chapter 15 - marketing channels and supply chains

marketing channel

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

middleman

any intermediary with legal authority to act on behalf of the manufacturer

agent or broker

any intermediary with legal authority to act on behalf of the manufacturer

wholesaler

an intermediary who sells to other intermediaries, usually to retailers; term usually applies to consumer markets

retailer

an intermediary who sells to consumers

distributor

an imprecise term, usually used to describe intermediaries, who perform a variety of distribution functions, including selling, maintaining inventory, extending credit, etc; more common in business markets

dealer

a more imprecise term than distributor that can mean the same as distributor, retailer, wholesaler, and so forth

transactional

the function intermediaries perform when they buy and sell products or services as well as sharing risk with producer when it stocks merchandise in anticipation of sales

logistical

the function intermediaries perform when they gather, sort, and disperse products

facilitating

the function intermediaries perform when they make a transaction easier for buyers such as financing, grading, and providing information

direct channel

a type of channel where the producer and ultimate consumers deal directly with each other; ex. insurance companies

indirect channel

a type of channel where intermediaries are inserted between the producer and consumers and perform numerous functions

digital channel

a type of channer that combines electronic and traditional intermediaries to create time, place, form, and possession utility for buyers

direct to consumer

a type of channel where consumers can buy products by interacting with various print or electronic media without a face-to-face meeting with a salesperson

multichannel marketing

the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers

bopus

customers purchase an item over the internet and then goes to the store to obtain it

boris

customer purchase an item over the internet and then goes to the store to return it

dual distribution

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

strategic channel alliances

one firm’s marketing channel is used to sell another firm’s products

vertical marketing systems

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

corporate system

a type of vertical marketing system where successive stages of production and distribution are combined under a single ownership

forward integration

a producer owns the intermediary at the next level down in the channel

backward integration

a retailer owns a manufacturing operation

contractual system

a type of vertical marketing system where independent production and distribution firms integrate their efforts to create more impact than they could achieve alone

wholesaler sponsored

a type of contractual system where a wholesaler develops a partnership with small, independent retailers to standardize and coordinate buying practices

retailer sponsored

a type of contractual system where small, independent retailers form an organization that operates a wholesale facility cooperatively

franchising

a type of contractual system where a parent company comes to an agreement with an individual or firm to operate a certain type of business under an established name and rules

manufacturer sponsored retail

a type of franchise system where a manufacturer licenses dealers to sell its products subject to various sales and service conditions

manufacturer sponsored wholesale

a type of franchise system where a producer licenses wholesalers to distribute its products to retailers

service sponsored retail

a type of franchise system where firms that have designed a unique approach for performing a service and wish to profit by selling the franchise to others

service sponsored

a type of franchise system where franchisors license individuals or firms to dispense a service under a trade name and according to specific guidelines

administered system

a type of vertical marketing system where successive stages of production and distribution is coordinated by the size and influence of one channel member rather than through ownership

intensive distribution

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

exclusive distribution

only one retailer in a specific geographic area carries a firm’s products

selective distribution

a firm selects a few retailers in a specific geographic area to carry its products

information, convenience, variety, services

the four categories of buyer interests that must be considered when selecting a channel

channel conflict

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

vertical conflict

occurs between different levels in a marketing channel

disintermediation

a source of vertical channel conflict when a channel member bypasses another member and sells or buys products direct

horizontal conflict

occurs between intermediaries at the same level in a marketing channel, either through disagreement on distribution coverage or when different retailers carry the same brands

channel captain

a channel member that coordinates, directs, and supports other channel members; power gained through reward, expertise, identification, and legitimate right

exclusive dealing

when a supplier requires channel members to sell only its products or restricts distributors from selling directly competitive products (illegal under clayton act)

tying arrangements

when a supplier requires a distributor purchasing some products to buy others from the supplier (illegal under clayton act)

full-line forcing

a type of tying arrangement where a supplier requires that a channel member carry all of its products in order to sell a specific item in the supplier’s line

resale restrictions

a supplier’s attempt to stipulate to whom distributors may resell the supplier’s products and in what specific geographical areas or territories they may be sold (illegal under sherman act)

logistics

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

supply chain

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

cross-docking

a practice that involves unloading products form suppliers, sorting products for individual stores, and quickly reloading products onto its trucks for a particular store

bullwhip effect

the tendency for supply chain managers at different levels of the supply chain to exaggerate the need to increase or decrease inventory in response to variation in demand

total logistics cost

expenses associated with transportation, materials handling and warehousing, inventory, stockouts, order processing, and return products handling

time, dependability, communication, convenience

the four customer service factors that logistics management must satisfy

blockchain technology

a decentralized digital system for recording, documenting, and facilitating transactions across all participants in a supply chain

vendor managed inventory

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

reverse logistics

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