Chapter 12 MKTG 3401

Three types of franchises

1. Manufacturer sponsored retailer franchise 2. Manufacturer-sponsored wholesaler franchise system 3. Service-firm-sponsord retailer franchise system

Horizontal Marketing system

A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity. ex: walmart with mcdonalds

Vertical Marketing Systems: Conventional Distribution Channel

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

Vertical Marketing Systems: Vertical Marketing System

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

Franchise organization

A contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process.

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.

Distribution Center

A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible.

Channel Level

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

Direct Marketing Channel

A marketing channel that has no intermediary levels. From producer to customer.

Value Delivery Network

A network composed of the company, suppliers, distributors, and 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 users. a company's channel affect every other marketing decision.

Contractual VMS

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

Administered VMS

A vertical marketing system that coordinates successive stages of production and distribution through size and power of one of the parties.

Corporate MS

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

Intermodal transportation

Combining two or more modes of transportation.

Vertical Conflict

Conflict between different levels of the same channel. Ex: KFC and its franchisees were in conflict over the company's decisions.

Channel Conflicts

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

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.

Horizontal Conflict

Occurs among firms at the same level of the channel ex: Ford dealers in Chicago may complain about competition from other dealers bc they are setting their prices too low.

Upstream Channels

Raw materials, components, parts, info., finances, expertise

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.

Third-party logistics (3PL) providers

an independent logistics provider that performs any or all of the functions required to get a client's product to market

Indirect Marketing Channels

channels that include one or more intermediaries. Ex: producer to retailer to consumer. Ex2: producer to wholesaler to retailer and to customer.

Marketing channel design

designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives,and evaluating those alternatives.

Exclusive distribution

giving a limited number of dealers the exclusive right to distribute the company's product in their territories. usually found in luxury brands like bentley's

VMS- Vertical Marketing System

includes corporate, contractual, and administered.

Downstream (Marketing channels/distribution channels)

look towards the customer; includes marketing channel partners such as wholesalers and retailers

Marketing logistics (or physical distribution)

planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit.

Marketing Channel Management

selecting, managing, and motivating individual channel members and evaluating their performance over time.

Intensive Distribution

stocking the product in as many outlets as possible. Used by producers of convenience products and common raw materials. ex: toothpaste, candy

Integrated logistic management

the logistics concept that emphasizes teamwork- both inside the company and among all the marketing channel organizations - to maximize the performance of the entire distribution system.

Selective distribution

the use of more than one but fewer than all of the intermediaries who are willing to carry the company's products. ex: television, furniture, and home appliances brands