Ch. 12 - MKTG 4550

5 Key Channel distribution ways

-Breaking bulk -Accumulating bulk and sorting -Creating assortments -Reducing transactions -Transportation and storage

2 Categories of Intermediaries

-Merchant Intermediaries: they do take title to the product. -Agent intermediaries: they don't take title to the product. Perform a variety of physical distribution, transaction and communication, and facilitating functions that make exchange possible.

Intermediaries

Play a role in the exchange process between producer and consumer (used to be called middlemen)

Transaction and communication functions

Selling Buying Marketing communications

Cutting out intermediaries is not a guarantee of saving consumers money. T or F?

True

Distributor

Wholesale middleman, found especially when selective or exclusive distribution is common and strong promotional support is needed. Sometimes used synonymously for a wholesaler.

Franchise organization

a contractual relationship between a franchisor, who is the grantor of the franchise, and the franchisee, who is the independent entity entering into an agreement to perform at the standards required by the franchisor

Creating assortments

accumulating products from several sources to then make those products available down the channel as a convenient assortment for consumers

Facilitating functions

activities that help fulfill completed transactions and also maintain the viability of the channel relationships -Financing -Market research -Risk-taking

Agent

business entity that negotiates purchases, sales, or both but does not take title to the goods involved.

Channel of distribution

consists of interdependent entities that are aligned for the purpose of transferring possession of a product from producer to consumer or business user (interdependent relationships among organizations)

Contractual VMS

consists of otherwise independent entities that are bound together legally through contractual agreement

Indirect channel

contains one or more intermediary levels (does not sell directly to consumer)

Retailer

entity primarily engaged in selling to end-user consumers

Facilitating agent

entity that assists in the performance of distribution tasks other than buying, selling, and transferring title

Direct channel

has no intermediaries and operates from manufacturer to consumer or organizational buyer

Middlemen

independent business entity that links producers and end-user consumers or organizational buyers.

Jobber

middleman that buys from manufacturers and sells to retailers. sometimes called "rack jobber' to reference the service of stocking racks or shelves with merchandize

Merchant Middlemen

middleman that buys goods outright, taking title to them.

Breaking bulk

occurs within a channel to better match quantities needed to space constraints and inventory turnover requirements (buying in large quantities and selling in smaller-quantities)

Network organization (virtual organization)

organization that eliminates many in-house business functions and activities in favor of focusing only on those aspects for which it is best equipped to add value.

Wholesaler

primarily engaged in buying(taking title to) and resell the goods to retailers or to organizational buyers

Disintermediation

shortening or collapsing of marketing channels due to the elimination of one or more intermediaries, is common in the electronic channel

Accumulating bulk

taking in product from multiple sources and transforming it, often through sorting it into different classifications for sales through the channel

Retailer cooperative (co-op)

the binding of retailers across a variety of product categories to gain cost and operating economies of scale in the channel

Physical distribution/logistics

the integrated process of moving input materials to the producer, in-process inventory through the firm, and finished goods out of the firm through the channel of distribution

Corporate VMS

the investment of a channel member in backward or forward vertical integration by buying controlling interests in other intermediaries (Braum's example)

Nimble

to be in a position to be maximally flexible, adaptable, and speedy in response to the many key change drivers affecting business today

Vertical marketing system (VMS)

vertically aligned networks behaving and performing as a unified system

Wholesaler cooperative

when retailers contract for varying degrees of exclusive dealings with a particular wholesaler

Customer advocacy

A willingness and ability on the part of a customer to participate in communicating the brand message to others within his or her sphere of influence.

Manufacturer's Agent

Agent that usually operates on an extended contract, often sells within an exclusive territory, handles noncompeting but related lines of goods, and has limited authority to price and create terms of sale.