Marketing Chapter 12

The 4 Major Logistics Functions:

1. Warehousing 2. Inventory Management 3. Transportation 4. Logistics Information Management

Horizontal Marketing System

A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity

Conventional Distribution Channel

A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole.

Vertical Marketing System (VMS)

A channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate.

Franchise Organization

A contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process (most common type on contractual relationship)

Multichannel distribution system

A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments

Channel Level

A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer

Indirect marketing channel

A marketing channel containing one or more intermediary levels (ex. producer --> wholesaler --> retailer --> consumer)

Direct Marketing Channel

A marketing channel that has no intermediary levels - the company sells directly to consumers (ex. selling door-to-door, on the internet)

Value delivery network

A network composed of the company, suppliers, distributers, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value.

Marketing Channel (distribution channel)

A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user

Contractual VMS

A vertical marketing system in which independents firms at different levels of production and distribution join together through contracts

Corporate VMS

A vertical marketing system that combines successive stages of production and distribution under single ownership - channel leadership is established through common ownership

Administered VMS

A vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties (leadership is not decided by common ownership or contractual ties, but through the size and power of one or few dominant channel members)

Third-party logistics (3PL) provider

An independent logistics provider that performs any or all of the functions required to get a client's product to market (FedEx, UPS)

Intermodel Transportation

Combining two or more modes of transportation 1. Piggyback: rail and trucks 2. Fishyback: water and trucks 3. Trainship: water and rail 4. Airtruck: air and trucks

Channel conflict: VERTICAL CONFLICT

Conflict between different levels of the same channel (even more common than horizontal conflict) (ex. KFC and its franchisees came into conflict on whether to implement grilled chicken or not)

Channel Conflict

Disagreements among marketing channel members on goals, roles, and rewards - who should do what and for what rewards

Exclusive Distribution

Giving a limited number of dealers the exclusive right to distribute the company's products in their territories

Supply Chain Management

Managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers

Downstream side of supply chain

Marketers traditionally focus on the downstream side (the marketing/distribution channels) that look toward the customer

Channel conflict: HORIZONTAL CONFLICT

Occurs among firms at the same level of the channel. (ex. ford dealers vs other dealers in the city)

Intensive Distribution

Stocking the product in as many outlets as possible

Disintermediation

The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries. (product or service producers go directly to final buyers or choose new types of intermediaries that displace traditional ones)

Selective Distribution

The use of more than one but fewer than all of the intermediaries who are willing to carry the company's products

Upstream from the company in the supply chain

set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service