distribution channels exam 3

Place

Making goods and services available in the right quantities and locations—when customers want them.

Channel of distribution

Any series of firms or individuals who participate in the flow of products from producer to final user or consumer

Direct marketing

Direct communication between a seller and an individual customer using a promotion method other than face-to-face personal selling.

Discrepancy of quantity

The difference between the quantity of products it is economical for a producer to make and the quantity final users or consumers normally want.

Discrepancy of assortment

The difference between the lines a typical producer makes and the assortment final consumers or users want.

Regrouping activities

Adjusting the quantities or assortments of products handled at each level in a channel of distribution.

Accumulating

Collecting products from many small producers.

Bulk-breaking

Dividing larger quantities into smaller quantities as products get closer to the final market.

Sorting

Separating products into grades and qualities desired by different target markets.

Assorting

Putting together a variety of products to give a target market what it wants.

Traditional channel systems

A channel in which the various channel members make little or no effort to cooperate with one another.

Vertical channel conflict

Conflict that occurs between firms at different levels in the channel of distribution.

Horizontal channel conflict

Conflict that occurs between firms at the same level in a distribution channel.

Channel captain

A manager who helps direct the activities of a whole channel and tries to avoid, or solve, channel conflicts.

Vertical marketing systems

Channel systems in which the whole channel focuses on the same target market at the end of the channel.

Corporate channel systems

Corporate ownership all along the channel.

Vertical integration

Acquiring firms at different levels of channel activity.

For example, IKEA purchased forests in Romania to have greater control over an important raw material.

Administered channel systems

Various channel members informally agree to cooperate with one another.

Contractual channel systems

Various channel members agree by contract to cooperate with one another.

Ideal market exposure

When a product is available widely enough to satisfy target customers’ needs but not exceed them.

Intensive distribution

Selling a product through all responsible and suitable wholesalers or retailers who will stock or sell the product.

Selective distribution

Selling through only those intermediaries who will give the product special attention.

Exclusive distribution

Selling through only one intermediary in a particular geographic area.

Multichannel distribution

When a producer uses several competing channels to reach the same target market—perhaps using several intermediaries in addition to selling directly.

Multichannel shoppers

Shoppers who use different channels as they move through the purchase process.

Omnichannel

A multichannel selling approach where a single retailer provides a seamless customer shopping experience from a desktop computer, mobile device, telephone, or brick-and-mortar store.

Reverse channels

Channels used to retrieve products that customers no longer want.

Waste Electrical and Electronic Equipment (WEEE) Directive

The European Community’s law that requires producers to take back waste electrical and electronic equipment.

Exporting

Selling some of what the firm produces to foreign markets.

Licensing

Selling the right to use some process, trademark, patent, or other right for a fee or royalty.

Management contracting

The seller provides only management skills—others own the production and distribution facilities.

Joint venture

In international marketing, a domestic firm entering into a partnership with a foreign firm.

Direct investment

A parent firm has a division (or owns a separate subsidiary firm) in a foreign market.

Logistics

The transporting, storing, and handling of goods in ways that match target customers’ needs with a firm’s marketing mix—both within individual firms and along a channel of distribution. See also Physical distribution (PD).

Customer service level

How rapidly and dependably a firm can deliver what customers want.

Physical distribution (PD) concept

All transporting, storing, and product-handling activities of a business and a whole channel system should be coordinated as one system that seeks to minimize the cost of distribution for a given customer service level.

Total cost approach

Evaluating each possible PD system and identifying all of the costs of each alternative.

Supply chain

The complete set of firms and facilities and logistics activities that are involved in procuring materials, transforming them into intermediate and finished products, and distributing them to customers.

Electronic data interchange (EDI)

An approach that puts information in a standardized format easily shared between different computer systems.

Transporting

The marketing function of moving goods.

Containerization

Grouping individual items into an economical shipping quantity and sealing them in protective containers for transit to the final destination.

Storing

The marketing function of holding goods.

Inventory

is the amount of goods being stored.

Private warehouses

Storing facilities owned or leased by companies for their own use.

Public warehouses

Independent storing facilities.

Distribution center

A special kind of warehouse designed to speed the flow of goods and avoid unnecessary storing costs.

Retailing

All of the activities involved in the sale of products to final consumers.

Wholesaling

The activities of those persons or establishments that sell to retailers and other merchants, or to industrial, institutional, and commercial users, but who do not sell in large amounts to final consumers.

Corporate chain

A firm that owns and manages more than one store—and often it’s many.

Franchise operation

A franchisor develops a good marketing strategy, and the retail franchise holders carry out the strategy in their own units.

General stores

Early retailers that carried anything they could sell in reasonable volume.

Single-line stores

Stores that specialize in certain lines of related products rather than a wide assortment. See also Limited-line stores.

Specialty shop

A type of conventional limited-line store—usually small and with a distinct personality.

Department stores

Larger stores that are organized into many separate departments and offer many product lines.

Convenience (food) stores

A convenience-oriented variation of the conventional limited-line food stores.

Door-to-door selling

Going directly to the consumer’s home.

Mass-merchandising concept

The idea that retailers should offer low prices to get faster turnover and greater sales volume by appealing to larger numbers.

Supermarkets

Large stores specializing in groceries with self-service and wide assortments.

Mass-merchandisers

Large, self-service stores with many departments that emphasize soft goods (housewares, clothing, and fabrics) and staples (like health and beauty aids) and selling on lower margins to get faster turnover.

Supercenters (hypermarkets)

Very large stores that try to carry not only food and drug items, but all goods and services that the consumer purchases routinely.

Warehouse clubs

stores with limited assortment, little service, and low prices that usually require a membership and annual fee.

Stockturn rate

The number of times the average inventory is sold during a year.

Online retailers

Stores that sell exclusively or almost exclusively online.

Social commerce

An entire shopping experience occurring within a social media platform.

Wheel of retailing theory

New types of retailers enter the market as low-status, low-margin, low-price operators and then, if successful, evolve into more conventional retailers offering more services with higher operating costs and higher prices.

Scrambled merchandising

Retailers carrying any product lines they think they can sell profitably.

Manufacturers’ sales branches

Separate warehouses that producers set up away from their factories.

Merchant wholesalers

Wholesalers that own (take title to) the products they sell.

Service wholesalers

Merchant wholesalers that provide all the wholesaling functions.

General merchandise wholesalers

Service wholesalers that carry a wide variety of nonperishable items such as hardware, electrical supplies, furniture, drugs, cosmetics, and automobile equipment.

Single-line (or general-line) wholesalers

Service wholesalers that carry a narrower line of merchandise than general merchandise wholesalers.

Specialty wholesalers

Service wholesalers that carry a very narrow range of products and offer more information and service than other service wholesalers.

Limited-function wholesalers

Merchant wholesalers that provide only some wholesaling functions.

Cash-and-carry wholesalers

Like service wholesalers, except that the customer must pay cash.

Drop-shippers

Wholesalers that own (take title to) the products they sell but do not actually handle, stock, or deliver them.

Truck wholesalers

Wholesalers that specialize in delivering products that they stock in their own trucks.

Rack jobbers

Merchant wholesalers that specialize in hard-to-handle assortments of products that a retailer doesn’t want to manage—and they often display the products on their own wire racks.

Catalog wholesalers

Sell out of catalogs that may be distributed widely to smaller industrial customers or retailers that might not be called on by other wholesalers.

Agent wholesalers

Wholesalers that do not own (take title to) the products they sell.

Manufacturers’ agents

Agent wholesalers that sell similar products for several noncompeting producers for a commission on what is actually sold.

Export agents

Import agents

Manufacturers’ agents who specialize in export trade.

Manufacturers’ agents who specialize in import trade.

Brokers

Agent wholesalers who specialize in bringing buyers and sellers together.

Export/import brokers

Brokers who specialize in bringing together buyers and sellers from different countries.

Selling agents

Agent wholesalers who take over the whole marketing job of producers, not just the selling function.

Combination export manager

A blend of manufacturers’ agent and selling agent—handling the entire export function for several producers of similar but noncompeting lines.

Auction companies

Agent wholesalers that provide a place where buyers and sellers can come together and complete a transaction.

Advertising agencies

Specialists in planning and handling mass-selling details for advertisers.

Advertising allowances

Price reductions to firms in the channel to encourage them to advertise or otherwise promote the firm’s products locally.

Cooperative advertising

Producers sharing in the cost of ads with wholesalers or retailers.

Product advertising

Advertising that tries to sell a specific product.

Institutional advertising

Advertising that tries to promote an organization’s image, reputation, or ideas rather than a specific product.

Pioneering advertising

Advertising that tries to develop primary demand for a product category rather than demand for a specific brand.

Competitive advertising

Advertising that tries to develop selective demand for a specific brand rather than a product category.

Direct competitive advertising

Competitive advertising that aims for immediate buying action.

Indirect competitive advertising

Competitive advertising that points out product advantages—to affect future buying decisions.

Comparative advertising

Advertising that makes specific brand comparisons using actual product names or images.

Reminder advertising

Advertising to keep the product’s name before the public.

Advertising media

The various means by which a message is communicated to its target market.

Pay-per-click

An advertiser pays media costs only when a customer clicks on the ad that leads to the advertiser’s website.

Retargeting

Displays ads to a web user based on data collected from previous online behavior.