Introduction to Marketing Chapter 10
Indirect marketing channel
A marketing channel containing one or more intermediary levels.
Direct marketing channel
A marketing channel that has no intermediary levels.
Value delivery network
A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value.
Marketing channel (distribution channel)
A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.
Which of the following statements is true regarding marketing channels and channel intermediaries?
Using marketing channel intermediaries means producers give up some control over how and to whom they sell their products.
Exclusive Distribution
Very limited number of dealers with exclusive right to distribute in their territories. Ex: Only at Macys
Retailers decide:
- Product assortment: be different vs. competitors - Services mix: Offer unique services - Store atmosphere: Create a unique store experience (ex: experiential retailing)
Conventional distribution channel
1+ independent producers, wholesalers, and retailers • Each member is a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole.
Horizontal marketing system
A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
Multichannel distribution system
A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments.
Category Killers
A giant specialty store that carries a very deep assortment of a narrow product line Ex: Party City, Pet Smart
Channel level
A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.
Retailing
Activities involved in selling goods or services directly to consumers for their personal use
What are the four steps to designing marketing channels in their correct order?
Analyzing consumer needs, setting channel objectives, identifying major channel alternatives, and evaluating the alternatives.
Brands typically go through three phases of managing vertical sales channel conflict:
Avoid Conflict Manage Conflict Reconcile Conflict
Which of the following statements is true regarding channel organization?
Channel members are dependent on each other for the overall success of the channel.
Channel Conflict
Disagreements among marketing channel members on goals, roles, and rewards
Downstream Partners
Distribution Retailers Customers
Which of the following statements regarding marketing logistics is true?
Marketing logistics involve inbound logistics, outbound logistics, and reverse logistics.
Selective Distribution
More than one, but less than all, carry the product. Ex:
Disintermediation
Occurs when product or service producers cut out marketing channel intermediaries or when radically new types of channel intermediaries displace traditional ones
Marketing logistics (physical distribution)
Planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet customer requirements at a profit.
Which of the following statements is true regarding the selection of qualified channel members?
Producers vary in their ability to attract qualified marketing intermediaries.
Upstream Partners
Raw Material Suppliers Finances
Amount of Service Offered (Retailer)
Self-Service Retailers: Customers locate-compare-select to save time or money. (Walmart) Limited Service Retailers: Carry more shopping goods that require some sales assistance. Higher prices due to higher operating costs. (JC Penny) Full-Service Retailers: Carry more specialty goods that require high-touch sales assistance. Higher prices due to much higher operating costs (Nordstrom)
Product Line Breadth & Depth (Retailer)
Specialty Stores: Narrow product lines; deep assortment within those lines (Destination Maternity) Department Stores: Wide variety of product lines (JC Penny) Supermarkets: Large, low-cost, low-margin, high-volume self-service store that carries wide range of food and household products (Shoprite) Convenience Stores: Small stores, limited line of high turnover convenience goods (Wawa) Superstores: Very large store for routinely purchased items (Walmart)
Intensive Distribution
Stock product in as many outlets as possible. Ex: Coke
Horizontal Marketing System
Two or more companies at one level join together to follow a new marketing opportunity
Shopper marketing
Using in-store promotions and advertising to extend brand equity to "the last mile" Encourages favorable point-of-purchase decisions
When assigning functions to channel members, it is important for producers to ________.
assign functions to the channel members that can add the most value for the cost
Indirect Marketing Channels
contain 1 or more intermediary levels
Channel Length
number of intermediary levels
Horizontal Conflict
occurs among firms at the same level of the channel. Ex: walmart, target
Vertical Conflict
occurs between different levels of the same channel. Ex: Sony, bestbuy
Most companies today see their intermediaries as first-line customers and focus on ________ to forge long-term relationships with channel members.
partner relationship management
A ________ consists of producers, wholesalers, and retailers acting as a unified system.
vertical marketing system The three major types of VMSs are corporate VMSs, contractual VMSs, and administered VMSs.
What are the four major functions of marketing logistics?
Warehousing, inventory management, transportation, and logistics information management
When designing marketing channels, companies must determine the number of channel members to use at each level. The three strategies that are available to do this are ________ distribution.
intensive, selective, and exclusive