3832 CH.14

There are three basic types of relationships, organized here by degree of closeness:

Arm's-length relationships; Cooperative relationships; Integrated relationships; Co-opetition

Which of the following is true of the facilitating function performed by intermediaries?

It includes research and financing.

Which of the following is true of channel conflict?

It is often caused by an unwillingness of traditional channel members to keep up with the changing times.

Retailers are those firms in a marketing channel that sell directly to consumers as their primary function.

True

Retailers simplify distribution by cutting the number of transactions required by consumers, making an assortment of goods available in one location.

True

Which of the following is a difference between vertical conflict and horizontal conflict?

Vertical conflict occurs between different levels in a marketing channel, while horizontal conflict occurs among channel members on the same level.

horizontal conflict

a channel conflict that occurs among channel members on the same level

vertical conflict

a channel conflict that occurs between different levels in a marketing channel, most typically between the manufacturer and wholesaler or between the manufacturer and retailer

retailer

a channel intermediary that sells mainly to consumers

To achieve control,

a channel member assumes channel leadership and exercises authority and power

bilateral monopoly

a channel structure whereby a single manufacturer supplies a single retailer, offering a single supply and demand point throughout the chain

retailer monopoly

a channel structure whereby a single retailer uses multiple suppliers

manufacturer monopoly

a channel structure whereby a single supplier provides products to multiple retailers

reverse channel

a channel that enables customers to return products or components for reuse or remanufacture

channel conflict

a clash of goals and methods between distribution channel members

strategic channel alliance

a cooperative agreement between business firms to use the other's already established distribution channel

direct channel (definition)

a distribution channel in which producers sell directly to consumers; polo ralph lauren, sherwin williams

selective distribution

a form of distribution achieved by screening dealers to eliminate all but a few in any single area

intensive distribution

a form of distribution aimed at having a product available in every outlet where target customers might want to buy it

exclusive distribution

a form of distribution that establishes one or a few dealers within a given area

channel captain

a member of a marketing channel that exercises authority and power over the activities of other channel members

arm's-length relationship

a relationship between companies that is loose, characterized by low relational investment and trust, and usually taking the form of a series of discrete transactions with no or low expectation of future interaction or service

integrated relationship

a relationship between companies that is tightly connected, with linked processes across and between firm boundaries and high levels of trust and inter-firm commitment

cooperative relationship

a relationship between companies that takes the form of informal partnership with moderate levels of trust and information sharing as needed to further each company's goals

co-opetition

a relationship that mixes elements of cooperation and competition between two partners

marketing channel (channel of distribution)

a set of interdependent organizations that eases the transfer of ownership as products move from producer to business user or consumer

channel control

a situation that occurs when one marketing channel member intentionally affects another member's behavior

drop and shop

a system that allows customers to recycle used electronics at the entrance of a retailer

A ____________ channel is commonly used for low-cost items that are frequently purchased, such as candy, cigarettes, and magazines

wholesaler

agents and brokers

wholesaling intermediaries who do not take title to a product but facilitate its sale from producer to end user by representing retailers, wholesalers, or manufacturers

The most prominent difference separating intermediaries is whether they__________ to the product

take title

The major characteristic that is used to differentiate intermediaries from one another is whether they:

take title to the products they sell.

m-commerce

the ability to conduct commerce using a mobile device for the purpose of buying or selling goods or services

channel power

the capacity of a particular marketing channel member to control or influence the behavior of other channel members

form utility

the elements of the composition and appearance of a product that make it desirable

time utility

the increase in customer satisfaction gained by making a good or service available at the appropriate time

exchange utility

the increased value of a product that is created as its ownership is transferred

dual distribution (multiple distribution)

the use of two or more channels to distribute the same product to target markets

place utility

the usefulness of a good or service as a function of the location at which it is made available

A critical role fulfilled by retailers within the marketing channel is that

they provide contact efficiency for consumers

Logistics functions typically include

transportation and storage of assets, as well as their accumulation, consolidation, and/or allocation for the purpose of conforming to customer requirements

A marketing channel can be viewed as a canal or pipeline through which products, their ownership, communication, financing and payment, and accompanying risk flow to the consumer

true

A product can take many routes to reach its final consumer

true

Along with marketing channels that move products down the chain to end customers, retailers and manufacturers also manage channels that move products back up the chain to suppliers

true

Businesses sometimes push their products to consumer markets through secondary channels in addition to their primary channels

true

By offering products at more affordable prices or under trial conditions, businesses can reach greater numbers of consumers and expand their customer bases

true

Complex, customized, and expensive products tend to benefit from shorter and more direct marketing channels

true

Consumers and companies alike view reverse channels as a way to reduce a product's environmental impact while creating a new financial opportunity - apple pays for old products

true

Intermediaries in marketing channels perform essential functions that enable goods to flow between producer and consumer

true

The choice of relationship type is important for channel management because each relationship type carries with it different levels of time, financial, and resource investment

true

The geographic location and size of the market are also important to channel selection

true

The relationships constructed by buyers and sellers are intended to make it easier for each to do business with the other

true

Marketers must also be aware that many countries have "gray" marketing channels in which products are distributed through _____________ channel intermediaries

unauthorized

passive opportunism

when a firm refuses to meet specific obligations or fails to change when new situations arise

active opportunism

when a firm violates agreements and restrictions, or forces another firm to renegotiate existing agreements when new circumstances arise

Channels represent the ___________________ element of the marketing mix

"place" or "distribution"

Which of the following is a difference between a retailer channel and a wholesaler channel?

A retailer channel is most common when the retailer is large and can buy in large quantities, while a wholesaler channel is commonly used for low-cost items that are frequently purchased.

_________________ negotiate with one another, buy and sell products, and facilitate the change of ownership between buyer and seller in the course of moving a product from the manufacturer into the hands of the final consumer.

Channel members

Facial recognition technology allows multiple retailers to sell products to consumers through social media sites.

False

In exclusive distribution, a manufacturer tries to have a product available in every outlet where potential consumers might want to buy it.

False

Mezjo Inc. is a video store that sells DVDs and also sells popcorn, candy, soft drinks, and entertainment publications. It stores all of these products in separate warehouses and uses different modes of transportation to deliver them. Which of the following functions is described in this scenario?

Logistical functions

____________________ are valuable because they provide a route for products and services to reach the customer

Marketing channels

In _______________ operations, customers are offered information, goods, services, and/or support through one or more synchronized channels.

Multichannel

The ______________ design creates redundancy and complexity in the firm's distribution system.

Multichannel

In _____________ operations, every customer receives equally efficient service.

Omnichannel

The ______________ design creates greater customer control over the shopping experience, leading to greater satisfaction and loyalty.

Omnichannel

______________ occurs when a firm refuses to meet specific obligations or fails to change when new situations arise.

Passive opportunism

__________________ play an important role in building unity among channel members

Social relationships

Compared to producers with only one or two product lines, producers that sell several products in a related area are

able to choose channels that are more direct

Two types of opportunism exist in marketing channels

active and passive

By contrast, when one or more channel members are small companies lacking in marketing power, an

agent/broker channel may be the best solution

channel members (intermediaries, resellers, middlemen)

all parties in the marketing channel who negotiate with one another, buy and sell products, and facilitate the change of ownership between buyer and seller in the course of moving the product from the manufacturer into the hands of the final consumer

merchant wholesaler

an institution that buys goods from manufacturers and resells them to businesses, government agencies, and other wholesalers or retailers and that receives and takes title to goods, stores them in its own warehouses, and later ships them

gray marketing channels

are used to sell stolen or counterfeited products

Phoenix Automated Retail Services specializes in DVD rentals via automated retail kiosks. If consumers want a particular DVD, they can rent it from Phoenix instead of searching for it in various production studios. Phoenix therefore provides _________________ for both consumers and the production studios.

contact efficiency

Transactional functions involve

contacting and communicating with prospective buyers to make them aware of existing products and to explain their features, advantages, and benefits

As products move to the final consumer, channel members facilitate the

distribution process by providing specialization and division of labor, overcoming discrepancies, and providing contact efficiency

This type of channel conflict is found most often when manufacturers practice dual or multiple distribution strategies

horizontal conflict

Conflict within a channel can be either

horizontal or vertical

A producer's desire to control pricing, positioning, brand image, and customer support also tends to

influence channel selection

Organizations have three options for intensity of distribution:

intensive distribution, selective distribution, or exclusive distribution

factors affecting channel choice

market, product, producer

A _________________ is a business structure of interdependent organizations that reaches from the point of production to the consumer and facilitates the downstream physical movement of goods through the supply chain.

marketing channel

Taking title

means they own the merchandise and control the terms of the sale—for example, price and delivery date

Indigo Blue Inc. is a distributor of equipment, component parts, and supplies in the United States. It has an ownership title to all its products. These products are stocked in both national and regional warehouses to guarantee product availability and quick service to the many manufacturers who are its customers. Based on this information, Indigo Blue Inc. is an example of a(n) _______________

merchant wholesaler

nontraditional channels

non-physical (often electronic) channels that facilitate the unique market access of products and services

The basic social dimensions of channels are

power, control, leadership, conflict, and partnering

Agent/broker channel

producer to agent/broker to wholesalers to retailers to consumers

Direct channel

producer to consumers

Retailer channel

producer to retailers to consumers

Wholesaler channel

producer to wholesalers to retailers to consumers

Another emerging channel structure involves

renting items that are usually only sold to end consumers

facilitating function includes

research (providing information about channel members and consumers) and financing (ensuring the channel members have the money to keep products moving through to ultimate customer)

A ________ channel is most common when the retailer is large and can buy in large quantities directly from the manufacturer.

retailer

Roubov Inc. is a chain of American department stores that sells clothing, furniture, home appliances, and toys. It buys its goods in large quantities directly from a manufacturer. Based on this information, Roubov Inc. most likely makes use of a(n) __________________

retailer channel

opportunism

secretive behavior that improves a firm's standing at the expense of a partner firm