Marketing: Chapter 13
*1.3 trillion
$$ annual cost of business logistics in the United States
*70%
%% the percent of a firm's cost base that can be traced back to its supply chain
*corporate VMS
(least popular VMS) - combines all stages of the marketing channel under a single owner [EX: Kellogs, Zara]
*contractual VMS
(most popular VMS) - channel members are linked by legal agreements spelling out each member's rights and obligations [EX: franchises like McDonald's and KFC]
Selective distribution
Distribution of a product through a limited number of channels.
Exclusive distribution
Distribution of a product through a single wholesaler or retailer in a specific geographic location.
Intensive distribution
Distribution of a product through all available channels.
Channel captain ("channel leader")
Dominant and controlling member of a marketing channel.
Vertical marketing system (VMS)
Planned channel system designed to improve distribution efficiency and cost-effectiveness by integrating various functions throughout the distribution chain.
*Containerization
Process of consolidating many items into a single, large container that is sealed at its point of origin and opened at its destination
strategic channel alliance
agreement whereby the products of one organization are distributed through the marketing channels of another
*outsourcing
contracting physical distribution tasks to third parties
megacarriers
freight transportation firms that provide several modes of shipment
*reorder point [reorder point = (order lead time * usage rate) + safety stock)]
inventory level that signals the need to place a new order
logistics management
involves planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants
distribution centers
large, centralized warehouses that focus on moving rather than storing goods
*possession utility
marketing channels --> give the customer access to the product to use or to store for future use
*form utility
marketing channels --> help with assembling, preparing, or otherwise refining the product to suit individual needs
*place utility
marketing channels --> make products available in locations where customers wish to purchase them
*time utility
marketing channels --> make products available when the customer wants them
freight forwarders
organizations that consolidate shipments from several firms into efficient lot sizes
materials handling
physical handling of tangible goods, supplies, and resources
public warehouses
storage space and related physical distribution facilities that can be leased by companies
Distribution
the decisions and activities that make products available to customers when and where they want to purchase them
warehousing
the design and operation of facilities for storing and moving goods
cycle time
the time needed to complete a process
*birdyback
truck trailers and air carriers
*piggyback
truck trailers and railway flatcars
*fishyback
truck trailers and water carriers
*bonded storage
warehousing arrangement in which imported or taxable products are not released until the product's owners pay US customers, duties, taxes, or other fees (enables firms to defer tax payments on products until they are delivered to customers)
*Downstream management
Controlling part of the supply chain that involves finished product storage, outbound logistics, marketing and sales, and customer service.
*Upstream management
Controlling part of the supply chain that involves raw materials, inbound logistics, and warehouse and storage facilities.
Marketing channel ("channel of distribution" or "distribution channel")
System of marketing institutions that enhances the physical flow of goods and services, along with ownership title, from producer to consumer or business user.
*Radio-frequency identification (RFID)
Technology that uses a tiny chip with identification information that can be read by a scanner using radio waves from a distance.
Marketing intermediary ("middleman" or "agent")
Wholesaler or retailer that operates between producers and consumers or business users.
Supply chain management
a set of approaches used to integrate the functions of operations management, logistics management, supply management, and marketing channel management so products are produced and distributed in the right quantities, to the right locations, and at the right time
exclusive dealing
a situation in which a manufacturer forbids an intermediary from carrying products of competing manufacturers
channel power
ability of one channel member to influence another member's goal achievement
Physical distribution ("logistics")
activities used to move products from producers to consumers and other end users
Supply chain
all the activities associated with the flow and transformation of products from raw materials through to the end customer
Tying agreement
an agreement in which a supplier furnishes a product to a channel member with the stipulation that the channel member must purchase other products as well
industrial distributor
an independent business organization that takes title to industrial products and carries inventories
just-in-time (JIT) ("lean distribution")
an inventory-management approach in which supplies arrive just when needed for production or resale
*order lead time
average time lapse between placing the order and receiving it
*administered VMS
channel members are independent, but informal coordination achieves a high level of interorganizational management; one channel member dominates the VMS [EX: uniform accounting and ordering procedures; cooperate in promotional activities for mutual benefit]
horizontal channel integration
combining organization at the same level of operation under one management
vertical channel integration
combining two or more stages of the marketing channel under one management
private warehouses
company-operated facilities for storing and shipping
electronic data interchange (EDI)
computerized means of integrating order process with production, inventory, accounting, and transportation
inventory management
developing and maintaining adequate assortments of products to meet customers' needs
supply management
in its broadest form, refers to the processes that enable the progress of value from raw material to final customer and back to redesign and final disposition
*full-line forcing
supplier requires that channel members purchase the supplier's entire line to obtain any of the supplier's products (used to ensure that intermediaries accept new products and that a suitable range of products is available to customers)
transportation
the movement of products from where they are made to intermediaries and end users
order processing
the receipt and transmission of sales order information
operations management
the total set of managerial activities used by an organization to transform resource inputs into products, services, or both
Dual distribution
the use of two or more marketing channels to distribute the same products to the same target market
intermodal transportation
two or more transportation modes used in combination