Marketing 3305 Exam 4

Direct channel

manufacturer sells straight to the end customers (ex. apple selling online)

Channel intermediaries

middlemen (wholesalers, retailers, agents) who help transfer goods from producer to consumer

What is an intermediary?

firms or individuals who help move a product from the producer to the consumer or business user

Breaking bulk (functions of distribution channels)

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

Creating assortments (functions of distribution channels)

provide variety of products in one location, so customers can conveniently buy many different items from one seller

Transportation (functions of distribution channels)

occurs when retailers and other channel members move the goods from the production point to other locations where they can hold them until consumers want them

Storage (functions of distribution channels)

occurs when retailers and other channel members move the goods from the production point to other locations where they can hold them until consumers want them

Facilitating purchase of items (functions of distribution channels)

make the purchase process easier for customers and manufacturers (ex. offering credit to buyers)

Taking risk (functions of distribution channels)

chance retailers take on the loss of a product when they buy a product from a manufacturer because the product sits on the shelf because no customer wants it

What is disintermediation?

when intermediaries fail to provide unique value

Independent intermediaries

• merchant wholesalers

  • full service merchant wholesalers

  • limited-service merchant wholesalers

    • cash-and-carry wholesalers

    • truck jobbers

    • drop shippers

    • mail-order wholesalers

    • rack jobbers

  • merchandise agents and brokers

    • agents and brokers provide paid services but never take title to the product

      • manufacturer’s agents

      • selling agents

      • commission agents

      • merchandise brokers

Manufacturer-owned intermediaries

• producers may set up their own channel intermediaries

• perform functions of independent intermediaries while maintaining control:

  • sales branches

  • sales offices

  • manufacturer’s showrooms

Types of distribution channels

consumer and B2B

Why might a producer choose a direct channel?

it grants maximum oversight and financial control over how their product is handled, priced, and delivered

Why might a producer choose an indirect channel?

they want to maximize their market reach and reduce their own operational and financial burdens

In the B2B market is direct or indirect more common?

direct channel is more common

What is meant by a dual or hybrid distribution system?

when channel members participate in more than one type of channel

Conventional marketing system (choosing the distribution strategy)

a multiple-level distribution channel in which members work independently of one another

Administered (vertical marketing system)

independent channel members work together due to power of a dominant channel member (ex. Walmart dictating terms to suppliers)

Corporate (vertical marketing system)

single firm owns manufacturing, wholesaling, and retailing operations (ex. Sherwin-Williams)

Contractual (vertical marketing system)

channel member cooperation enforced by contracts that spell out rights and responsibilities of each member

• retailer cooperative

  • form a legal group to run their own wholesale operation and buy in bulk for cheaper prices (ex. ACE Hardware)

• franchise organizations

  • where a parent company lets an independent owner run a business using their brand name and blueprint (ex. McDonalds)

• horizontal marketing system

  • two or more companies at the same channel level partner up to exploit a new marketing opportunity (ex. Starbucks inside a Target)

What is meant by intensive, exclusive, and selective distribution?

• intensive - maximize coverage by selling through as many outlets as possible

• exclusive - limit distribution to a single outlet in a particular region

• selective - seeks to strike a balance between intensive and exclusive distribution

Selecting channel partners (develop distribution tactics)

firms consider economic, competitive, relationship, and sustainability factors

Channel leader (develop distribution tactics)

the dominant firm that controls the channel

Channel power (develop distribution tactics)

derives from different potential sources

• economic power

• legitimate powr

• coercive power

Channel cooperation

state of harmony where channel members share data, align goals, and work together to deliver value to the end consumer

Channel conflict

disagreements, clashes, or friction among channel members over goals, roles, rewards, or pricing strategies

Logistics

the process of designing, managing, and improving the movement of products through a supply chain

Order processing (logistics)

includes activities that occur between the time an order comes in and the time the product goes out

• many firms automate this process using enterprise resource planning (ERP) software

Warehousing (logistics)

storage of good in anticipation of sale or transfer of goods to another member of distribution channel

• logistics planning determines:

  • how many warehouses will be needed

  • where will warehouses be located

  • what type of warehouses

Materials handling (logistics)

relates to the movement of products into, within, and out of warehouses

• procedures that limit the number of times a product must be handled:

  • decrease the likelihood of damage

  • reduce the cost of materials handling

Transportation modes

• dependability

• cost

• speed of delivery

• accessibility

• capability

• traceability

What is the supply chain?

the entire sequence of firms that perform activities required to create and deliver a product or service to consumers or industrial users

The Wheel of Retailing

entry phase

• low margin, low prices, limited or no services, low-end facilities

trading-up phase

• moderate prices, better facilities, some services, increased quality merchandise

vulnerability phase

• high prices

• luxurious facilities

• excellent services and amenities

Changing demographics and consumer preferences

more dual-career families place greater emphasis on convenience

• increased number of locations and format

• extended hours

ethnic diversity

• need to adjust retail mix to attract consumers in areas with high concentration of ethnic population

Destination retailer (changing demographics and consumer preferences)

firm that consumers view as distinctive enough to become loyal to it

Omni-channel marketing (technology)

seamless shopping experience whether shopping online, mobile device, phone, or brick-and-mortar

What is POS systems and what do they do?

retail computer systems that collect sales data and hook directly into a store’s inventory-control and management systems

What is retailtainment?

marketing strategies that enhance the shopping experience

Brick-and-Mortar retailers

traditional businesses that sell goods or services out of physical storefronts

What is merchandise mix?

total set of all products offered for sale by a retailer, including all product lines sold to all consumer groups

What is B2B E-Commerce?

online exchange between companies and individual consumers

What is M-Commerce?

the promotional or other e-commerce activities over mobile devices

What is automatic vending?

usually best suited to low-cost convenience goods and offers many benefits to consumers and marketers

What defines a service?

acts, efforts, or performances exchanged from producer to user without ownership rights

Characteristics of services

intangibility, perishability, variability, inseparability

Intangibility perishability, variability, inseparability

intangibility

• cant see, touch, or smell good service

• marketers provide physical cues

perishability

• impossible to store for later sale or consumption

• capacity management

variability

• service can vary

• difficult to standardize services

inseparability

• impossible to separate the production and consumption of a service

• disintermediation

What is a servicescape?

the actual physical facility where the service is performed, delivered, and consumed

What is meant by Integrated Marketing Communication?

the planning, execution, and evaluation of coordinated, brand communication programs over time to targeted audiences

What is meant by Multichannel Promotion Strategy?

combines traditional marketing communication with social media and other online activities

One-to-many (marketing communication)

single marketer or organization broadcasts a message to a large, broad audience

• advertising

• sales promotion

• public relations

One-to-one (marketing communication)

marketer speaks to an individual consumer or a highly specific targeted group

• database marketing

• direct marketing

• personal selling

Many-to-many (marketing communication)

consumers talk to other consumers and marketers join the conversation

• buzz building

• social media

The Communication Model

1. source (company, individual)

2. message (advertising, PR, sales promotion)

3. medium (magazines, newspapers, television)

4. receiver (consumer)

5. noise (competing messages)

6. feedback (purchase data, product awareness, brand loyalty)

The promotional mix

communication elements the marketer controls

• one- to-many (mass)

• one-to-one (personal)

  • advertising, sales promotion, public relations, personal selling, direct marketing

Advertising vs Sales promotion

advertising: non-personal communication from an identified sponsor using mass media

sales promotion: programs designed to build interest in or encourage purchase of a product during a specified period

Levels of control for each type of marketing communication

Objectives of promotion

Methods for determining the marketing communication budget

Push vs Pull strategies

Types of advertising

Create the ads

Tonality

Creative tactics

Traditional mass media

Types of digital media

Mobile advertising

Sales promotion to consumers

B2B sales promotions