Marketing Test 4 Ch.15

Types of Functions

(Channel activities carried out by intermediaries that create value for the buyer) -Transactional functions: when intermediaries buy and sell products or services. -Logistical functions: Gathering, sorting, and dispersing products. -Facilitating functions: make a transaction easier for buyers (faster, cheaper, etc.)

Intensive distribution

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

reverse logistics

a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal.

Direct Marketing Channel

allow consumers to buy products by interacting with various advertising media without a face-to-face meeting with a salesperson.

dual distribution

an arrangement whereby a firm reachers different buyers by employing two or more different types of channels for the same basic product.

dependability

consistency of replenishment

Marketing Channel

consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.

Selective distribution

falls in between the two... means that a firm selects a few retailers in a specific geographical area to carry its products.

Total logistics cost

includes expenses associated with transportation, materials handling, and warehousing, inventory, stock outs (being out of order), order processing, and return products handling - goal is to minimize total logistic costs.

Strategic Channel Alliances

one firm's marketing channel is used to sell another firm's products.

Supply chain

refers to the various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users.

Customer Service Concept

the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience.

Multichannel Marketing

the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.

Exclusive distribution

the extreme opposite of intensive distribution because only one retailer in a specified geographical area carries the firm's products.

Supply Chain Management

the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering products and services that provide value to consumers.

Vendor-managed inventory

the supplier determines the product amount and assortment a customer needs and automatically delivers the appropriate items.

Order Cycle/ Replenishment

the time between the ordering of an item and when it is received and ready for use or sale.

Logistics

those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost. -Logistics Management- the performance of these activities.

Communication

two way link between buyer and seller to help monitor services and anticipate future needs.

disintermediation

when a channel member bypasses another member and sells or buys products direct.

Value created for buyer

Time Place Form Possession

3 major types of VMS

-Corporate VMS - all parts of channel integrated and owned under a single ownership (one firm buys up and owns all, thus this type VMS allows owner most control over channel management) -Contractual VMS - all or part of channel has integrated channel members integrated based on a 'contract' with certain terms of operation in the contract clauses - e.g. most visible of this type are our franchises -Administered VMS - all or parts of channel has integrated channel members integrated based on the 'size and influence' of one of the channel members, called a channel captain, and all the other channel members 'listen up' to operating advice of this channel captain.

Two types of marketing channels for consumer products/services

-Direct Channel- No middle men. The producer and the ultimate consumers deal directly with each other. -Indirect Channel- have middleman/men. Intermediaries are inserted between the producer and consumers and perform numerous channel functions.

Buyer Requirements

-Information: an important requirement when buyers have limited knowledge or desire specific data about a product or service. -Convenience -Variety -Pre- or Post-sale Services

Legal Consideration in channels of distribution -1

-Vertical price fixing is illegal (studied in Ch 14.) - Sherman Anti-trust Act (1891) and Consumer Goods Pricing Act (1975). -Price Discrimination is illegal (Robinson-Patman Act) -Deceptive Pricing is illegal (FTC Act) -Geographic Pricing that involves a conspiracy to set prices (FTC ACT and Robinson- Patman Act) -Predatory Pricing is illegal (Sherman-Antitrust Act and FTC Act) -Any channel practices that restrain competition, creates monopolies, or otherwise represent unfair methods of competition (Sherman Anti-trust Act; Clayton Act (1914); and monitored by the FTC and the Justice Department) -Dual Distribution - not illegal but viewed as anticompetitive but if lessens competition by eliminating wholesalers or retailers then violates the Sherman Act and Clayton Act. -Vertical Integration - not illegal but if it has potential to lessen competition and foster a monopoly is illegal under Clayton Act. -Exclusive Dealing - when a supplier requires a channel member to sell only its products or restricts it from selling directly competitive products illegal under the Clayton Act. -Tying Arrangements - when supplier requires a distributor top purchase some products to have access to others (e.g., full-line forcing) - illegal under Clayton Act. -Refusal to Deal - producer has legal right to choose intermediaries to carry and represent its products however the producer refusing to deal with existing channel members may be illegal under Clayton Act. -Resale Restrictions - when supplier attempts to stipulate to whom distributors may resell product to or in what specific geographic areas or territories this is illegal under Sherman Act.

Channel Conflict

-arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals. -Two types: --Vertical conflict: occurs between different levels in a marketing channel. --Horizontal conflict: occurs between intermediaries at the same level in a marketing channel, such as between two or more retailers.

Vertical Marketing System

-professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact. o Forward integration versus backward integration o Vertical integration versus horizontal integration o Total integration versus partial integration

Convenience

-there should be a minimum of effort on the part of the buyer in doing business with the seller

To carry out common goals

-understand the customer -understand the supply chain -harmonize the supply chain with the marketing strategy.

Dimensions of a marketing channel

Length= (vertical) - Distance between you and the buyer -(Short Channel) (etc. produce, diamonds) Width= (horizontal) -How many intermediaries/ middlemen do you have at each layer -Where do you want to make your product available to the consumers. -1 broker, 2 broker, etc.

Types of Marketing Middlemen or Intermediaries

• Middlemen (Intermediaries) = a generic term for any person or firm who conducts marketing channel activities anywhere in channel as the product, its title, information about it, risk involved, etc., flows between producer and end-user. • Agent = an intermediary legally charged by a selling firm to represent the firm in sales transactions - use when that there are a large number of customers, but you don't have time to be of service to them. • Broker = an intermediary you would hire if you had something to sell and didn't know where a buyer was located. • Wholesaler = An intermediary who buys from a sell and resells to other intermediaries - usually retailers. A term usually used when product is a consumer good). • Retailer = An intermediary who sells to end consumers. • Distributor = An imprecise term used to describe intermediaries who perform a wide variety of distribution functions such as selling, inventorying, extending credit, and so on. A term usually used with the product is a business market good. • Dealer = A more imprecise term than distributor that can mean the same as distributor, retailer, wholesaler and so on.