, often the least expensive way is by shop

Ships are slower than ground or air transportation, so water transportation isn't appropriate for goods that need to be delivered quickly. -water transport is local as well as international

Motor vehicles ( vans and trucks) - when fuel prices rise, trucking companies look for ways to cut costs

The newest measure of transportation from farm to consumer is the carbon cost. - some argue that the fewer miles food travels, the better for the environment

direct marketing includes

any activity that directly links manufacturers or intermediaries with the ultimate consumer -it includes direct mail, catalog sales, and telemarketing as well as online marketing

marketing intermediaries ( once called middlemen)

are organizations that assist in moving goods and services from producers to businesses ( B2B) and from businesses to consumers ( B2C) -they're called intermediaries because they're in the middle of a series of organizations that join together to help distribute goods from producers to consumers

Channels of distribution help ensure

communication flows and the flow of money and title to the goods -they also help ensure that the right quantity and assortment of goods will be available when and where needed

direct marketing took on a new dimension with interactive video.

companies that use interactive video has become major competitors for those who market through static paper catalogs

bar codes got a big lift when smartphone apps made it possible to

compare prices and read review about products from different suppliers

a channel of distribution

consists of a whole set of marketing intermediaries, such as agents, brokers, wholesalers, and retailers, that join together to transport and store goods in their path ( or channel) from products to consumers.

a supply chain ( value chain)

consists of all the linked activities various organizations must perform to move goods and services from the sources of raw materials to ultimate consumers.

today, intermodal shipping containers, which detach from the truck trailer's chassis are widely used in place of truck trailers and can be stacked two high on specially designed railcars called a double sack -this shipping process is called

container on flat car ( COFC)

four systems have emerged to tie firms together

corporate systems, contractual systems, administrated systems, and supply chains

all transportation modes can be evaluated on basic service criteria:

cost, speed, dependability, flexibility, frequency, and reach

logistics is as much about the movement of information as it is about the movement of goods

customer wants and needs must flow through the system all the way to suppliers and must do si in real time -information must also flow down through the system with no delay

there are 3 forms of contractual systems -wholesaler-sponsored chains, such as Ace Hardware

each store signs an agreement to use the same name, participate in chian promotions, and cooperate as a unified system of stores, even though each is independently owned managed

one way traditional retailers can compete with online retailers is to be so

efficient that online retailers can't beat them on cost-given the need for customers to pay for delivery -that means manufacturers, wholesalers, and retailers must work closely to form a unified system

social commerce is a form of

electronic commerce that involves using social media, online media that support social interaction, and user contributions to assist in the online buying and selling of products and services.

many companies have had success using a multilevel marketing ( MLM) and salespeople who work as indpedent contractors

ex/ Avon -salespeople earn commissions on their own sales, create commissions for the "upliners" who recruited them and receive commissions form any "downliners" they recruit to sell -when you have hundreds of downlines - people recruited by the people you recruit - your commissions can be sizeable -the main attraction of multilevel marketing for employees, other than the potential for making money, is the low-cost of entry

social commerce denotes a wide range of shopping, recommending, and selling behaviors. -peer to peer sales platforms ( also known as consumer to consumer or C2C marketing)

examples include eBay, Etsy, Amazon, Marketplace, Getaground) : community -based marketplaces where individuals communicate and sell directly to each other

there are 2 kinds of warehouse: storage and distribution -distribution warehouses are

facilities used to gather and restriction products

____ _____ change raw materials and parts and other inputs into outputs, such as finished goods like shoes, cars, and clothes

factory processes

included in the supply chain are

farmers, miners, suppliers of all kinds ( parts, equipment, suppliers), manufacturers, wholesalers, and retailers.

intermediaries add service utility by providing

fast, friendly service during and after the sale and by teaching customers how to best use products over time -service utility is rapidly becoming the most important utility for many retailers because without it they would lose business to direct marketing ( marketing by catalog or online)

when truck trailers are placed on ships to travel long distances at lower rates, it's called

fishyback

6 kinds of utility

form, time, place, possession, information and service -marketing intermediaries provide most

3 common types of limited function wholesalers are rack jobbers, cash-and-carry wholesalers, and drop shippers. -rack jobbers

furnish racks or shelves full of merchandise, like music, toys, accessories, and health and beauty aids, to retailers. -they display the products and sell them on consignment, meaning they keep title to the goods until they're sold and then share the profits with the retailer .

there are 2 kinds of warehouse: storage and distribution -storage warehouse

holds products for a relatively long time -seasonal goods such as lawn mowers are kept in a warehouse

online retailing just one form of nonstore retailing -other categories

include telemarketing; vending machines, kiosks, carts, and pop-ups; direct selling; multilevel marketing; and direct marketing.

interactive online selling provides

increasing competition for retail stores.

merchant wholesalers are

independently owned firms that take title to the goods they handle

services that specialize in intermodal shipping are known as

intermodal marketing companies -today railroads are partnering with each other and with other transportation companies to offer distribution

a wholesale sale

is a sale of goods and services to businesses and institutions like schools or hospitals, for use in the business, or to wholesalers or retailers for resale,

materials handling

is the movement of goods within a warehouse, from warehouses to the factory floor, and from the factory floor to various workstations.

agents/brokers are

marketing intermediaries who bing buyers and sellers together and assist in negotiating an exchange but don't take title to the goods ex/ rest estates agents

a wholesaler is a

marketing intermediary that sells to other organizations such as retailers, manufacturers, and hospitals -wholesalers are part of the B2B system

if a manufacturer can't buy retail stores, it can try to get retailers to sign a contract to cooperate with it. In a contractual distribution system

members are bound to cooperate through contractual agreement.

many people question MLM because some companies using it have acted unethically

more often than not, people at the bottom buy the products themselves and sell a bare minimum, if anything, to others. -be careful of multilevel schemes as a sellar and as a buyer

brokers have no continuous relationship with the buyer or seller

once they negotiate a contract between the parties, their relationship ends -producers of seasonal products like fruits and vegetables often use brokers, as does the real estate industry

in a corporate distribution system

one firm owns all the organizations in the channel of distribution -it owns its own retail stores and coordinates everything: display, pricing, promotion, inventory control, and so on

intermediaries add information utility by

opening two-way flows of information between marketing participants -newspapers, salespeople, libraries, websites, and government publications are all information sources made available by intermediaries -they provide information utility

retailer is an

organization that sells to ultimate consumers ( like you and me)

Pipelines primarily transport

Water, petroleum, and petroleum products -some other products include coal, natural gas, and shale oil

Smaller manufacturers or marketers can get good rates and service by using a freight forwarder

Which puts many small shipments together to create a single large one that can be transported cost effectively by truck or train - such shipments are known as less-than-carload (LCL) shipments - sown freight forwarders also offer warehousing, customs assistance, and other services along with pickup and delivery.

some economists have said that intermediaries add costs and should be eliminated -marketers say intermediaries

add value, and that the value greatly exceeds the cost

a system in which producers manage all the marketing functions at the retail level is called an

administered distributed system -retailers cooperate with producers in such systems because they get a great deal of free help

agents and brokers bring buyers and sellers

together and assist in negotiating an exchange. -agents and broker never own the products. -Usually, they do not carry inventory, provide credit, or assume risks. -agents and brokers earn commission or fees based on a percentage of the sales revenues.

railroads joined with trucking firms to create a shipping process called

trailer on flat car ( TOFOC ) or piggybacking.

intermediaries perform certain marketing tasks such as

transporting, storing, selling, advertising, and relationship building - faster and more cheaply than most manufacturers could

the US State Department offers an electronic passport card as a substitute for passport books for use by

uS citizens who travel often Canada, Mexico, and the Caribbean -it uses an RFID chip to provide data about the user and is more convenient and less expensive than a passport book, though some people believe it can be easily altered

intermodal shipping

uses multiple modes of transportation - highway, air, water, rail - to complete a single long distance movement of freight.

there are 3 categories of retail distribution: intensive, selective, and exclusive -intensive distribution

puts product into as many retail outlets as possible, including vending machines. -product that need intensive distribution include convenience goods such as candy, gum, and popular magazines

direct selling

reaches consumers in their homes or workplaces -many businesses use direct selling to sell cosmetics, household goods, lingerie, clothes, and candles at house parties they sponsor

telemarketing is the

sale of goods and services by telephone. -many companies use to it to supplement or replace in -store selling and complement online selling -many send catalog to consumers, ho roder by calling a toll-free number.

online retailing consists of

selling goods and service to ultimate consumers online.

types of retail stores category killer

sells a huge variety of one type of product to dominate that category of goods -bass pro shops, office depot/office mat

types of retail stores sepcility store

sells a wide selection of goods in one category -jewelry stores, shoe stores, and bicycle shops

types of retail stores department store

sells a wide variety of products ( clothes, furniture, housewares) in separate departments -sears, JCPenny, Nordstrom

types of retail stores warehouse club

sells food and general merchandise in facilities that are usually larger than supermarkets and offers discount prices; membership may be required -Costco and Sam's club

types of retail stores -convenience store

sells food and other often-needed items at convenient locations; may stay open all night -7-eleven

types of retail stores outled stores

sells general merchandise directly from the manufacturers at a discount; items may be discontinued or have flaws ("seconds")

types of retail stores discount store

sells many different products at price generally below those of department stores -walmart and target

types of retail stores supermarket

sells mostly food with other nonfood products such as detergent and paper products -Safeway, Kroger, Albertsons

3 common types of limited function wholesalers are rack jobbers, cash-and-carry wholesalers, and drop shippers -cash-and-carry wholesalers

serve mostly smaller retailers with a limited assortment of products

direct marketing has become popular because

shopping from home or work is more convenient for consumers than going to stores -instead, of driving to a mall, people can shop online. Or they can browse catalogs and advertising supplements in the newspaper and magazines and then buy by phone, mail, or online.

carts and kiosks have lower overhead costs than stores do

so they can offer lower prices on items such as t-shirts purses, watches, and cell phones

3 common types of limited function wholesalers are rack jobbers, cash-and-carry wholesalers, and drop shippers -drop shippers

solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer -they own the merchandise but don't handle, stock, or deliver. That's done by the producer. -drop shippers tend to handle bulky products such as coal, lumber, and chemicals

not all supply chains are so effective and efficient as they can be

some companies have struggled with high distribution costs, including the costs of disruptions, inefficient truck routes, and excess inventory -the complexity of supply chain management often leads firms to, outsauce the whole process to experts who know how to integrate it

radio frequency identification ( RDID),

tags merchandise so that it can be tracked form its arrival on the supplier's docks to its exit through the retailer's door

the life or death of a firm often depends on its ability to

take orders, process orders, keep customers informed about the progress of their orders, get the goods out to customers quickly, hande returns, and manage any recycling issues

the third party logistics providers ( 3PLs)

that have superior capability in business intelligence and are proactively sharing that knowledge are the ones who will grow in the future

buyers want goods delivered quickly

that means marketers must have goods available in various parts of the country ready to be shipped locally when ordered

social commerce denotes a wide range of shopping, recommending, and selling behaviors. -peer recommendations

(Amazon, yelp): sites that aggregate product or service reviews, recommend products based on others' purchasing history

social commerce denotes a wide range of shopping, recommending, and selling behaviors. -social shopping

(Modcloth, fab, fancy): shopping sites that include chat and forum features for people to discuss and exchange advice and opinions

social commerce denotes a wide range of shopping, recommending, and selling behaviors. -social network shops and shopping apps

(facebook marketplace, Twitter, instagram, Pinterest): sales driven by referrals from established social platforms

social commerce denotes a wide range of shopping, recommending, and selling behaviors. -user-curated shopping

(fancy, lyst, styloko): shopping-focused sites where users create and share lists of products and services that others can shop from

social commerce denotes a wide range of shopping, recommending, and selling behaviors. -group buyings and daily deals

(groupon, livingsocial, scoutmob) : products and services offered at a reduced rate if enough people agree to buy

social commerce denotes a wide range of shopping, recommending, and selling behaviors. -crowdfunding/crowdsourcing

(threadless, kickstarter, cut on your bias, indiegogo): consumers become involved directly in the production process through voting, funding, and collaboratively designing products

railroads are the best way to ship bulky items such as commodities, autos, and heavy equipment because, compared to other forms of transportation, railroads:

-are able to handle large quantities -are high in the flexibility of handling products -reach many locations

the approximately 3.7 million retail stores in the United States

-are major employers of marketing graduates -employ more than 40 million people

the primary functions of agents and brokers are to

-assist in negotiating an exchange -bring buyers and sellers together

technological methods currently in use in logistics system to track goods include

-bar codes -RFIDs

some wholesalers were tradiotanlly called "cahs and carry" because small businesses would

-carry it with them to their own business -pay for the purchase immediately -purchase the amount needed and transport it themselves

types of retail stores

-department -discount -supermarket -warehouse club -convenience -category killer -outlet -specialty

traditional store retailers were used to shipping from manufacturers to warehouses to the retail store, except for larger purchases such as furniture. They have had to:

-develop systems to delivery directly to customers' homes -outsource distribution functions to specialists such as FedEx and UPS

a channel of distribution ensures which of the following

-flow of communication throughout the channel -flow of money and title to goods -correct assortment and quantities available as needed

there are 3 forms of contractual systems

-franchise systems -wholesaler-sponsored chains -retail cooperatives

materials handling is the movement of goods:

-from warehouses to factory floor -to workstations in the factory -within a warehouse

marketing intermediaries can be eliminated but the functions they perform cannot because

-functions such as assortment and transportation are still needed -title has to be transferred from producers to consumers

producers who use a selective distribution strategy include

-furniture makers -appliance manufacturers

logistics describes how companies perform the 7 R's:

-getting the right product to the right place, to the right customer, at the right time, in the right quantity, in the right condition, and at the right place.

online retailers have had difficulty satisfying customers who:

-have complaints -require personal assistance -need to return purchases

what would be kept in a storage warehouse from one year to the next?

-holiday decorations -lawn mowers -snow blowers

a wholesaler sells to

-hospitals -retailers -producers of goods and services

marketing intermediaries perform the 6 marketing utilities by getting products and services to consumers

-in the form they wanted -when and where they are wanted -at affordable prices

supply chain management adds value to the channel of distribution by

-increasing efficiency -providing an overview of the entire supply chain -lowering costs

the benefits to the retailer of exclusive distribution include

-limited competition in a geographic area -exclusive rights to sell the product

the benefits of kiosks and carts include

-lower overhead for retailers -lower costs for consumers

organizations that assist in moving goods and services from producers to businesses ( B2B) and from businesses to consumer ( B2C) are called

-marketing intermediaries -middle men

which of the following functions are included in supply chain management

-movement of raw materials -control of parts, work in progress, and finished goods -management of information throughout the supply chain

interactive video has added a new dimension to direct marketing because it enables consumers to:

-oder goods and services online -compare prices -when an item from different perspectives

activities in direct marketing include

-online sales -catalog sales -telemarketing

3 basic points about intermediaries:

1-marketing can be eliminated, but their activities can't; that is, you can eliminate some wholesalers and retailers, but then consumers or someone else would have to perform the intermediaries' tasks, including transporting and storing goods, finding supplies, and establishing communication with suppliers 2- intermediary organizations have survived because they perform marketing functions faster and more cheaply than others can. to maintain their competitive position in the channel, they now must adopt the latest technology. That includes search engine optimization, social networking ( on sites like Facebook), and analyzing website statistics to understand their customers better 3- intermediaries add costs to products, but these costs are usually more than offset by the values they create

agents often maintain a long-term relationship with the people they represent, whereas brokers

are usually hired on a temporary basis.

agents who represent producers are either manufacturers' agents or sales agent

as long as they do not carry competing products, manufacturers' agents may represent several manufacturers in a specific territory -they often work in the automotive supply, footwear, and fabricated steel industries. -sales agents represent a single producer in a typically large territory

intermediaire add place utility to products by placing them WHERE people want them

as more and more sales become global, place utility will grow in importance -grocery stores are now adding pick up services, so that customers can order online and then pick up their food as a convenient time and place

Reverse Logistics Activities

brings goods back to the manufacturer because of defects or for recycling materials

producers rather than intermedeiares have provided form utilkity

by changing raw materials into useful products

there are 3 categories of retail distribution: intensive, selective, and exclusive -exclusive distribution

is the use of only one retail outlet in a given geographic area -the retailer has exclusive rights to sell the product and is therefore likely to carry a large inventory, give exceptional service, and pay more attention to this brand than to others. -luxury auto manufacturers often use exclusive disturbing, as do producers of specialty goods such as skydiving equipment

third-party logistics

is the use of outside firms to help move goods from here to there -it is part of the trend to outsource functions your firm cannot do more efficiently than outside firms

few companies are most interested in tracking items than UPS, which now uses a mix of Bluetooth's short-range radio capability and wireless receivers to track merchandise.

it claims the system is better then RFID.

a supply chain is longer than a channel of distribution because

it includes links from suppliers to manufacturers, whereas the channel of distribution begins with manufacturers, -channels of distribution are part of the overall supply train

drop shippers typcially handle products such as

lumber and coal

intermediaires, such as retailers, add time utility tp products by

making them available when consumers need them -time utility by making goods and services available to you 24 hours a day, seven days a week

Outbound logistics activities focus on the ________.

manages the flow of finished products and information to business buyers and ultimately to consumers like you and me.

outsourcing supply chain management is one the rise as more firms realize how complex distribution is

outsourcing this function can have serious consequences though

there are 2 types of merchant wholesalers: full service and limited function -full-service wholesalers

perform all the distribution functions. -they provide a sales force to sell the goods, maintain inventory, communicate advertising deals, arrange the transportation of goods, and provide capital and market information, and they assume the risk for the goods

there are 2 types of merchant wholesalers: full service and limited function -limited-function wholesalers

perform select functions, but try to do them especially well

logistics is the

planning, impleming, and controlling of 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,

pop-up stores are quickly gained in popularity around the country.

pop-ups are temporary outlets that remain open fir a short amount of time in small spaces and offer items not found in traditional stores

there are 3 forms of contractual systems -franchise systems, such as McDonalds

the franchisee agrees to all the rules, regulations, and procedures established by the franchiser. -this results in the consistent quality and level of service you find in the most franchised organizations

supply chain management is

the process of managing the movement of raw materials, parts, work in progress, finished goods, and related information through all the organizations in the supply chain; managing the return of such goods if necessary; and recycling materials when appropriate - a key issue today is making the supply chain sustainable because so much of what affects the environment is caused by the distribution

a retail sale is

the sale of goods and services to consumers for their personal use

many new jobs are becoming available in the exciting area of supply chain management

these include jobs in distribution: trinas, airplanes, trucks, ships, and pipelines -it laosm enas job handiling informaton flows becatuween and keeping track of inventory, following the path of products as they move from seller to buyer and back, recycling goods, and much more

vending machines dispense convenience goods when consumers deposit sufficient money.

they carry the benefit of location - they're found in airports, office buildings, schools, service stations, and other areas where people want convenience items

there are 3 forms of contractual systems -retail cooperatives, such as Associated grocers

this arrangement is much like a wholesalers-sponsored chain except it is initiated by the retailers. -the same degree of cooperation exists, and the stores remain independent. -retailers agree to focus their purchases on one wholesaler, but cooperate retailers could also cause a wholesale organization to ensure better service ( normally)

a good percentage of the total cost of logistics is for storage

this includes the cost of the storage warehouse ( distribution facility) and its operation, plus movement of goods within the warehouse

there are 3 categories of retail distribution: intensive, selective, and exclusive -selective distribution

uses only a preferred group of the available retailers in an area, -such selection helps ensure the producer of quality sales and service. -manufacturers of appliances, furniture, and clothing ( shopping goods) use selective distribution

because such systems ( supply chains) are so effective and efficient, they are sometimes called

value chains instead of supply chains. -starbucks had a value chain that incudes a series of activities that claim to add value to its products at every step in the production process

utillity, in economics, is the

want-satisfying ability, or value, that organizations add to goods or services by making them more useful or accessible to consumers than they were before

intermediaries add possession utility by doing

whatever is necessary to transfer ownership from one party to another, including providing credit. -activities associated with possession utility include delivery, installation, guarantees, and follow-up service -for those who don't want to own goods, possession utility makes it possible for them to use goods through renting or leasing