Marketing: Channels for Distribution

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Channel Conflict

- Arises when one channel member believes another member is engaged in detrimental behavior that affects its goals - Two Types: Vertical and Horizontal

Administered Vertical Marketing System

- Coordination in successive stages of production and distribution by the size and influence of one channel member - Ex. Proctor and Gamble

Electronic Channels

- Employ the Internet to make products and services available for consumption - Cannot perform many logistical functions, left to distributor

Classifying Retailers

- Form of Ownership - Level of Service - Type of Merchandise Line

Contractual Vertical Marketing System

- Independent production and distribution firms integrate their efforts on a contractual basis - Three Variations: Wholesaler-sponsored, Retailer-sponsored, and Franchising - Four Types of Franchising: Manufacturer/Retail, Manufacturer/Wholesaler, Service/Retail, Service

Vertical Conflict

- Occurs between different levels in a marketing a market channel, cutting out an intermediary - Three sources: Manufacturer to Wholesaler, Manufacturer to Retailer, Wholesaler to Retailer

Horizontal Conflict

- Occurs between intermediaries at the same level in a marketing channel, i.e. between two or more retailers or wholesalers - Two Sources: Overlapping territories and Dual distribution

Intermediary Functions

- Transactional Function: Buying, Selling, Risk Taking - Logistical Function: Assorting, Storing, Sorting, Transporting - Facilitating Function: Financing, Grading, Marketing Information and Research

Multichannel Marketing

- Using different marketing channels to reach customers - Dual distribution: an arrangement whereby a firm reaches different buyers by employing two or more different types of channels - Ex. "brick and click"

Non-Store Retailers

- Vending - Direct Mail/Catalogs - TV home shopping - Online Retailing - Telemarketing - Direct Selling

Channels for Consumers vs. Business Products

Variations on Direct and Indirect Channels

Corporate Vertical Marketing System

combination of production and distribution under single ownership

Selective Distribution

Firm selects a few retailers in a specific geographical area to carry its products

Intensive Distribution

Firm tries to place its products and services in as many outlets as possible

Marketing Channel

Firms involved in the process of making products available to consumers

Intermediaries

Firms that serve as the link between sellers and buyers

Form of Ownership

Independent Retailer - Independent business owned by an individual Corporate Chain - Multiple outlets under common ownership Contractual Systems - Independently owned stores that operate like a chain

Channel Level

Indicates the number of intermediaries

Vertical Marketing Systems

Intended to improve coordination and cooperation between channel members - Corporate Systems - Contractual systems - Administered systems

Legal Considerations

Clayton Act: - Prohibits exclusive dealings and tying arrangements (full-line forcing) - Vertical Integration is subject to legal action Sherman Act: - Resale Restrictions: who and where products can be sold

Type of Merchandise Line

Depth of Line - Considerable assortment in a product category - Ex. Sports Authority, Best Buy, Barnes and Nobles Breadth of Line - Broad product lines, limited depth - Ex. Department stores

Consumers Channels

Direct: Producer and Consumer deal directly Indirect: - Retailer - Wholeseller --> Retailer - Agent --> Wholesaler --> Retialer

Business Channels

Direct: Producer and industrial user deal directly Indirect: - Industrial distributor --> Industrial user - Agent --> Industrial user - Agent --> Industrial distributor --> Industrial user

Common Types of Wholesalers

Merchant Wholesalers - Independently Owned, take title Agents and Brokers - Do not take title Manufacturer Branches/Offices - Owned by producers

Exclusive Distribution

One retailer in a specified geographical areas will carry a firm's products

Level of Service

Self-Service Limited Service Full Service


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