ch. 12

support

-firm infrastructure -human resource management -technology development -procurement are all _________ activities of Porters Generic Value chain

primary

-inbound logistics -operations -outbound logistics -marketing and sales -service are all _________ activities of Porters Generic Value chain

buying

Both wholesalers and retailers perform an important function by evaluating products and ultimately simplifying purchase decisions by creating assortments.

Marketing Communications

Intermediaries frequently receive incentives from manufacturers to participate in helping promote products in the channel

Outsourcing or third-party logistics (3PL)

Many firms outsource to this so they can focus on the core business.

Other Services

Services performed by intermediaries run a gamut of activities such as training others in the channel on how to display or sell the products, repair and maintenance of products after a sale, and providing customized software for inventory management, accounting and billing, and other opera- tional processes.

accumulating bulk

Take in product from multiple sources and transform it, often through sorting it into different classifications for sales through the channel

market research

The activity of gathering information about consumers' needs and preferences.

Corporate VMS

The investment of a channel member in backward or forward vertical integration by buying controlling interest in other intermediaries.

creating assortments

The process of accumulating products from several sources to then make those products available down the channel as a convenient assortment for consumers.

reducing transactions

The process of lowering the number of purchasing transactions carried out by a firm by utilizing the services of intermediaries.

Administered VMS

When the channel control of a vertical marketing system is determined by the size and power of one of its channel members.

risk-taking

a big part of how an intermediary can add value is by reducing the risk of others in the channel

manufacturer

a business that makes finished products out of processed goods

reward power

a channel member's ability to coerce vendors by offering them incentives

legitimate power

a channel member's ability to influence other members based on contracts or other formal agreements

referent power

a channel member's ability to influence other members based on respect, admiration, or reverence

expert power

a channel member's utilization of its unique competencies and knowledge to influence others in the channel

intensive distribution

a distribution strategy designed to saturate every possible intermediary, especially retailers. Examples: convenience goods, impulse goods

selective distribution

a distribution strategy in which goods are distributed only to a limited number of intermediaries. Example: most appliances, midrange fashion apparel, home furnishings

agent

business entity that negotiates purchases, sales, or both but does not take title to the goods involved

coercive power

involves an explicit or implicit threat that a channel captain will invoke negative consequences on a channel member if it does not comply with the leader's request or expectations.

value network

is an overarching system of formal and informal relationships within which the firm participates to procure, transform and enhance, and ultimately supply its offerings in final form within a market space.

physical distribution

is the integrated process of moving input materials to the producer, in-process inventory through the firm, and finished goods out of the firm through the channel of distribution.

breaking bulk

occurs within a channel to better match quantities needed to space constraints and inventory turnover requirements

Disintermediation

or the shortening or collapsing of marketing channels due to the elimination of one or more intermediaries, is common in the electronic channel.

wholesaler

own title to goods is a ________

facilitating functions

performed by intermediaries include a variety of activities that help fulfill completed transactions and also maintain the viability of the channel relationships

Value Chain

portrays a synthesis of primary and support activities utilized by an organization to design, produce, market, deliver, and support its products.

Exclusive Territories

protects an intermediary from having to compete with others selling producer's goods. Legality depends on having to demonstrate that the exclusivity doesn't violate any statues on restriction of competition.

distribution intensity

refers to the number of intermediaries involved in distributing the product.

supply chain

represents all organizations involved in supplying a firm, the members of its channel of distribution, and its end-user consumers and business users

sorting

the process of classifying products for sale through different channels

Supply Chain Management

the process of managing the aspects of the supply chain

exclusive dealings

when a supplier creates a restrictive agreement that prohibits intermediaries that handle its product from selling competing firms' products. Legality depends on whether it interferes with the intermediary's right to act independently or the rights of competitors to succeed-that is, competition lessened by the arrangement

financing

without readily available credit at various stages in the distribution process, many channels could not operate.

Physical distribution (or logistics) functions

´Breaking bulk ´Accumulating bulk and sorting ´Creating assortments ´Reducing transactions ´Transportation and storage are all ____________

Facilitating functions

´Financing ´Market research ´Risk-taking Other services are all ___________

Transaction and communications functions

´Selling ´Buying ´Marketing Communication are all ____________

transportation and storage

commonly provided intermediary functions for producers that do not perform these functions themselves

channel of distribution

consists of interdependent entities that are aligned for the purpose of transferring possession of a product from producer to consumer or business user.

exclusive distribution

distribution strategy built on prestige, scarcity, and premium pricing in which a producer only distributes its products to one or very few vendors. Example: Voss water

agent

doesn't own title to goods is a ___________

wholesaler

entity primarily engaged in buying, taking title to, storing (usually), and physically handling goods in large quantities. They resell goods (usually in smaller quantities) to retailers or to organizational buyers.

retailer

entity primarily engaged in selling to the end-user consumers

pull strategy

focuses much of its promotional investment on the end user consumer. Example: heavy advertising, direct marketing

tying contract

if a seller requires an intermediary to purchase a supplementary product to qualify to purchase the primary product. For instance, you can buy my printer, but you have to buy my ink. This is illegal but its difficult to prove in a court of law whether it is a contract or it isn't

selling

intermediaries provide a sales force to represent a manufacturer's product line. This could take the form of manufacturers' representatives, or brokers, that represent a product line down the channel. Alternatively, the salespeople might work for a wholesaler or retailer.

push strategy

that much of the intensive promotional activities take place from the manufacturer downward through the channel of distribution. Example: slotting allowance or shelf fees

Contractual VMS

the blinding of otherwise independent entities in the vertical marketing system legally through contactual agreements