marketing channels exam 1

four p’s

product, price, place (channel), promotion

sustainable competitve advantage

competition cannot easily replicate it

three key players in marketing channel

manufacturer, intermediaries, end-user

marketing channel definition

a set of interdependent organizations involved in the process of making a product or service available for use or consumption

3 types of intermediaries

wholesalers, retailers, specialized

wholesalers

distributors/agents/representatives that sell to other intermediaries, such as retailers in bulk

retailers

sell directly to end user

specialized intermediaries

insurance companies, finance companies, credit card companies, etc

why are end users part of the marketing channel

end users perform key channel functions

disintermediation

the removal of intermediaries in a channel

who owns the “power of the purse”

the end user

bulk breaking

breaking down bulk products into smaller packages to allow the end user to not carry extra product

six categories of service outputs

bulk breaking, spatial convenience, waiting/delivery time, product variety, customer service, information sharing

spatial convenience

reducing effort for consumer to get to the retailer (convience stores, dollar generals, etc)

waiting time

the amount of time the end user must wait to receive good

product variety

the amount of different products and product lines

product assortment

the depth of products and lines a brand creates for a product category

information sharing

education given to end users about a certain product both before and after a product purchase

constant-sum scale

determines what factors are most important for a company

auditing existing marketing channel

evaluates each channel member’s efficiency

inventory holding cost formula

physical possession + ownership = inventory holding cost

2/10, n30 (2ten, net 30)

if paid withing 10 days, receive a 2% discount, must be paid regardless within 30 days

efficiency template purpose

amount of work completed by each channel member, the importance of each channel member, and the amount they should be paid according to their work

activity based channel concept

accounting model to measure the cost of performance

delphi analysis

using qualitative techniques to measure cost weights

zero based channel concept

a model that meets market’s demands without any extra cost or input, may not be possible

bounds that create channel gaps

environmental and managerial

service gaps

amount of a service is greater than demanded (SS>SD), or amount of service is less than demanded (SS<SD)

cost gaps

when the total cost of performing channel functions are too high (ex: high cost in training employees and employee turnover rates are high)

Bullwhip effect

small changes in consumer demands has a large effect on the manufactured demands

vertical integration

when a company does all of the work itself

outsourcing

company uses a third party for certain tasks

relational governance/quasi vertical integration

when certain channels share some of the tasks, very close and committed relationship

managerial bounds

gaps created due to bounds within the companies control

environmental bounds

gaps created by bounds outside of companies control, such as tariffs