Chapter 15

What is a channel of distribution?

A channel of distribution consists of a whole set of marketing intermediar- ies, such as agents, brokers, wholesalers, and retailers, that join together to transport and store goods in their path (or channel) from producers to consumers.

corporate distribution system

A distribution system in which all of the organizations in the channel of distribution are owned by one firm.

contractual distribution system

A distribution system in which members are bound to cooperate through contractual agreements.

administered distribution system

A distribution system in which producers manage all of the marketing functions at the retail level.

social commerce

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

wholesaler

A marketing intermediary that sells to other organizations.

How do intermediaries perform the six marketing utilities?

A retail grocer may cut or trim meat, providing some form utility. But marketers are more often responsible for the five other utilities. They pro- vide time utility by having goods available when people want them, and place utility by having goods where people want them. Possession utility makes it possible for people to own things and includes credit, delivery, installation, guarantees, and anything else that completes the sale. Mar- keters also inform consumers of the availability of goods and services with advertising, publicity, and other means. That provides information utility. Finally, marketers provide fast, friendly, and efficient service during and after the sale (service utility).

What is a retailer?

A retailer is an organization that sells to ultimate consumers. Marketers develop several strategies based on retailing.

What are the different kinds of warehouses?

A storage warehouse stores products for a relatively long time. Distribu- tion warehouses are used to gather and redistribute products.

channel of distribution

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 producers to consumers.

What is a wholesaler?

A wholesaler is a marketing intermediary that sells to organizations and individuals, but not to final consumers.

service utility

Adding value by providing fast, friendly service during and after the sale and by teaching customers how to best use products over time.

place utility

Adding value to products by having them where people want them.

time utility

Adding value to products by making them available when they're needed.

information utility

Adding value to products by opening two-way flows of information between marketing participants.

What is the difference between logistics and distribution?

Distribution generally means transportation. Logistics is more complex.Inbound logistics brings raw materials, packaging, other goods and ser- vices, and information from suppliers to producers. Materials handling is the moving of goods from warehouses to the factory floor and to various workstations. Outbound logistics manages the flow of finished products and information to business buyers and ultimate consumers (people like you and me). Reverse logistics brings goods back to the manufacturer because of defects or for recycling materials.

selective distribution

Distribution that sends products to only a preferred group of retailers in an area.

exclusive distribution

Distribution that sends products to only one retail outlet in a given geographic area.

possession utility

Doing whatever is necessary to transfer ownership from one party to another, including providing credit, delivery, installation, guarantees, and follow-up service.

What is intermodal shipping?

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

What is logistics?

Logistics includes planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of ori- gin to points of consumption to meet customer requirements at a profit.

What are the principles behind the use of such intermediaries?

Marketing intermediaries can be eliminated, but their activities can't. Without wholesalers and retailers, consumers would have to perform the tasks of transporting and storing goods, finding suppliers, and establishing communication with them. Intermediaries add costs to products, but these costs are usually more than offset by the values they create.

What are some wholesale organizations that assist in the movement of goods from manufacturers to consumers?

Merchant wholesalers are independently owned firms that take title to the goods they handle. Rack jobbers furnish racks or shelves full of mer- chandise to retailers, display products, and sell on consignment. Cash- and-carry wholesalers serve mostly small retailers with a limited assortment of products. Drop shippers solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer.

Whataresome of the forms of nonstore retailing?

Nonstore retailing includes electronic retailing; telemarketing (marketing by phone); vending machines, kiosks, and carts (marketing by putting products in convenient locations, such as in the halls of shopping cen- ters); direct selling (marketing by approaching consumers in their homes or places of work); multilevel marketing (marketing by setting up a sys- tem of salespeople who recruit other salespeople and help them to sell directly to customers); and direct marketing (direct mail and catalog sales). Telemarketing and online marketing are also forms of direct marketing.

marketing intermediaries

Organizations that assist in moving goods and services from producers to businesses (B2B) and from businesses to consumers (B2C).

electronic retailing

Selling goods and services to ultimate customers (e.g., you and me) over the Internet.

direct selling

Selling to consumers in their homes or where they work.

reverse logistics

The area of logistics that involves bringing goods back to the manufacturer because of defects or for recycling materials.

inbound logistics

The area of logistics that involves bringing raw materials, packaging, other goods and services, and information from suppliers to producers.

outbound logistics

The area of logistics that involves managing the flow of finished products and information to business buyers and ultimate consumers (people like you and me).

Whatarethe four types of distribution systems?

The four distribution systems that tie firms together are (1) corporate sys- tems, in which all organizations in the channel are owned by one firm; (2)contractual systems, in which members are bound to cooperate through contractual agreements; (3) administered systems, in which all marketing functions at the retail level are managed by manufacturers; and (4) supply chains, in which the various firms in the supply chain are linked electroni- cally to provide the most efficient movement of information and goods possible.

logistics

The marketing activity that involves planning, implementing, and controlling 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.

materials handling

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

supply-chain management

The process of managing the movement of raw materials, parts, work in progress, finished goods, and related information through all the organizations involved in the supply chain; managing the return of such goods, if necessary; and recycling materials when appropriate.

telemarketing

The sale of goods and services by telephone.

supply chain (value chain)

The sequence of linked activities that must be performed by various organizations to move goods from the sources of raw materials to ultimate consumers

rack jobbers

Wholesalers that furnish racks or shelves full of merchandise to retailers, display products, and sell on consignment.

drop shippers

Wholesalers that solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer.

freight forwarder

An organization that puts many small shipments together to create a single large shipment that can be transported cost- effectively to the final destination.

retailer

An organization that sells to ultimate consumers.

direct marketing

Any activity that directly links manufacturers or intermediaries with the ultimate consumer.

intensive distribution

Distribution that puts products into as many retail outlets as possible.

utility

In economics, the want- satisfying ability, or value, that organizations add to goods or services.

merchant wholesalers

Independently owned firms that take title to the goods they handle.

How do marketing intermediaries add value?

Intermediaries perform certain marketing tasks—such as transporting, storing, selling, advertising, and relationship building—faster and more cheaply than most manufacturers could. Channels of distribution ensure communication flows and the flow of money and title to goods. They also help ensure that the right quantity and assortment of goods will be avail- able when and where needed.

agents/brokers

Marketing intermediaries who bring buyers and sellers together and assist in negotiating an exchange but don't take title to the goods.

intermodal shipping

The use of multiple modes of transportation to complete a single long-distance movement of freight.

What are the various transportation modes?

Transportation modes include rail (for heavy shipments within the coun- try or between bordering countries); trucks (for getting goods directly to consumers); ships (for slow, inexpensive movement of goods, often inter- nationally); pipelines (for moving water, oil, and other such goods); and airplanes (for shipping goods quickly).

cash-and-carry wholesalers

Wholesalers that serve mostly smaller retailers with a limited assortment of products.