MKTG 409 Chapter 14

Unit Loading

A common method used in materials handling. One or more boxes are placed on a pallet or skid.

Containerization

A common method used in materials handling. The consolidation of many items into single, large container that is sealed at its point of origin and opened at its destination.

Electronic Data Interchange (EDI)

A computerized means of integrating order processing with production inventory, accounting, and transportation.

Channel Captain

Also called Channel Leader. The dominant leader of a marketing channel or a supply channel.

Megacarriers

Freight transportation firms that provide several modes of shipment.

Time Utility

Having products available when the customer wants them.

Birdybacks

Method of transportation for containerization that facilitates intermodal transportation by consolidating shipments into sealed containers. Using air carriers.

Logistics Management

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.

Possession Utility

The customer has access to the product to use or to store for future use.

Distribution

The decisions and activities that make products available to customers when and where they want to purchase them.

Strategic Issues in Marketing Channels

To maintain customer satisfaction and an effective supply chain, manages must retain a strategic focus on certain competitive priorities, including developing channel leadership, fostering cooperation between channel members, managing channel conflict, and possibly consolidating marketing channels through channel integration.

Intermodal Transportation

Two or more transportation modes used in combination.

Exclusive Distribution

Using a single outlet in a fairly large geographic area to distribute a product. Specialty products.

Vertical Channel Integration

Combining two or more stages of the marketing channel under one management.

Private Warehouses

Company-operated facilities for storing and shipping products.

Materials Handling

Physical handling of tangible goods, supplies, and resources.

Channel Power

The ability of one channel member to influence another member's goal achievement.

Vertical Marketing System (VMS)

A marketing channel managed by a single channel member to achieve efficient, low-cost distribution aimed at satisfying target market customers.

Full-Line Forcing

A related practice to tying agreement. In which a supplier requires that channel members purchase the supplier's entire line to obtain any of the supplier's products.

Exclusive Dealing

A situation in which a manufacturer forbids an intermediary from carrying products of competing manufacturers.

Supply Chain

All the organizations and activities involved with the flow and transformation of products from raw materials through to the end customer. "upstream" supply chain = producers and suppliers "downstream" supply chain = wholesalers and retailers Before = marketing focused solely on certain downstream supply chain activities. NOW= marketing professionals are recognizing that they can reduce costs, boost profits, and better serve customers by effectively integrating activities along the ENTIRE supply chain. In an efficient supply chain, upstream firms provide direct or indirect input to make the product, while downstream firms are responsible for delivery of the product and after-market services to the ultimate customers.

Marketing Channel

Also called a channel of distribution or distribution channel. 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. Marketing channels serve many functions, including creating utility and facilitating exchange efficiencies.

Physical Distribution

Also called logistics. Activities used to move products from producers to consumers and other end users.

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.

Strategic Channel Alliance

An agreement whereby the products of one organization are distributed through the marketing channels of another.

Industrial Distributor

An independent business organization that takes title to industrial products and carries inventories.

Form Utility

Assembling, preparing, or otherwise refining the product to suit individual customer needs.

Administered VMS

Channel members are independent, but informal coordination achieves a high level of inter-organziational management.

Corporate VMS

Combines all stages of the marketing channel, from producers to consumers, under a single owner.

Horizontal Channel Integration

Combining organizations at the same level of operation under one management.

Digital Distribution

Delivering content through the Internet to a computer or other device.

Inventory Management

Developing and maintaining adequate assortments of products to meet customers' needs.

Field Public Warehouses

Established by public warehouses at the owner's inventory location.

Third-Party Logistics (3PL) Firms

Firms that have special expertise in core physical distribution activities such as warehousing, transportation, inventory management, na information technology and can often perform these activities more efficiently.

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.

Distribution Centers

Large, centralized warehouses that focus on moving rather than storing goods.

Place Utility

Making products available in locations where customers wish to purchase them.

Piggyback

Method of transportation for containerization that facilitates intermodal transportation by consolidating shipments into sealed containers. Using truck trailers and railway flatcars.

Fishyback

Method of transportation for containerization that facilitates intermodal transportation by consolidating shipments into sealed containers. Using water carriers.

Marketing Intermediaries

Middlemen that link producers to other intermediaries or ultimate consumers through contractual arrangements or through the purchase and resale of products. Play key roles in CRM, not only through their distribution activities but also by maintaining databases and information systems to help all members of the marketing channel maintain effective customer relationships.

Freight Forwarders

Organizations that consolidate shipments from several firms into efficient lot sizes.

Bonded Storage

Public warehouses provide bonded storage. A warehousing arrangement in which imported or taxable products are not released until the products' owners pay U.S. customs duties, taxes, or other fees.

Stockouts

Shortages of products. When too few products are carried in inventory.

Just-In-Time (JIT)

Sometimes referred to as lean distribution. An inventory-management approach in which supplies arrive just when needed for production or resale.

Public Warehouses

Storage space and related physical distribution facilities that can be leased by companies.

Safety Stock

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 Lead Time

The average time lapse between placing the order and receiving it.

Outsourcing

The contracting of physical distribution tasks to third parties.

Supply-Chain Management (SCM)

The coordination of all the activities involved with the flow and transformation of supplies, products, and information throughout the supply chain to the ultimate consumer. It integrates the functions of operations management, supply management, logistics management, and marketing channel management so that products are produced and distributed in the right quantities, to the right locations, and at the right times. SCM should begin with the focus on the customer, who is the ultimate consumer and whose satisfaction should be the goal of all the efforts of channel members.

Warehousing

The design and operation of facilities for storing and moving goods.

Reorder Point

The inventory level that signals the need to place a new order.

Contractual VMS

The most popular type of vertical marketing system. Channel members are linked by legal agreements spelling out each member's rights and obligations.

Transportation

The movement of products from where they are made to intermediaries and end users.

Usage Rate

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

Order Processing

The receipt and transmission of sales order information.

Cycle Time

The time needed to complete a process.

Operations Management

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

Multichannel Distribution

The use of a variety of marketing channels to ensure maximum distribution.

Intensive Distribution

Using all available outlets to distribute a product. Convenience products

Selective Distribution

Using only some available outlets in an area to distribute a product. Shopping products.

Radio Frequency Identification (RFID)

Using radio waves to identify and track materials tagged with special microchips.