Marketing (Ch 8)

Channel Leaders

(Captains) Strong channel member wields power.

Channel Power

Ability to influence a channel partners goals and affects

Strategic Channel Alliances

Agreement by 2+ firms to deliver products via "channel."

Resale Price Maintenance Agreement

Agreement whereby a producer of a product restricts the price a retailer can charge for it

Conventional Marketing System

All members operate independently

Supply Chain

All organizations that participate in production, promotion, and delivery of a product/service from producer to end consumer

Vertical Conflict

Between 2 different types of members in a channel

Horizontal Conflict

Between organizations of same type. Healthy.

Retailers

Buy products from wholesalers, agents, and distributors to sell to consumers

Vertical Marketing System

Channel members located at different level within channel formally agree to cooperate with one another.

Direct Channel

Consists of producer and consumer

Indirect Channel

Consists of producer, consumer and 1+ intermediaries

Pull Strategy

Creating demand for a product among consumers so that business agrees to sell product.

Direct Marketing

Delivering personalized promotional materials directly to individual consumers

Examples of category killers

Department stores, superstores, warehouses, outlets, online, used retail, pop-up stores

Typical Marketing Channels (4)

Direct, Indirect, Industrial, Disintermediation

Channel Conflict

Dispute among channel members.

Market Channel

Distribution Channel - Specific avenue a seller uses to make a finished good/service available for purchase. (product & consumer)

Channel Members

Firms a company partners with to actively promote and sell a product as it travels through its market channel to users.

Forward Integration

Form of vertical integration where company adds downstream operations (by acquisition)

Category Killer

High volumes of particular products to dominate competition.

Factors the affect products intensity of distribution (3)

Intensive, Selective, Exclusive

Industrial Distributors

Intermediary firms that sell products that businesses and agencies use, but don't resell

Types of Merchant (Wholesaler)

Limited-Service, Cash-and-Carry, Drop-Shippers

Push Strategies

Manufacturer convinces wholesalers, distributors, retailers to sell its products. Focus on selling to intermediaries.

3 Types of Wholesalers

Merchants, Brokers, Manufacturers Agents

Exclusive Distribution

One or very few outlets. Scarcely makes demand (not because excessive products). Example; Designer lines at Target.

Dumping

Practice of selling goods in another country for a lower price than home country. Illegally drives competition out and raises prices.

Supply Chain Management

Process of managing and refining supply chains so as to make them as efficient as possible

Gray Market

Producer hasn't authorized its products to be sold

Store Brands

Products retailers produce themselves or pay manufacturers to produce for them.

Nondisclosure Agreement

Pull; Contract that specifies what info is proprietary or owned by partner, how/if partner can use info.

Free on Board

Pull; contract term that designates which party is responsible.

Non-store Retailing

Retailing not done in stores

Selective Distribution

Select outlets in select locations. Example; Sony in Walmart vs. Sony in Electronics Store

Intensive Distribution

Sell in as many outlets as possible. Example; Convenience Items

Manufacturer Sales Offices

Selling units that work directly for manufacturers (B2B).

Disintermediation

Situation when intermediaries are cut out of marketing channels

Vertical Integration

Strategy of disintermediation, growth by acquisition, development of operations, or eliminates middleman.

Retailer Examples

Supermarkets, Drugstores, Convenience Stores, Specialty Stores

Brokers definition

They negotiate sales, but don't purchase or take title to products they sell. Example - Realtors

Horizontal Marketing System

Two companies at some channel level agree to cooperate to sell products or make most of marketing operations.

Channel Section Factors (5)

Type of customer, type of product, channel partner capabilities, business environment and technology, competitions marketing channel.

Backward Integration

Vertical integration where company integrating channel operations moves upstream towards manufacturing.

Types of channel partners

Wholesalers, Brokers, Manufacturers, Retailers

Wholesalers definition

purchase products in large quantities. Can store and break into units, deliver to distributors

Intermediaries

third parties that facilitate the supply and sale of products from manufacturers to users.

Channels 4 forms of utility (value)

time, form, place, ownership

Merchants definition

wholesalers that take title to the goods (distributors). Sell products to other stores.