Test 2 Chapter 14 Additional Definitions

Corporate

A _________ VMS combines all stages of the marketing channel, from producers to consumers, under a single owner. For example, the Inditex Group, which owns popular clothing retailer Zara, utilizes a corporate VMS to achieve channel efficiencies and maintain a maximum amount of control over the supply chain.

Contractual

A ___________ VMS is the most popular type of vertical marketing system. Channel members are linked by legal agreements spelling out each member's rights and obligations. Franchise organizations, such as McDonald's and KFC, are __________ VMSs.

Upstream; downstream

A distribution system involves firms that are "___________" in the supply chain (e.g., producers and suppliers) and "____________" (e.g., wholesalers and retailers) working together to serve customers and generate competitive advantage.

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.

Characteristics; attributes; organization; competition; environmental; intermediaries

Although the process varies across organizations, channel selection decisions are usually affected significantly by one or more of the following factors: customer ________, product _______, type of _________, ________, marketing ________ forces, and characteristics of _______.

Field public warehouses

Are established by public warehouses at the owner's inventory location. The warehouser becomes custodian of the products and issues a receipt that can be used as collateral for a loan.

Order entry

Begins when customers or salespeople place purchase orders via customer-service counter, telephone, regular mail, e-mail, or website.

Reorder point

Can be calculated using the following formula: Reorder Point = (Order Lead Time x Usage Rate) + Safety Stock

Market presence; accessibility

Channel decisions are critical because they determine a product's _________ __________ and __________.

Form utility

Channel members sometimes create _____ _____ by assembling, preparing, or otherwise refining the product to suit individual customer needs.

Piggyback; fishyback; birdyback

Containerization facilitates intermodal transportation by consolidating shipments into sealed containers for transport by ___________ (using truck trailers and railway flatcars), __________ (using water carriers), and ________ (using air carriers).

Administered

In an _________ VMS, channel members are independent, but informal coordination achieves a high level of inter-organizational management. Members of an ________ VMS may adopt uniform accounting and ordering procedures and cooperate in promotional activities for the benefit of all partners.

Upstream; downstream

In an efficient supply chain, ___________ firms provide direct or indirect input to make the product, while __________ firms are responsible for delivery of the product and after-market services to the ultimate customers.

Order handling

Involves several tasks. Once an order is entered, it is transmitted to a warehouse to verify product availability and, if necessary, to the credit department to set terms and prices and to check the customer's credit rating. If the credit department approves the purchase, warehouse personnel assemble the order. In many warehouses, automated machines carry out this step. If the requested product is not in stock, a production order is sent to the factory, or the customer is offered a substitute.

Time utility

Is having products available when the customer wants them. Services like Netflix allow customers to watch a movie whenever they want.

Place utility

Is making products available in locations where customers wish to purchase them. For example, Zappos allows customers to shop for shoes and accessories anywhere they have access to a mobile device and an Internet connection.

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.

Containerization

Is the consolidation of many items into a single, large container that is sealed at its point of origin and opened at its destination.

Usage rate

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

Time, place, possession, and form

Marketing channels create four types of utility: _____, ______, ______, and ____..

Utility; efficiencies

Marketing channels serve many functions, including creating ________ and facilitating exchange ___________.

Possession utility

Means that the customer has access to the product to use or to store for future use. Possession utility can occur through ownership or through arrangements that give the customer the right to use the product, such as a lease or rental agreement.

Corporate, administered, contractual

Most vertical marketing systems take one of three forms: ______, _______, or _______.

Unit loading

One or more boxes are placed on a pallet or skid. These units can then be loaded efficiently by mechanical means, such as forklifts, trucks, or conveyer systems.

Order entry, order handling, and order delivery

Order processing entails three main tasks..

Customer satisfaction

Providing _______ ______ should be the driving force behind marketing channel decisions.

Order lead time

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

Supply-chain management

Refers to 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.

When; how

The objective of inventory management is to minimize inventory costs while maintaining an adequate supply of goods to satisfy customers. To achieve this objective, marketers focus on two major issues: _____ to order and ____ much to order.

Intensive, selective, and exclusive distribution

The three major levels of market coverage are ______, ______, and _______ ______. .

Customer relationship management (CRM)

This system exploits the information in supply-chain partners' information systems and makes it available for easy reference. This can help all channel members make better marketing strategy decisions that develop and sustain desirable customer relationships.

Reorder point

To determine when to order, a marketer calculates the ______ ____: the inventory level that signals the need to place a new order. To calculate the ______ _______ , the marketer must know the order lead time, the usage rate, and the amount of safety stock required.

Competitive priorities; speed; cost

To unlock the potential of a supply chain, activities must be coordinated into an effective system. Supply chains driven by firm-established goals focus on the "___________ ____________" of speed, quality, cost, or flexibility as the performance objective. Managers must remember, however, to keep a holistic view of the supply chain so that goals such as "_______" or "______" do not result in dissatisfied or underpaid workers or other such abuses in factories. This should be a particular concern among firms that use international manufacturers because it can be more difficult to monitor working conditions internationally.

Private and public

Warehouses fall into two general categories

Stockouts

When too few products are carried in inventory, the result is _______, or shortages of products. ________ can result in customer dissatisfaction that leads to lower sales, even loss of customers and brand switching.

Full-line forcing

Where a supplier requires that channel members purchase the supplier's entire line to obtain any of the supplier's products.

Intermediaries; Wholesalers; Retailers

Wholesalers and retailers are examples of ____________. ____________ buy and resell products to other wholesalers, retailers, and industrial customers. __________ purchase products and resell them to end consumers.

Unit loading and containerization

_____ _______ and ___________ are two common methods used in materials handling.