MARK 3336 EXAM 3 CH 12
Contractual VMS
A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than each could achieve alone; Channel members coordinate their activities and manage conflict through contractual agreements
Marketing channel management
Selecting, managing, and motivating individual channel members and evaluating their performance over time
Franchise organization
A contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process
horizontal marketing system
A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity
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.
Multichannel distribution system
A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments; With each new channel, the company expands its sales and market coverage and gains opportunities to tailor its products and services to the specific needs of diverse customer segments
Distribution center
A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible
Value delivery network
A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value
marketing channel (or distribution channel)
A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user; Producers use intermediaries because they create greater efficiency in making goods available to target markets. Through their contacts, experience, specialization, and scale of operation, intermediaries usually offer the firm more than it can achieve on its own channel members add value by bridging the major time, place, and possession gaps that separate goods and services from those who use them
Administered VMS
A vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties
third-party logistics (3pL) provider
An independent logistics provider that performs any or all of the functions required to get a client's product to market; also called outsourced logistics or contract logistics
Multimodal transportation
Combining two or more modes of transportation
Marketing channel design
Designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives
exclusive distribution
Giving a limited number of dealers the exclusive right to distribute the company's products in their territories; often found in the distribution of luxury brands
Members of the marketing channel perform many key functions (8)
Information Promotion Contact Matching Negotiation Physical Distribution Financing Risk-taking
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
Marketing logistics (physical distribution)
Planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit
Intensive distribution
Stocking the product in as many outlets as possible to provide maximum brand exposure and consumer convenience
Disintermediation
The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries
Integrated logistics management
The logistics concept that emphasizes teamwork—both inside the company and among all the marketing channel organizations—to maximize the performance of the entire distribution system
Selective distribution
The use of more than one but fewer than all of the intermediaries that are willing to carry the company's products; Most consumer electronics, furniture, and home appliance brands are distributed in this manner
conventional distribution channel
a channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole; No channel member has much control over the other members, and no formal means exists for assigning roles and resolving channel conflict
Channel Level
a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer; The number of intermediary levels indicates the length of a channel
Indirect Marketing Channel
a marketing channel containing one or more intermediary levels
Direct Marketing Chanel
a marketing channel that has no intermediary levels
exclusive dealing
a situation in which a manufacturer forbids an intermediary from carrying products of competing manufacturers
corporate vertical marketing system (VMS)
a vertical marketing system that combines successive stages of production and distribution under single ownership-channel leadership is established through common ownership; Coordination and conflict management are attained through regular organizational channels
Vertical conflict
conflict between different levels of the same channel; more common
Channel Conflict
disagreements among marketing channel members on goals, roles, and rewards - who should do what and for what rewards
2 types of channel arrangements
conventional distribution channel vertical marketing system (VMS)
3 major types of VMS
corporate contractual administered
3 strategies in selecting number of marketing intermediaries
intensive distribution, exclusive distribution, and selective distribution
Horizontal conflict
occurs among firms at the same level of the channel
downstream side of the supply chain
the marketing channels (or distribution channels) that look toward the customer
Upstream from the company
the set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service
supply chain consists of
upstream and downstream partners
4 major logistics functions
warehousing, inventory management, transportation, and logistics information management