Marketing: Chapter 13

*1.3 trillion

$$ annual cost of business logistics in the United States

*70%

%% the percent of a firm's cost base that can be traced back to its supply chain

*corporate VMS

(least popular VMS) - combines all stages of the marketing channel under a single owner [EX: Kellogs, Zara]

*contractual VMS

(most popular VMS) - channel members are linked by legal agreements spelling out each member's rights and obligations [EX: franchises like McDonald's and KFC]

Selective distribution

Distribution of a product through a limited number of channels.

Exclusive distribution

Distribution of a product through a single wholesaler or retailer in a specific geographic location.

Intensive distribution

Distribution of a product through all available channels.

Channel captain ("channel leader")

Dominant and controlling member of a marketing channel.

Vertical marketing system (VMS)

Planned channel system designed to improve distribution efficiency and cost-effectiveness by integrating various functions throughout the distribution chain.

*Containerization

Process of consolidating many items into a single, large container that is sealed at its point of origin and opened at its destination

strategic channel alliance

agreement whereby the products of one organization are distributed through the marketing channels of another

*outsourcing

contracting physical distribution tasks to third parties

megacarriers

freight transportation firms that provide several modes of shipment

*reorder point [reorder point = (order lead time * usage rate) + safety stock)]

inventory level that signals the need to place a new order

logistics management

involves planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants

distribution centers

large, centralized warehouses that focus on moving rather than storing goods

*possession utility

marketing channels --> give the customer access to the product to use or to store for future use

*form utility

marketing channels --> help with assembling, preparing, or otherwise refining the product to suit individual needs

*place utility

marketing channels --> make products available in locations where customers wish to purchase them

*time utility

marketing channels --> make products available when the customer wants them

freight forwarders

organizations that consolidate shipments from several firms into efficient lot sizes

materials handling

physical handling of tangible goods, supplies, and resources

public warehouses

storage space and related physical distribution facilities that can be leased by companies

Distribution

the decisions and activities that make products available to customers when and where they want to purchase them

warehousing

the design and operation of facilities for storing and moving goods

cycle time

the time needed to complete a process

*birdyback

truck trailers and air carriers

*piggyback

truck trailers and railway flatcars

*fishyback

truck trailers and water carriers

*bonded storage

warehousing arrangement in which imported or taxable products are not released until the product's owners pay US customers, duties, taxes, or other fees (enables firms to defer tax payments on products until they are delivered to customers)

*Downstream management

Controlling part of the supply chain that involves finished product storage, outbound logistics, marketing and sales, and customer service.

*Upstream management

Controlling part of the supply chain that involves raw materials, inbound logistics, and warehouse and storage facilities.

Marketing channel ("channel of distribution" or "distribution channel")

System of marketing institutions that enhances the physical flow of goods and services, along with ownership title, from producer to consumer or business user.

*Radio-frequency identification (RFID)

Technology that uses a tiny chip with identification information that can be read by a scanner using radio waves from a distance.

Marketing intermediary ("middleman" or "agent")

Wholesaler or retailer that operates between producers and consumers or business users.

Supply chain management

a set of approaches used to integrate the functions of operations management, logistics management, supply management, and marketing channel management so products are produced and distributed in the right quantities, to the right locations, and at the right time

exclusive dealing

a situation in which a manufacturer forbids an intermediary from carrying products of competing manufacturers

channel power

ability of one channel member to influence another member's goal achievement

Physical distribution ("logistics")

activities used to move products from producers to consumers and other end users

Supply chain

all the activities associated with the flow and transformation of products from raw materials through to the end customer

Tying agreement

an agreement in which a supplier furnishes a product to a channel member with the stipulation that the channel member must purchase other products as well

industrial distributor

an independent business organization that takes title to industrial products and carries inventories

just-in-time (JIT) ("lean distribution")

an inventory-management approach in which supplies arrive just when needed for production or resale

*order lead time

average time lapse between placing the order and receiving it

*administered VMS

channel members are independent, but informal coordination achieves a high level of interorganizational management; one channel member dominates the VMS [EX: uniform accounting and ordering procedures; cooperate in promotional activities for mutual benefit]

horizontal channel integration

combining organization at the same level of operation under one management

vertical channel integration

combining two or more stages of the marketing channel under one management

private warehouses

company-operated facilities for storing and shipping

electronic data interchange (EDI)

computerized means of integrating order process with production, inventory, accounting, and transportation

inventory management

developing and maintaining adequate assortments of products to meet customers' needs

supply management

in its broadest form, refers to the processes that enable the progress of value from raw material to final customer and back to redesign and final disposition

*full-line forcing

supplier requires that channel members purchase the supplier's entire line to obtain any of the supplier's products (used to ensure that intermediaries accept new products and that a suitable range of products is available to customers)

transportation

the movement of products from where they are made to intermediaries and end users

order processing

the receipt and transmission of sales order information

operations management

the total set of managerial activities used by an organization to transform resource inputs into products, services, or both

Dual distribution

the use of two or more marketing channels to distribute the same products to the same target market

intermodal transportation

two or more transportation modes used in combination