Marketing 200 - Chapter 11, 12, 13, 14 and 3

What does B2B stand for?

Business-to-Business

What does VMS stand for?

Vertical Marketing System

• True Value Hardware vs Ace Hardware

What does ERP stand for?

Enterprise Resource Planning

What does RFID stand for?

Radio Frequency Identification:

-Product tags with tiny chips containing information about the item’s contents, origin, and destination

What does JIT stand for?

Just in Time

Define Transportation and Storage.

Retailers and other channel members move the goods from the production point to other locations where they are held until consumers need them.

• Peeps

Define Facilitating Function.

Channel intermediaries that make the purchase process easier for customers and manufacturers.

• BNPL

Define Communication and Transaction Functions.

When channel members develop and execute both promotional and other types of communication among members of the channel.

What are Independent Intermediaries?

Do business with many manufacturers and many different consumers.

Merchant wholesalers DO or Don’t take title to the goods?

-Do

-Assume Risks, can suffer lost

Merchandise agents/brokers DO or DO NOT take title to the goods?

-Don’t

-Provides services in exchange for commissions

What do Manufacturer-owned Intermediaries do?

Performs all functions of independent intermediaries while still maintaining complete control over the channel.

There is no single best channel for all products. True or False

True

Types of Consumer Distribution Channels?

Direct

• Producer → Consumer

Indirect

• Producer → Retailer → Consumer

What are B2B Distribution Channels?

• Flow of goods from the Producer to the organization or Business customer.

  • Can be direct & indirect

What are Dual (multiple) channels?

Where producers, dealers, wholesalers, retailers, and customers participate in more than one type of channel.

What are Hybrid distribution channels?

Uses a number of different channels and communication methods to serve a target market

• Ex. A company combining channels like direct sales, distributions, retail sales, and direct mail

• Ex. Xerox

Example of Dual Channel Distribution

• Pharmaceutical Companies

  • Sell to hospitals → Indirect consumer channels (Walgreens) → Companies sell to 3rd party buyers

Example of Hybrid Channel Distribution.

• Xerox Copiers

  • Sells only through authorized dealers and usually to large business customers, offers competitive advantages; increased market coverage, lower market costs, greater potential for customization of service for local markets

Price and Place are related. True or False.

• True

  • Ultradent teeth whitening only sold from dentist. Makes it more high end since sold by professionals

Mid price products are sold through mass merchandisers. True or False.

True

Prestige products are sold through upscale department stores and specialty stores. True or False.

True

Define Slotting Allowance.

Marketers paying more for access to shelf space

When Developing Objectives, what are the overall objectives?

• Utility

• How does distribution work with the other marketing mix elements

• Make depend on nature of product

Develop Objective:
If the product is Bulky, then _ _ _ _ _?

minimize cost

Develop Objective:

If the product is Fragile, then _ _ _ _ _?

Minimize handling

• Since Covid, Shipping costs are _ _ _ _ _ _!

• Since Covid, Commodities costs are _ _ _ _ _ _!

• Since Covid, Labor costs are _ _ _ _ _ _!

RISING for all

What are Internal/External Environmental Influences?

• Geography

  • Degree of technical complexity of product

Internal/External Environmental Influences:

If the product is Perishable, the _ _ _ _ _ _ _ distribution.

Selective

Internal/External Environmental Influences:

If the product is Inexpensive, the _ _ _ _ _ _ _ distribution.

Intensive

What is Distribution Strategy Decision 2?

• Intensive

• Exclusive

• Selective

When is an Intensive Distribution Strategy Used?

• With Convenience Products

  • Selling products through all suitable wholesalers or retailers that are willing.

When is an Exclusive Distribution Strategy Used?

• Used with Specialty Products

  • Limit distribution to a single outlet in a particular region

When is a Selective Distribution Strategy Used?

• Used with Shopping Products

  • Distribution using fewer outlets than intensive distribution but more than exclusive

An example of Developing Distribution Tactics.

Small businesses such as Instant Pot outsource distribution via partnerships with Amazon. Amazon warehouses and ships products for companies; very helpful as small businesses scale up.

What is the Develop Distribution Tactics Decision 1.

• Select Channel Partners

  • Ex. Should I seek distribution through Walmart?

    • Pro: Double Business

    • Con: Loss of marketing decision-making

  • Corporate Social Responsibility

    • Ex. Starbucks

    • Work with those who share values

What is the Develop Distribution Tactics Decision 2.

• Manage the Channel

  • Channel power: Ability of one channel member to influence, control, and lead the entire channel based on sources of power. (Channel Captain)

    • Economic Power:If it has ability to control resources

    • Legitimate Power: Has legal authority to call the shots

    • Reward and Coercive Power: If engages in exclusive distribution and has ability to give profitable products and take them away from the channel intermediaries.

Photo showing reduced transactions via intermediaries.

Photo of Key types of Intermediaries.

Learn about Types of Intermediaries from this photo.

What are the Five Functions of Logistics?

• Order Processing

• Warehousing

• Materials Handling

• Transportation

• Inventory Control

Define Order Processing.

Series of activities that occurs between the time on order comes into the org and the time a product goes out the door.

• Enterprise Resource Planning (ERP)

Define Enterprise Resource Planning.

Software solution that integrates information from across the entire company, including finance, order fulfillment, manufacturing, and transportation.

Define Warehousing.

Storing goods in anticipation of sale or transfer to another member of the channel of distribution.

• Time Utility

Define Materials Handling.

Moving products into, within; and out of warehouses.

Different Types of Channel Distribution

Define Transportation.

Mode by which product moves between channel members.

Six types of Transportation and Descriptions.

• Dependability

  • Ability of carrier to deliver goods safely & on time

• Cost

  • Total transportation cost to move goods one place to another. Includes charges for loading, etc.

• Speed

  • Total time delivery takes. Including loading and unloading.

• Accessibility

  • Number of locations carrier services

• Capability

  • Ability of carrier to handle different products, large, bulky, small, fragile.

• Traceability

  • Ability of carrier to locate goods in shipment

Define Inventory Control.

Activities to ensure goods are always available to meet customer demand.

• RFID and JIT: Avoid stock-outs

What is Supply Chain.

All activities to turn raw materials into goods or services and put in hands of consumers or business customer.

• Is place the “final frontier” for achieving long-term competitive advantage.

• Ex. Walmart/Sam’s Club

  • Cross Docking

• High-impact supply chain trend: insourcing - bring specialist company like UPS

What does CSA stand for?

Community Supported Agriculture

IKEA has control over all channel operations. True or False.

True

Case Study: BDP International Notes

• Client: PepsiCo

  • Quaker Oats

• World Economic Forum (WEF) in Davios, Switzerland

• Quaker Opportunity with Breakfast Bars

  • Weren’t approved in the EU

  • Label for ingredients wasn’t approved

Define Physical Distribution.

Activities that move finished goods from manufacturers to final customers.

Define Channel of Distribution.

Series of firms or individuals that facilitates the movement of a product from producer to final consumer.

Define a producer.

The individual of firm that manufacturers or produces a good or service and a customer

Define Direct Channel.

Firm sells its own product first to customer.

Define Indirect Channel.

Firm sells their products through third parties.

• Often include channel intermediaries: Middle Man

What are Functions of Distribution Channels?

• Provide time, place, possession/ownership utility

• Provide logistics and/or physical distribution

• Create efficiencies by reducing the number of transactions

Define Breaking Bulk.

Purchase large quantities of goods from producers but sell only one or few at a time to many different customers.

• Ex. Mulch

Creating Assortment

Provide a variety of products in one location to meet needs of buyers.

• Ex. Walmart(Sells a little bit of everything)

What are Risk-Taking Functions?

Chance retailers take when they buy a product from a manufacturer, as product may sit on shelf.

What are communications and transaction functions?

Channel members develop and execute both promotional and other types of communication among members of the channel.

Define Disintermediation.

The elimination of some layers of the channel of distribution to cut costs and improve the efficiency of the channel.

• New tech can render channel members obsolete

• Ex. Self checkout, Family video

What are Channel Levels?

Number of distinct categories of intermediaries that make up a channel of distribution.

Define Hybrid Marketing Systems.

Uses a number of different channels and communication methods to serve a target market.

• Ex. A company combining channels like direct sales, distributions, retail sales, and direct mail.

Define Subscription Boxes.

Sends boxes filled with items people didn’t know they wanted.

Define Product Diversion.

The distribution of a product through one or more channels not authorized for use by the manufacturer of the product.

What is a Diverter.

An entity that facilitates the distribution of a product through one or more channels not authorized for use by the manufacturer of the product.

Define Distribution Planning.

Process of developing distribution objectives, evaluating internal and external environmental influences on distribution, and choosing a distribution strategy.

Distribution Strategy Decision 1.

• Conventional

• Vertical

• Horizontal

Define Conventional Distribution Strategy.

A multilevel distribution channel in which member work independently of one another.

• Same Goals

• Relationships are limited to simply buying and selling from each other

• While members work independently, each recognizes self-interest is best served by fair dealing

Define Vertical Distribution Strategy. (VMS)

Channel in which there is formal cooperation among channel members at two or more different level; manufacturing, wholesaling, retailing

• Retailer Cooperative

What are Retailer Cooperative?

Group of retailers that establishes a wholesaling operation to help them complete more effectively with the large chains.

• Ex. Associated Grocers and True Value Hardware

Define Horizontal Distribution Strategy.

2 or more firms at the same channel level agree to work together to get their product to the consumer.

• Most airlines do this today to get passengers where they need

Define Gray Market.

Legal but frowned upon by manufacturer. Usually high end item sold through exclusive distribution. (Rolex sold through Walmart.)

Define Channel Cooperation.

Occurs when produces, wholesalers, and retailers depnd on one another for success.

What is a channel conflict.

Incompatible goals, poor communication, disagreement, etc. Cause conflict.

What are logistics? Also the two kinds?

Process of designing, managing, and improving the movement of products through the supply chain.

• Inbound and Outbound

What are some Inbound Logistics.

Raw materials, parts, components, and supplies.W

What are outbound logistics.

Work in progress and finished.

Define Reverse Logistic.

Includes product returns, recycling and material re use, and waste disposal.

What is a Distribution Center?

A warehouse that stores goods for short periods of time, usually for “breaking bulk”

What is inventory turnover?

Number of times a firm’s inventory completely cycles through during a time frame.

Define Level Loading.

Manufacturing approach intended to balance the inventory holding capabilities, and production capacity constraints of a manufacturer for a particular product through implementation of a schedule, employed during and beyond periods of peak demand.

What are Stock-Outs?

Zero-Inventory result, resulting in loss of sales and upset customers.

What are Just in Time Inventory Techniques?

Sets up delivery of goods just as they are needed on the production floor.

• Reduce inventory to ensure deliveries arrive when needed

What is Cross Docking?

Efficient technique where products are transferred off a supplier truck directly onto buyer truck bound for next point, such as retail store.

What is Insourcing?

Company contacts with a specialist firm to handle all or part of its supply chain operations.

Chapter Ending Case: Rent the Runaway Notes.

• Sharing Economy

• Rents designer dress, giving consumer experiences

• Reverse Logistics

• Had an 11 day shut down, CEO issued apologies

• Survived and not does athleisure and ski apparel

• Quality and time delivery is crucial

Define Knowledge Management.

Comprehensive approach to collecting, organizing, storing, and retrieving a firm’s information assets.

Online Challenge:
What is the Online Distribution Piracy?

The theft and unauthorized repurposing of intellectual property via the internet.

What is Copyright Infringement?

The use of works protected by copyright law w/o the permission of the copyright holder.

What are Wholesaling Intermediaries?

Firms that handle the flow of products from the manufacturer to the retailer.

What are the two Merchant Wholesalers?

• Full-service Merchant Wholesalers

• Limited-service Merchant Wholesalers

Define Full-Service Merchant Wholesalers.

Provide a wide range of services for their customers.

Define Limited-Service Merchant Wholesalers.

Provide fewer services for their customers.

• Cash and Carry wholesalers

• Truck Jobbers

• Mail-order wholesalers

• Rack Jobbers

Define Cash and Carry wholesalers.

Provide low cost merchandise for retailers and industrial customers that are too small for other wholesalers sales reps to call on.

Define Truck Jobbers.

Carry their products to small business customer locations for their inspection and selection.

Define Mail-Order Wholesalers.

Sell products to small retailers and other industrial customers, often located in remote areas, through catalogs rather than sales force.