Chapter 10

Corporate VMS

- a vertical marketing system that combines successive stages of production and distribution under single ownership-channel leadership is established though common ownership -ex. Kroger (grocery store) owns and operates manufacturing plants, dairies, deli and bakery plants, etc

Marketing Channel (Distribution Channel)

- set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user -must be designed well, usually long term commitments -product must fit capabilities of its channel members -ex. Kodak sold its printers with Best Buy stores because the retailers could educate buyers

Horizontal Marketing System

- two or more companies at one level join together to follow a new marketing opportunity -combine financial, production, or marketing resources to achieve more -ex. Walmart partners with McDonalds so that Walmart keeps hungry shoppers from needing to leave store to eat and McDonalds benefits from heavy store traffic

Conventional Distribution Channel

-a channel consisting of independent, separate businesses who are all seeking to maximize their own profit, even at expense of profits for the entire system -lack leadership and power often results in poor conflict resolution and performance -VMS is a better structure

Vertical Marketing System

-a channel structure where producers. wholesalers, and retailers act as a unified system. One channel member owns the others, has contacts with them or has so much power that they all cooperate -can be dominated by producer, wholesaler, or retailer -different types include: corporate, contractual, and administered

Contractual VMS

-a vertical marketing system in which independent firms at different levels of production and distribution join together through contracts -channel members coordinate their activites and manage conflicts through contractual agreements ex. Franchise organization

Franchise Organization

-contractual VMS where a franchisor links several stages in the production-distribution process -most common contractual VMS -Manufacturer-sponsored retailer franchise system: having independent franchised dealers ex. Ford - Manufacturer-sponsored wholesaler franchise system: ex. Coca-Cola licenses bottlers (wholesalers) around the world to make the product and sell the product to local retailers -Service- firm sponsored retailer franchise system: ex. Burger King, McDonalds, Holiday Inn

Reverse Logistics

-customer centered logistics, starts with market place (customers) and works backwards to factory or sources of supply -outbound distribution: moving products from the factory to resellers and ultimately customers -inbound distribution: moving products and materials from suppliers to the factory -reverse distribution: reusing, recycling, refurbishing, or disposing of broken, unwanted, or excess products returned by consumers or resellers

Disintermediation

-cutting out of marketing channel intermediaries, displacement of traditional resellers by new types of selling and intermediaries -ex. Southwest and JetBlue sell tickets directly to consumers therefore travel agents aren't needed -ex. iTunes and Amazon MP3 are online download of music cutting out traditional music store retailers

Channel Conflict

-disagreements among marketing channel members on goals, roles, and rewards-who should do what and for what reward -cooperating to achieve overall channel goals sometimes means giving up individual company goals, but most channel members often act in their own short-run best interests -Horizontal Conflict: occurs among firms at the same level of channel. ex. Holiday Inn franchisees complaining about other Holiday Inn operators giving bad service and hurting the overall brand image -Vertical Conflict: occurs between different levels of the same channel. ex. McDonald's franchisees not following policies set by the corporation

Multichannel Distribution System

-distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments -selling to consumers in more than one way -ex. selling to consumer through catalogs, telephone, internet, and selling to business segment through sales force

Channel Level

-layer of intermediaries that performs some work in brining the product and its ownership closer to the final buyer -number of intermediary levels indicates the length of a channel

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 -benefits: give customers better service or lower prices, savings to customers and company, sustainability

Direct Marketing Channel

-marketing channel that has no intermediary levels, company sells directly to consumers -ex. Avon and other cosmetics sell their products door to door through home, office parties and on the internet

Value Delivery Network

-network composed of the company, suppliers, distributors, and ultimately customers who partner to help the entire system deliver better customer value

Marketing Logistics (Physical Distribution)

-planning, implementing, and controlling the physical flow of materials, final goods and any related information from points of origin to points of consumption to meet customer requirements at a profit -getting right product to right place at right time

Marketing Channel Management

-selecting, managing, and motivating individual channel members and evaluating their performance over time -Selecting: evalute how long the company has been in business, lines carried, location, growth, profit, cooperativeness, and reputation -Managing and Motivating: strong partner relationship management to forge long-term partnerships with channel members -Evaluating: check channel members performance against standards such as sales quotas, inventory levels, services to customers, etc

Administered VMS

-vertical marketing system that coordinates production and distribution through the size and power of one of the parties -ex. GE and Kraft are such strong, powerful companies they can command certain things from resellers such as displays, shelf, space, promotion, price -they are respected more