Chapter 15 Distribution Channels and Supply Chain Management

Four distribution channels

-Direct channel -Channels using marketing intermediaries -Dual distribution Reverse channels

radio frequency identification (RFID):

-a tiny chip with identification information is placed on an item; that chip can then be read by a radio frequency scanner from a distance, making tracking easier

enterprise resource planning (ERP) system

-an integrated software package that consolidates data from among the firm's units

horizontal conflict

-disagreements among channel members at the same level, such as two or more wholesalers or retailers

upstream management

-the management of raw materials, inbound logistics, and warehouse and storage facilities

containerization

-the process of combining several unitized loads into a single, well-protected load •Reduces loading/unloading time •Limits in-transit damage to freight

selective distribution

-when a firm chooses only a limited number of retailers in a market area to handle its line

exclusive distribution:

-when a producer sells to only a small number of retailers or grants exclusive rights to a wholesaler or retailer to sell its products in a specific geographic region

logistical cost control

businesses reexamine each link in their supply chains to identify activities that don't add value for customers

long distribution channel

involves several intermediaries working in succession to move goods from producers to consumers.

unitizing

or palletizing, combining as many packages as possible into each load that moves within or outside a facility

intensive distribution

seeks to distribute a product through all available retailers in a trade area

downstream management

the management of finished product storage, outbound logistics, marketing and sales, and customer service

Supply chain management takes place in two directions

upstream management downstream management

intermodal operations

•: utilizing a combination of transport modes to improve customer service and achieve cost advantages

direct selling

•a marketing tactic in which a producer establishes direct sales contact with its product's final users

sales agent

•a third-party person or company who represents the producer to wholesalers and retailers

marketing intermediary

•an organization that operates between producers and consumers to help bring the product to market

reverse channels

•channels designed to return goods to their producers -Example: incurring a recycling charge for disposing of old tires when you buy new ones

The first step in choosing a distribution channel is to

•determine which type of channel will best meet: -Seller's objectives -Distribution needs of customers

short distribution channel

•involves few intermediaries. -Examples: business market products, service firms

vertical integration

•is when a producer assumes control over functions that were previously handled by an intermediary

wholesalers

•marketing intermediary who takes title to the goods, stores them in warehouses, and distributes them to retailers, other distributors, and sometimes end consumers

distribution channels

•the individuals and organizations who manage the flow of product from producers to consumers -Also are called marketing channels

distribution intensity

•the number or percentage of intermediaries (usually retailers) through which a manufacturer distributes its goods in a particular market

direct channel

carries goods directly from a producer to the ultimate user

vertical conflict:

disagreements among channel members at different levels

Two types of conflict can hinder the functioning of a distribution channel

horizontal conflict vertical conflict:

supply chain

the complete sequence of suppliers and activities that contribute to the creation and delivery of goods and services