Chapter 12: Marketing Channels - Delivering Customer Value

Some sellers require that dealers not handle​ competitor's products. This strategy is called​ __________.

exclusive dealing

​Cross-functional teamwork within the​ company, building logistics​ partnerships, and third party logistics are all important elements of​ __________.

integrated logistics management

One key function of channel members is​ __________, which involves shaping offers to meet the​ buyer's needs, including activities such as​ manufacturing, grading,​ assembling, and packaging.

matching

Firms producing consumer​ electronics, furniture, and home appliance brands typically distribute their products​__________.

selectively

When setting channel​ objectives, companies should state the objectives in terms of​ __________.

targeted levels of customer service

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; online marketers taking business from traditional brick-and-mortar retailers

After the company has defined its channel​ objectives, it should next identify its major channel alternatives in terms of the types of​ intermediaries, the number of​ intermediaries, and​ __________.

the responsibilities of channel members

The​ company, suppliers,​ distributors, and customers who "partner" with one another to improve the performance of the entire system make up the​ __________.

value delivery network

Using​ __________, the customer shares​ real-time data on sales and current inventory levels with the supplier. The supplier then takes full responsibility for managing inventories and deliveries.

vendor-managed inventory

Which of the following is an example of horizontal channel​ conflict?

A. A retailer complaining about a​ producer's pricing. B. A consumer complaining to a producer about the quality of a product. C. A consumer complaining to a retailer about the service they received. D. A Ford dealer complaining that another Ford dealer is advertising in their territory. Your answer is correct. E. A retailer complaining about receiving damaged goods from a wholesaler. answer: D

Which of the following statements regarding marketing channel design is​ correct?

A. In global​ markets, channel systems are the same in different countries. B. Channel alternatives should be evaluated against​ economic, control, and adaptability criteria. Your answer is correct. C. Channel objectives should be set in terms of profitability. D. It is important to let the responsibilities of channel members evolve as their relationship develops. E. Marketers should always maximize the number of intermediaries used in a channel. answer: B

Which of the following statements regarding marketing logistics is​ correct?

A. The goal of marketing logistics should be to provide a targeted level of customer service at the least cost. Your answer is correct. B. It is important for companies to improve logistics even though logistics are not a source of competitive advantage. C. Sustainability is not relevant to marketing channel logistics and the supply chain. D. Marketing logistics handle only outbound logistics. E. The goal of marketing logistics is to maximize sales. answer: A

Which of the following statements regarding marketing channel behavior and design is​ correct?

A. The success of individual channel members depends on the overall​ channel's success. Your answer is correct. B. Vertical marketing systems lack leadership and​ power, often resulting in damaging conflict and poor channel performance. C. Conflicts rarely occur in marketing distribution channels. D. Distribution channels are nothing more than simple collections of firms tied together by various flows. E. A conventional distribution channel consists of one or more independent​ producers, wholesalers, and retailers acting as a unified system. answer: A

Which of the following is a reason that producers use marketing channels and channel​ intermediaries?

A. Using channel intermediaries increases the number of contacts with customers. B. The reduced costs of using channel intermediaries offsets the inefficiencies of marketing channels. C. Marketing channel members are able to transform the assortments of products made by producers into the assortments wanted by consumers. Your answer is correct. D. Marketing channel decisions require only a​ short-term commitment. E. Using marketing channels allows producers to retain full control over how and to whom they sell their products. answer: C

Which of the following statements regarding a​ just-in-time logistics system is​ correct?

A. ​Just-in-time logistics systems ensure that new stock arrives at least one week before it is needed. B. ​Just-in-time logistics systems eliminate the need for forecasting. C. ​Just-in-time logistics systems greatly increase​ inventory-carrying and​ inventory-handling costs. D. ​Just-in-time logistics systems allow producers and retailer to carry large amounts of inventory. E. ​Just-in-time logistics systems allow producers and retailers to carry small inventories to last for only a few days of operations. answer: E

What does the process of designing marketing channels start​ with?

Analyzing consumer needs

direct vs indirect channels

Direct - A marketing channel that has no intermediary levels Indirect - A marketing channel containing one or more intermediary levels firms that help the company to promote, sell, and distribute its goods to final buyers.

​__________ is a practice whereby a producer agrees to sell a brand to a dealer only if the dealer agrees to sell some or all of the rest of its line.

Full-line forcing

Multichannel distribution strategy

Multichannel distribution systems = a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments; with each new channel, the company expands its sales and market coverage and gains opportunities to tailor its products and services to the specific needs of diverse customer segments; but such multichannel systems are harder to control, and they can generate conflict as more channels compete for customers and sales

channel behavior; channel conflict (horizontal & vertical)

They are behavioral systems consisting of real companies and people who interact to accomplish their individual and collective goals; channel conflict = disagreements among marketing channel members on goals, roles, and rewards--who should do what and for what rewards; horizontal = conflict among firms at the same level of the channel; vertical = conflict between different levels of the same channel (more common)

How channel member create value; channel members and levels

Through their contacts, experience, specialization, and scale of operation, intermediaries usually offer the firm more than it can achieve on its own; reduce the amount of work that must be done by both producers and consumers; the role of marketing intermediaries is to transform the assortments of products made by producers into the assortments wanted by consumers; channel members add value by bridging the major time, place, and possession gaps that separate goods and services from those who use them 1. Channel level = a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer; the number of intermediary levels indicates the length of a channel

What are the four major functions of​ logistics?

Warehousing, inventory​ management, transportation, and logistics information​ management

CVS pharmacy stores have recently stopped selling cigarettes. For cigarette​ manufacturers, this highlights the challenge of​ __________ channel members.

selecting

Vertical Marketing Systems (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; corporate VMS = a vertical marketing system that combines successive stages of production and distribution under single ownership--channel leadership is established through common ownership; Contractual VMS = a vertical marketing system in which independent firms at different levels of production and distribution join together through contracts (franchise organization = a channel member, called a franchisor, links several stages in the production-distribution process); Administered VMS = coordinates success stages of production and distribution through the size and power of one of the parties (Apple, Walmart, Home Depot)

Which of the following statements is correct regarding the functions channel members​ perform?

A. Channel members fulfill a variety of​ functions, but in doing so do not take any risks. B. Manufacturers can decrease costs by taking on more channel functions. C. Finding and engaging customers and potential buyers is not a function performed by channel members. D. Channel members create greater efficiencies than manufacturers could achieve on their own. Your answer is correct. E. Channel members do not get involved in financing—in other​ words, the acquisition and use of funds to cover the costs of the channel work. answer: D

Which of the following statements regarding international distribution channels is​ correct?

A. Distribution systems do not vary widely from country to country. B. For Western​ companies, India's distribution system is easy to navigate. C. Due to logistics costs in​ China, the majority of companies can only access affluent areas of major cities. Your answer is correct. D. Rural China now has a​ centralized, adequate distribution system. E. Global marketers find that it is unnecessary to adapt their channel strategies in different countries. answer: C

Channel design decisions; intensive distribution, exclusive distribution, selective distribution

Good channel design begins with analyzing customer needs, marketing channels are really customer value delivery networks; Marketing channel design = designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives; intensive distribution = stocking the product in as many outlets as possible, must be available where and when consumers want them; exclusive distribution = giving a limited number of dealers the exclusive right to distribute the company's products in their territories, often found in the distribution of luxury brands; selective distribution = the use of more than one but fewer than all of the intermediaries that are willing to carry the company's products, most consumer electronics, furniture, and home appliance brands are distributed in this manner, by using selective distribution companies can develop good working relationships with dealers and expect a better-than-average selling efforts

Walmart has a lot of power and exerts strong influence on the suppliers they buy from. This channel power is an example of​ a(n) __________ vertical marketing system​ (VMS).

administered

Due to changes in​ technology, a recent trend is for product or service producers to cut out intermediaries and go directly to final buyers. This is one form of​ __________.

disintermediation

In​ 2001, Apple opened its first Apple stores in the United States. These stores were owned and operated by Apple. This is an example of which type of vertical marketing system​ (VMS)?

corporate

Companies now use​ __________ and supply chain management software to help​ recruit, train,​ organize, manage,​motivate, and evaluate channel partners.

partner relationship management

The length of a channel is determined by​ __________.

the number of intermediary levels