Ch 14:

Materials handling

, the physical handling of tangible goods, supplies, and resources, is an important factor in warehouse operations, as well as in transportation from points of production to points of consumption

corporate

A __________ VMS combines all stages of the marketing channel, from producers to consumers, under a single owner ex) Zara's clothing is trendy, requiring the shortest time possible from product development to offering the clothing in stores. Inventory is characterized by very high turnover and frequent change

electronic data interchange (EDI)

A computerized means of integrating order processing with production, inventory, accounting, and transportation - inks marketing channel members and outsourcing firms together

marketing channel

A group of individuals and organizations that direct the flow of products from producers to customers within the supply chain aka: channel of distribution or distribution channel

multiple

A manufacturer often uses ___________ channels when the same product is directed to both consumers and business customers

vertical marketing system (VMS)

A marketing channel managed by a single channel member to achieve efficient, low-cost distribution aimed at satisfying target market customers

counterfeits

A problem that can arise with exclusive (and selective) distribution is that unauthorized resellers acquire and sell products or ____________, violating the agreement between a manufacturer and its exclusive authorized dealers.

exclusive dealing

A situation in which a manufacturer forbids an intermediary from carrying products of competing manufacturers

prices, sales

Acting as a salesperson on behalf of the producers, a manufacturers' agent has little or no latitude in negotiating _______ or _______ terms.

Channel management

All activities related to selling, service, and the development of long-term customer relationships

supply chain

All the activities associated with the flow and transformation of products from raw materials through to the end customer

customer characteristics, product attributes, type of organization, competition, marketing environmental forces, characteristics of intermediaries

Although the process varies across organizations, channel selection decisions are usually affected significantly by one or more of the following factors: customer characteristics, product attributes, type of organization, competition, marketing environmental forces, and characteristics of intermediaries

clearly define roles (of each channel member), agree on means of coordinating channels

Although there is no single method for resolving conflict, partnerships can be reestablished if two conditions are met...

strategic channel alliance

An agreement whereby the products of one organization are distributed through the marketing channels of another - sometimes same target market but not direct competitors ex) brand of bottled water might be distributed through a marketing channel for soft drinks, or a cereal producer in the United States might form a strategic channel alliance with a European food processor to facilitate international distribution

industrial distributor

An independent business organization that takes title to industrial products and carries inventories -usually sell standardized items, such as maintenance supplies, production tools, and small operating equipment

just in time (JIT)

An inventory-management approach in which supplies arrive just when needed for production or resale -usually no safety stock

supply chain

Any one organization's failure to meet expectations can disrupt the entire ___________

proactive

As labor and environmental regulations change, an organization may be forced to modify its existing distribution channel structure to comply with new laws. Firms might choose to enact the changes before they are mandated in order to appear ___________

individual (case by case basis for restricted sale territories)

At present, the producer's intent in establishing restricted territories and the overall effect of doing so on the market must be evaluated for each __________ case.

quickly

Because they rarely maintain inventories, manufacturers' agents have a limited ability to provide customers with parts or repair services __________

directly

Business customers often prefer to deal ________ with producers (or very knowledgeable channel intermediaries such as industrial distributors), especially for highly technical or expensive products, such as mainframe computers, jet airplanes, or heavy machinery that require strict specifications and technical assistance

large

Businesses also frequently buy in ________ quantities.

capital requirements.

By holding adequate inventories in local markets, industrial distributors reduce producers' ________________

retailers

Channel B, which moves goods from the producer to a retailer and then to customers, is a frequent choice of large retailers because it allows them to buy in quantity from manufacturers -target and walmart

producers

Channel C is a common distribution channel for consumer products. It takes goods from the producer to a wholesaler, then to a retailer, s a practical option for ___________ that sell to hundreds of thousands of customers through thousands of retailers

mass

Channel D, wherein goods pass from producer, to agents, to wholesalers, to retailers, and finally to consumers, is used frequently for products intended for mass distribution, such as processed foods

cooperation

Channel ______________ leads to greater trust among channel members and improves the overall functioning of the channel

contractual vms

Channel members are linked by legal agreements spelling out each member's rights and obligations ex) Franchise organizations, such as McDonald's and KFC

form

Channel members sometimes create _________ utility by assembling, preparing, or otherwise refining the product to suit individual customer needs.

horizontal channel integration

Combining organizations at the same level of operation under one management ex) The owner of a dry-cleaning firm, for example, might buy and combine several other existing dry-cleaning establishments. Likewise, Sherwin-Williams acquired rival paint firm Valspar for $11.3 billion in part to fast-track its move into international markets

Vertical channel integration

Combining two or more stages of the marketing channel under one management ex) SolarCity acquired the manufacturing firm Silevo, as well as a solar manufacturing facility previously owned by bankrupt Solyndra, in order to gain new technology and manufacturing capability to begin making its own highly efficient solar panels, bringing many stages of the channel under one roof

private warehouses

Company-operated facilities for storing and shipping products -when its warehousing needs in a given geographic market are substantial and stable enough to warrant a long-term commitment to a fixed facility -or firms that require special handling and storage and that want control - face fixed costs, such as insurance, taxes, maintenance, and debt expense

Digital distribution

Delivering content through the Internet to a computer or other device - avoid physical distribution altogether ex) when you watch a TV show on Netflix or Hulu or listen to music on Pandora or Spotify

Inventory management

Developing and maintaining adequate assortments of products to meet customers' needs

outlets

Firms that desire to convey an exclusive image for their products may wish to limit the number of ________ available.

direct channel

For instance, a haircut received at a barber shop moves through channel A because there is no intermediary between the person performing the service and the one receiving it

short

Fragile products that require special handling are likely to be distributed through ________ channels to minimize the amount of handling and risk of damage

megacarriers

Freight transportation firms that provide several modes of shipment

intensity of coverage

In addition to deciding which marketing channels to use to distribute a product, marketers must determine the appropriate _______________________ —that is, the number and kinds of outlets in which a product will be sold

administered

In an _________________ VMS, channel members are independent, but informal coordination achieves a high level of inter-organizational management - individual channel members maintain autonomy but one channel member dominates

direct

In contrast to consumer goods, business products, especially expensive equipment, are most likely to be sold through __________ channels ex)business buyers of Xerox products not only receive devices and equipment, but ongoing maintenance, technical support, and data analytics

Supply management

In its broadest form, refers to the processes that enable the progress of value from raw material to final customer and back to redesign and final disposition ex) purchasing, procurement, sourcing

knowledge

In some cases, industrial distributors lack the specialized ___________ necessary to sell and service technical products.

86

Indeed, some ____ percent of U.S. Fortune 500 companies outsource logistics and supply-chain functions to 3PLs

exchanges

Intermediaries are specialists in facilitating __________. - They provide valuable assistance because of their access to and control over important resources used in the proper functioning of marketing channels

Distribution centers

Large, centralized warehouses that focus on moving rather than storing goods -designed for rapid flow of products and are usually one-story buildings with access to transportation networks, such as major highways and/or railway lines

longer

Less-expensive standardized products with long shelf lives, such as soft drinks and canned goods, can go through ____________ channels with many intermediaries

internationally.

Managers must remember, however, to keep a holistic view of the supply chain so that goals such as "speed" or "cost" do not result in dissatisfied or underpaid workers or other such abuses in factories. This should be a particular concern among firms that use international manufacturers because it can be more difficult to monitor working conditions ________________

short

Marketers of complex and expensive products (like automobiles) will likely employ __________ channels, as will marketers of perishable products (such as dairy and produce)

time, place, possession, form

Marketing channels create four types of utility:

marketing intermediaries

Middlemen that link producers to other intermediaries or ultimate consumers through contractual arrangements or through the purchase and resale of products ex) MercuryGate provides transportation management software to firms to streamline logistics

corporate, administered, contractual.

Most vertical marketing systems take one of three forms:

order entry, order handling, order delivery

Order processing entails three main tasks:

freight forwarders

Organizations that consolidate shipments from several firms into efficient lot sizes

industrial distributor

Overall, these distributors can be most effective when a product has broad market appeal, is easily stocked and serviced, is sold in small quantities, and is needed on demand to avoid high losses.

vendors

Owing to their size, larger firms are in a better position to deal with ___________ or other channel members. They are also likely to have more distribution centers, which reduce delivery times to customers

Logistics management

Planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants

bonded storage

Public warehouses also provide _______________, a warehousing arrangement in which imported or taxable products are not released until the products' owners pay U.S. customs duties, taxes, or other fees -enable firms to defer tax payments on such items until they are delivered to customers.

availability

Sales of low-cost convenience products may be directly related to product __________ ex) In Japan, McDonald's was temporarily forced to stop selling medium- and large-sized french fries due to a potato shortage. The shortage resulted from a labor dispute at ports along the United States' West Coast that interrupted shipments to Japan

difficult to change

Selecting appropriate marketing channels is important because they are _____________________ once chosen

service

Selective distribution is often used to motivate retailers to provide adequate

Public warehouses

Storage space and related physical distribution facilities that can be leased by companies -useful to firms that have seasonal production or demand, low-volume storage needs, and inventories that must be maintained in many locations -

quality, competing, market

The courts accept tying agreements when the supplier is the only firm able to provide products of a certain _______-, when the intermediary is free to carry ___________ products as well, and when a company has just entered the __________ - most other are illegal

Warehousing

The design and operation of facilities for storing and moving goods -when mass production creates a greater stock of goods than can be sold immediately

channel captain (leader)

The dominant leader of a marketing channel or a supply channel - may be a producer, wholesaler, or retailer - may establish channel policies and coordinate development of the marketing mix.

limited

The fact that manufacturers' agents are typically paid on a commission basis may also be an economical alternative for a firm that has highly __________ resources and cannot afford a full-time sales force.

anticompetitive

The legality of an exclusive-dealing contract is determined by applying three tests. If the exclusive dealing blocks competitors from as much as 15 percent of the market, the sales volume is large, and the producer is considerably larger than the retailer, then the arrangement is considered _________________

time, place, quantities

The major role of marketing channels is to make products available at the right ________ at the right __________ in the right __________

wherever, whenever

The primary reason for using a multichannel strategy is to reach target customers ________ and ____________ they may choose to interact with a company or its products

Order processing

The receipt and transmission of sales order information

manufacturers' agent

The third channel for business products, channel G, employs a _______________________ , an independent businessperson who sells complementary products of several producers in assigned territories and is compensated through commissions - Unlike an industrial distributor, a ______________________ does not acquire title to the products and usually does not take possession

cycle time

The time needed to complete a process ex)Dollar Shave Club company turned to a third-party logistics specialist, which allowed it to focus on providing excellent customer service while ensuring on-time deliveries to subscribers

Operations management

The total set of managerial activities used by an organization to transform resource inputs into products, services, or both

multichannel distribution

The use of a variety of marketing channels to ensure maximum distribution ex) can purchase a Dell computer directly from the company by calling a toll-free number or going through its website as well as indirectly through select retailers such as Best Buy

actions

The use of manufacturers' agents also has drawbacks. The seller has little control over the _________ of manufacturers' agents

consumer, business

The various marketing channels can be classified generally as channels for ____________ products and channels for ____________ products.

manufacturers' agent and an industrial distributor

This channel may be appropriate when the producer wishes to cover a large geographic area, but maintains no sales force due to highly seasonal demand or because it cannot afford one - This channel can also be useful for a business marketer that wants to enter a new geographic market without expanding its sales force.

channel power

To attain desired objectives, the captain must possess_____________, the ability to influence another channel member's goal achievement.

developing channel leadership, fostering cooperation between channel members, managing channel conflict, consolidating marketing channels through channel integration.

To maintain customer satisfaction and an effective supply chain, managers must retain a strategic focus on certain competitive priorities, including (4 activities)

false (Although wholesalers can be eliminated, their functions cannot. Other channel members would have to perform those functions, perhaps not as efficiently, and customers still would have to pay for them)

True or false: making the distribution channel as short as possible by eliminating wholesalers will decrease the prices for products

Intermodal transportation

Two or more transportation modes used in combination

Exclusive distribution

Using a single outlet in a fairly large geographic area to distribute a product -suitable for products purchased infrequently, consumed over a long period of time, or that require a high level of customer service or information -also used for expensive, high-quality products with high profit margins, such as Porsche, BMW, and other luxury automobiles

Intensive distribution

Using all available outlets to distribute a product - products that have a high replacement rate, require almost no service, and are bought based on price cues ex) Most convenience products like bread, chewing gum, soft drinks, and newspapers

Selective distribution

Using only some available outlets in an area to distribute a product -appropriate for shopping products, which include durable goods like televisions or computers -consumers are willing to spend more time and possibly visit several retail outlets and websites to compare prices, designs, styles, and other features.

bargaining

Vertically integrated channels can be more effective against competition because of increased ____________ power and the ease of sharing information and responsibilities

manufacturer

When a _____________ is a channel captain and it determines that it must increase sales volume to achieve production efficiency, it may encourage growth through offering channel members financing, business advice, ordering assistance, advertising services, sales and service training, and support materials.

direct, intermediaries

When customers are concentrated in a small geographic area, a ________ channel may be best, but when many customers are spread across an entire state or nation, distribution through multiple ________________ is likely to be more efficient.

stockouts

When too few products are carried in inventory, the result is _____________, or shortages of products

intermediaries

Wholesalers and retailers are examples of..

air

_______ transportation is the fastest but most expensive form of shipping. It is used most often for perishable goods, for high-value and/or low-bulk items, and for products that require quick delivery over long distances

Retailers

_________ that are channel captains control many brands and sometimes replace uncooperative producers

Place

_________ utility is making products available in locations where customers wish to purchase them ex) Zappos allows customers to shop for shoes and accessories anywhere they have access to a mobile device and an Internet connection

Time

__________ utility is having products available when the customer wants them ex) Netflix allow customers to watch a movie whenever they want

Target

___________ abandoned the Canadian market after losing a billion dollars in large part due to a poor distribution system. The retail company opened 133 stores in just two years, but Canadian shoppers routinely found empty shelves due to supply-chain issues the company might have identified sooner had it opened just a few stores at a time

Trade offs

___________ are strategic decisions to combine (and recombine) resources for greatest cost-effectiveness -Higher costs in one functional area of a distribution system may be necessary to achieve lower costs in another

Wholesaler

___________ leaders may form voluntary chains with several retailers, which they supply with bulk buying or management services, and which may also market their own brands. In return, the retailers shift most of their purchasing to the _____________ leader

Possession

___________ utility means that the customer has access to the product to use or to store for future use. -can occur through ownership or through arrangements that give the customer the right to use the product, such as a lease or rental agreement

Physical distribution

____________ also known as logistics, refers to the activities used to move products from producers to consumers and other end users.

Channel decisions

____________ are critical because they determine a product's market presence and accessibility

Amazon

____________ has set the gold standard for supply-chain management—offering customers nearly anything they can imagine at low prices, through a user-friendly website that features product reviews and ratings, perks like offering a variety of shipping options, and an easy return policy

Transportation

____________, the movement of products from where they are made to intermediaries and end users, is the most expensive physical distribution function

wholesalers

_____________ buy and resell products to other _________________, retailers, and industrial customers

Retailers

______________ purchase products and resell them to end consumers

Customer relationship management (CRM)

______________ sytsems exploit the information in supply-chain partners' information systems and make it available for easy reference

Field public

______________ warehouses are established by public warehouses at the owner's inventory location. The warehouser becomes custodian of the products and issues a receipt that can be used as collateral for a loan

Efficiencies, added, reduced

________________ arise when firms that specialize in certain elements of producing a product or moving it through the channel are more effective at performing specialized tasks than the manufacturer - This results in _________ value to customers and ____________ costs throughout the distribution channel.

Information

________________ is a crucial component in operating supply chains efficiently and effectively.

Railroads

commonly haul minerals, sand, lumber, chemicals, and farm products, as well as automobiles and low-value manufactured goods

Intensive, selective, and exclusive distribution

he three major levels of market coverage are ....

Competing

industrial distributors often stock ______________ brands, so a producer cannot depend on them to sell its brand aggressively

outsourcing

is the contracting of physical distribution tasks to third parties

upstream

producers and suppliers are examples of what in supply stream

Trucks

provide the most flexible schedules and routes of all major transportation modes in the United States, because they can go almost anywhere - Subject to size and weight restrictions on the loads they carry

(order lead time x usage rate) + safety stock

reorder point =

Waterway

s are the cheapest method of shipping heavy, low-value, nonperishable goods. - vast majority of international cargo is transported by water at least part of the way

processing, inventory management, materials handling, warehousing, transportation

the 5 logistics "activities" include

reorder point

the inventory level that signals the need to place a new order

marketing channel

the least flexible component of the marketing mix.

Pipelines

the most automated transportation mode, usually belong to the shipper and carry the shipper's products - move products slowly but continuously and at relatively low cost. They are dependable and minimize the problems of product damage and theft. However, contents are subject to as much as 1 percent shrinkage, usually from evaporation

tying agreement

tying agreement An agreement in which a supplier furnishes a product to a channel member with the stipulation that the channel member must purchase other products as well

full line forcing

type of tying agreement: in which a supplier requires that channel members purchase the supplier's entire line to obtain any of the supplier's products

convenience, shopping, specialty, unsought

we divided consumer products into four categories—________________________ —according to how consumers make purchases

contractual

what is the most common type of VMS

horizontal (Problems that come with increased size often follow, resulting in decreased flexibility, difficulties coordinating among members, and the need for additional marketing research and large-scale planning)

which is harder, horizontal integration or vertical?

downstream

wholesalers and retailers are examples of what in supply chain