Marketing Quiz 15

Exclusive Distribution

Exclusive distribution uses only one outlet in a relatively large geographic area.

Channel Leadership

Many marketing-channel decisions are determined by give-and-take among channel partners, with the idea that the overall channel ultimately will benefit.

Competition

The success or failure of a competitor's marketing channel may encourage or dissuade an organization from considering a similar approach. A firm also may be forced to adopt a similar strategy to remain competitive.

Characteristics of Intermediaries

When an organization believes that a current intermediary is not promoting the organization's products adequately, it may reconsider its channel choices.

Physical distribution

also known as logistics, refers to the activities used to move products from producers to consumers and other end users.

Distribution centers=

are large facilities used for receiving, warehousing, and redistributing products to stores or customers.

strategic channel alliance

exists when the products of one organization are distributed through the marketing channels of another. -Such alliances can provide benefits for both the organization that owns the marketing channel and the company whose brand is being distributed through the channel.

Distribution

focuses on the decisions and activities involved in making products available to customers when and where they want to purchase them

vertical marketing system (VMS)

in which a single channel member coordinates or manages channel activities to achieve efficient, low-cost distribution aimed at satisfying target-market customers. - Vertical integration brings most or all stages of the marketing channel under common control or ownership

marketing channel

is a group of individuals and organizations that direct the flow of products from producers to customers within the supply chain. - The major role of marketing channels—is to make products available at the right time at the right place in the right quantities.

usage rate

is the rate at which a product's inventory is used or sold during a specific time period.

marketing intermediaries

that link producers to other intermediaries or to ultimate consumers through contractual arrangements or through the purchase and reselling of products. - Wholesalers and retailers are examples of intermediaries.

channel power

the ability to influence another channel member's goal achievement.

Warehousing

the design and operation of facilities for storing and moving goods, is another important physical distribution function

reorder point

the inventory level that signals the need to place a new order. reorder point = (order lead time × usage rate) + safety stock

Selective Distribution

uses only some available outlets in an area to distribute a product. - Selective distribution is appropriate for shopping products; durable goods, such as televisions, stereos, and home computers, usually fall into this category. - These products are more expensive than convenience goods, and consumers are willing to spend more time visiting several retail outlets to compare prices, designs, styles, and other features.

Supply management

(e.g., purchasing, procurement, sourcing) 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.

Customer Characteristics

-Business customers often prefer to deal directly with producers (or very knowledgeable channel intermediaries such as industrial distributors), especially for highly technical or expensive products, such as mainframe computers, jet airplanes, and large mining machine -Consumers, on the other hand, generally buy limited quantities of a product, purchase from retailers, and often do not mind limited customer service.

Most vertical marketing systems take one of three forms:

1. Corporate- combines all stages of the marketing channel, from producers to consumers, under a single owner. 2. Administered- channel members are independent, but a high level of interorganizational management is achieved through informal coordination. 3. Contractual- the most popular type of vertical marketing system, channel members are linked by legal agreements spelling out each member's rights and obligations.

Competitive Priorities in Marketing Channels

Goal-driven supply chains, by direction of their firms, focus on the "competitive priorities" of speed, quality, cost, or flexibility as the performance objective. These priorities can generate problems for some organizations.

Intensive Distribution

Intensive distribution uses all available outlets for distributing a product. - Intensive distribution is appropriate for most convenience products like bread, chewing gum, soft drinks, and newspapers.

Product Attributes

Marketers of complex and expensive products like automobiles will likely employ short channels, as will marketers of perishable products, such as dairy and produce. - Less-expensive, more standardized products like soft drinks and canned goods can employ longer channels with many intermediaries.

channel captain

Some marketing channels, however, are organized and controlled by a single leader,

Multiple Marketing Channels

To reach diverse target markets, manufacturers may use several marketing channels simultaneously, with each channel involving a different group of intermedi

stockouts

When too few products are carried in inventory

manufacturers' agent

an independent businessperson who sells complementary products of several producers in assigned territories and is compensated through commissions. Unlike an industrial distributor, a manufacturers' agent does not acquire title to the products and usually does not take possession. - For an organizational seller with highly seasonal demand, a manufacturers' agent can be an asset because the seller does not have to support a year-round sales force.

Selecting Marketing Channels

channel selection decisions are usually significantly affected by one or more of the following factors: 1. customer characteristics 2. product attributes 3. type of organization 4. Competition 5. marketing environmental forces 6. characteristics of intermediaries

Vertical Channel Integration

combines two or more stages of the channel under one management. - This may occur when one member of a marketing channel purchases the operations of another member or simply performs the functions of another member, eliminating the need for that intermediary.

just-in-time (JIT) approach

in which supplies arrive just as they are needed for use in production or for resale

Inventory management

involves developing and maintaining adequate assortments of products to meet customers' needs. - The objective of inventory management is to minimize inventory costs while maintaining an adequate supply of goods to satisfy customers.

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.

industrial distributor

is an independent business that takes title to products and carries inventories. - Industrial distributors usually sell standardized items, such as maintenance supplies, production tools, and small operating equipment. - Overall, these distributors can be most effectively used when a product has broad market appeal, is easily stocked and serviced, is sold in small quantities, and is needed on demand to avoid high losses.

Safety stock

is the amount of extra inventory a firm keeps to guard against stockouts resulting from above-average usage rates and/or longer-than-expected lead times.

Order processing

is the receipt and transmission of sales order information.

Operations management

is the total set of managerial activities used by an organization to transform resource inputs into products, services, or both.

Supply Chain Management Pt2.

is therefore 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

lead time

refers to the average time lapse between placing the order and receiving it.

Materials handling

the physical handling of tangible goods, supplies, and resources, is an important factor in warehouse operations, as well as in transportation from points of production to points of consumption.

cycle time

the time needed to complete a process.

dual distribution

the use of two or more marketing channels to distribute the same products to the same target market.

Supply Chain Management

which refers to all the activities associated with the flow and transformation of products from raw materials through to the end customer. - This results in a total distribution system that involves firms that are both "upstream" in the supply chain (e.g., suppliers) and "downstream" (e.g., wholesalers, retailers) to serve customers and generate competitive advantage

Type of Organization

-Owing to their sheer size, larger firms may be able to negotiate better deals with vendors or other channel members. -Compared with small firms, they may be in a better position to have more distribution centers, which may reduce delivery times to customers.

Warehouses fall into two general categories:

1. Private- for shipping and storing their own products. 2. Public- lease storage space and related physical distribution facilities to other companies

Marketing channels create four types of utility:

1. Time- is having products available when the customer wants them 2. Place- Place utility is created by making products available in locations where customers wish to purchase them. 3. Possession- Possession utility means that the customer has access to the product to use or to store for future use. 4.Form- create by assembling, preparing, or otherwise refining the product to suit individual customer needs

Order processing entails three main tasks:

1. order entry- Order entry begins when customers or salespeople place purchase orders via telephone, regular mail, e-mail, or website. 2. order handling 3. order delivery- The customer is sent an invoice, inventory records are adjusted, and the order is delivered.

Environmental Forces

Adverse economic conditions might force an organization to use a low-cost channel, even though customer satisfaction is reduced.

Channels for Business Products

As with consumer products, manufacturers of business products sometimes work with more than one level of wholesalers. Business customers prefer to communicate directly with producers, especially when expensive or technically complex products are involved

Channel Integration

Channel members can either combine and control most activities or pass them on to another channel member.

Horizontal Channel Integration

Combining organizations at the same level of operation under one management constitutes horizontal channel integration. An organization may integrate horizontally by merging with other organizations at the same level in the marketing channel.

Channels for Consumer Products

Contrary to popular opinion, a long channel may be the most efficient distribution channel for some consumer goods. - When several channel intermediaries perform specialized functions, costs may be lower than when one channel member tries to perform them all.

Channel Cooperation

Cooperation enables retailers, wholesalers, suppliers, and logistics providers to speed up inventory replenishment, improve customer service, and cut the costs of bringing products to the consumer