Ch 12 - Managing Marketing Channels and Supply Chains Flashcards

1
Q

Explain what is meant by a marketing channel of distribution and why intermediaries are needed.

A

A marketing channel of distribution, or simply a 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. Intermediaries make possible the flow of products from producers to buyers by performing three basic functions. The transactional function involves buying, selling, and risk taking because intermediaries stock merchandise in anticipation of sales. The logistical function involves the gathering, storing, and dispensing of products. The facilitating function assists producers in making products and services more attractive to buyers. The performance of these functions by intermediaries creates time, place, form, and possession utility for consumers.

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2
Q

Distinguish among traditional marketing channels, electronic marketing channels, and different types of vertical marketing systems.

A

Traditional marketing channels describe the route taken by products and services from producers to buyers. This route can range from a direct channel with no intermediaries, because a producer and the ultimate consumer deal directly with each other, to indirect channels where intermediaries (agents, wholesalers, distributors, or retailers) are inserted between a producer and consumer and perform numerous channel functions. Electronic marketing channels employ the Internet to make products and services available for consumption or use by consumer or business buyers. Vertical marketing systems are professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact. There are three major types of vertical marketing systems (VMSs). A corporate VMS combines successive stages of production and distribution under a single ownership. A contractual VMS exists when independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone. An administered VMS achieves coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.

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3
Q

Describe factors that marketing executives consider when selecting and managing a marketing channel.

A

Marketing executives consider three questions when selecting and managing a marketing channel and intermediaries. (1) Which channel and intermediaries will provide the best coverage of the target market? Marketers typically choose one of three levels of market coverage: intensive, selective, or exclusive distribution. (2) Which channel and intermediaries will best satisfy the buying requirements of the target market? These buying requirements fall into four categories: information, convenience, variety, and pre- or postsale services. (3) Which channel and intermediaries will be the most profitable? Here marketers look at the margins earned (revenues minus cost) for each channel member and for the channel as a whole.

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4
Q

Explain what supply chain and logistics management are and how they relate to marketing strategy.

A

A supply chain refers to the various firms involved in performing the various activities required to create and deliver a product or service to consumers or industrial users. Supply chain management is the integration and organization of information and logistics across firms for the purpose of creating value for consumers. Logistics involves 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 includes the coordination of the flows of both inbound and outbound products, an emphasis on making these flows cost effective, and customer service. A company’s supply chain follows from a clearly defined marketing strategy. The alignment of a company’s supply chain with its marketing strategy involves three steps. First, a supply chain must reflect the needs of the customer segment being served. Second, a company must understand what a supply chain is designed to do well. Supply chains range from those that emphasize being responsive to customer requirements and demands to those that emphasize efficiency with the goal of supplying products at the lowest possible delivered cost. Finally, a supply chain must be consistent with the targeted customer’s needs and the company’s marketing strategy. The Dell and Walmart examples in the chapter illustrate how this alignment is achieved by two market leaders.

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5
Q

channel conflict

A

Arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals.

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6
Q

customer service

A

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

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7
Q

disintermediation

A

Channel conflict that arises when a channel member bypasses another member and sells or buys products direct.

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8
Q

dual distribution

A

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

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9
Q

exclusive distribution

A

A level of distribution density whereby only one retailer in a specific geographical area carries the firm’s products.

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10
Q

intensive distribution

A

A level of distribution density whereby a firm tries to place its products and services in as many outlets as possible.

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11
Q

logistics

A

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.

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12
Q

marketing channel

A

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.

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13
Q

multichannel marketing

A

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.

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14
Q

reverse logistics

A

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

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15
Q

selective distribution

A

A level of distribution density whereby a firm selects a few retailers in a specific geographical area to carry its products.

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16
Q

supply chain

A

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

17
Q

total logistics cost

A

Expenses associated with transportation, materials handling and warehousing, inventory, stockouts (being out of inventory), order processing, and return products handling.

18
Q

vendor-managed inventory (VMI)

A

An inventory-management system whereby the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items.

19
Q

vertical marketing systems

A

Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.

20
Q

What is meant by a marketing channel?

A

A 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.

21
Q

What are the three basic functions performed by intermediaries?

A

Intermediaries perform transactional, logistical, and facilitating functions.

22
Q

What is the difference between a direct and an indirect channel?

A

A direct channel is one in which a producer of consumer or business products and services and ultimate consumers or industrial users deal directly with each other. An indirect channel has intermediaries that are inserted between the producer and ultimate consumers or industrial users and perform numerous channel functions.

23
Q

Why are channels for business products typically shorter than channels for consumer products?

A

Business channels are typically shorter than consumer channels because business users are fewer in number, tend to be more concentrated geographically, and buy in larger quantities.

24
Q

What is the principal distinction between a corporate vertical marketing system and an administered vertical marketing system?

A

A corporate vertical marketing system combines successive stages of production and distribution under a single ownership. An administered vertical marketing system achieves coordination by the size and influence of one channel member rather than through ownership.

25
Q

What are the three questions marketing executives consider when choosing a marketing channel and intermediaries?

A

The three questions to consider when choosing a marketing channel and intermediaries are: (1) Which will provide the best coverage of the target market? (2) Which will best satisfy the buying requirements of the target market? (3) Which will be the most profitable?

26
Q

What are the three degrees of distribution density?

A

intensive; exclusive; selective

27
Q

What is the principal difference between a marketing channel and a supply chain?

A

A 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. A supply chain differs from a marketing channel in terms of membership. It includes suppliers who provide raw materials to a manufacturer as well as the wholesalers and retailers—the marketing channel—that deliver the finished goods to ultimate consumers.

28
Q

The choice of a supply chain involves what three steps?

A

(1) Understand the customer. (2) Understand the supply chain. (3) Harmonize the supply chain with the marketing strategy.

29
Q

A manager’s key task is to balance which four customer service factors against which six logistics cost factors?

A

The four customer service factors are time, dependability, communication, and convenience. The logistics cost factors are transportation costs, materials handling and warehousing costs, inventory costs, stockout costs (being out of inventory), and order processing costs. Another cost identified in Figure 12-9 and in the text is return products handling costs.