Chapter 12 marketing

vertical marketing system

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.

Tying agreement

Are agreements where the dealer must take most or all of the product

Multichannel Distribution Systems

Are systems in which a single firm sets up two or more marketing systems

Exclusive Territorial Agreements

Are where producer or seller limit territory

Horizontal Marketing systems

Is a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity

marketing channel

Is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user

Disintermediation

Is the cutting out of marketing channel intermediaries by producers of the displacement of traditional retailers by new intermediaries

Marketing Distribution

Is when the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories

Exclusive Dealing

Is when the seller requires that the exclusive distribution sellers not handel competitors products

Exclusive distribution

Permitting only a limited number of outlets (dealers) the right to distribute a product Pros: maximum channel ownership, elect seeking behavior from consumers cons: Minimal coverage/ availability

Intensive Distribution

Stocking product in as many outlets as possible Pros: maximum availability cons: low channel ownership, substantial risk of conflict

horizontal conflict

a channel conflict that occurs among channel members on the same level

vertical conflict

a channel conflict that occurs between different levels in a marketing channel, most typically between the manufacturer and wholesaler or between the manufacturer and retailer

Franchise organization

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

channel level

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

indirect marketing channel

a marketing channel containing one or more intermediary levels

direct marketing channel

a marketing channel that has no intermediary levels

Contractual VMS

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

marketing channel design

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

channel conflict

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

Upstream Partners

firms that supply raw materials, components, parts, information, finances, and expertise needed to create a product or service

down stream partners

include the marketing channels or distribution channels that look toward the customer, including resellers

Selective Distribution

multiple intermediaries get to sell the product pros: good availability, some level of channel ownership cons: Potential for conflict