MGMT 105 Chapter 11

"Direct channel"

"A channel of distribution in which a manufacturer of a product or creator of a service distributes directly to the end customer."

"Indirect channel"

"A channel of distribution in which firms sell their products through third parties."

"Facilitating functions"

"Functions of channel intermediaries that make the purchase process easier for customers and manufacturers."

"Conventional marketing system"

"A multiple-level distribution channel in which channel members work independently of one another."

"Administered VMS"

"A vertical marketing system in which channel members remain independent but voluntarily work together because of the power of a single channel member."

"Product specifications"

A written description of the quality, size, weight, and other details required of a product purchase.

"Enterprise resource planning systems"

A software system that integrates information from across the entire company, including finance, order fulfillment, manufacturing, and transportation, and then facilitates sharing of the data throughout the firm.

"Radio frequency identification"

Product tags with tiny chips containing information about the item's content, origin, and destination.

"Stock-outs"

"Zero-inventory situations resulting in lost sales and customer dissatisfaction."

"Channel cooperation"

Occurs when producers, wholesalers, and retailers depend on one another for success.

"Channel conflict"

Incompatible goals, poor communication, and disagreement over roles, responsibilities, and functions among firms at different levels of the same distribution channel that may threaten manufacturer's distribution strategy.

"Organizational markets"

"Another name for business-to-business markets."

"Resellers"

The individuals or organizations that buy finished goods for the purpose of reselling, renting, or leasing to others to make a profit and to maintain their business operations.

"Supply chain"

"All the activities necessary to turn raw materials into a good or service and put it in the hands of the consumer or business customer."

"Knowledge management"

A comprehensive approach to collecting, organizing, storing, and retrieving a firm's information assets.

"Subscription boxes"

"A business model for distribution that supplies surprises by sending out a box each month filled with items you never knew you wanted but you just have to have."

"Business-to-business markets"

(B2B markets) The group of customers that includes manufacturers, wholesalers, retailers, and other organizations.

"Disintermediation"

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

"Online distribution piracy"

"The theft and unauthorized repurposing of intellectual property via the Internet."

"Independent intermediaries"

"Channel intermediaries that are not controlled by any manufacturer but instead do business with many different manufacturers and many different customers."

"Limited-service merchant wholesalers"

"Wholesalers that provide fewer services for their customers."

"Consumer-to-consumer"

"(C2C) A rapidly growing business model in which customers trade with each other using-third party platforms."

"North American Industry Classification System"

(NAICS) The numerical coding system that the United States, Canada, and Mexico use to classify firms into detailed categories according to their business activities.

"Joint demand"

"Demand for two or more goods that are used together to create a product."

"Distribution intensity"

"The number of intermediaries at each level of the channel."

"Corporate VMS"

A vertical marketing system in which a single firm owns manufacturing, wholesaling, and retailing operations.

"Gray market"

"A distribution channel in which a product’s sale to a customer may be technically legal but is at a minimum considered inappropriate by the manufacturer of the related product. Gray markets often emerge around high-end luxury goods sold through exclusive distribution."

"Modified rebuy"

"A buying situation classification used by business buyers to categorize a previously made purchase that involves some change and that requires limited decision making."

"Offshoring"

"A process by which U.S. companies contract with companies or individuals in remote places like China or India to perform work they used to do at home."

"Reverse marketing"

"A business practice in which a buyer firm attempts to identify suppliers who will produce products according to the buyer firm’s specifications."

"Spyware"

"Software that covertly gathers information from an individual’s or an organization’s computer."

"Reverse logistics"

Includes product returns, recycling and material reuse, and waste disposal.

"Warehousing"

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

"Inventory control"

"Activities to ensure that goods are always available to meet customers’ demands."

"Level loading"

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

"Cross-docking"

A supply chain efficiency technique in which products are transferred off a supplier's truck directly onto a buyer's truck bound for the next distribution point, such as a retail store.

"Supply chain management"

"The management of flows among firms in the supply chain to maximize total profitability."

"Insourcing"

"A practice in which a company contracts with a specialist firm to handle all or part of its supply chain operations."

"Risk-taking functions"

The chance retailers take when they buy a product from a manufacturer, as the product might just sit on the shelf if no customers want it.

"Copyright infringement"

"The use of works protected by copyright law without the permission of the copyright holder."

"Channel levels"

"The number of distinct categories of intermediaries that make up a channel of distribution."

"B2B distribution channels"

"Channels that facilitate the flow of goods from a producer to an organizational or business customer."

"Channel intermediaries"

Firms or individuals, such as wholesalers, agents, brokers, or retailers, who help move a product from the producer to the consumer or business user. An older term for intermediaries is middlemen.

"Horizontal marketing system"

"An arrangement within a channel of distribution in which two or more firms at the same channel level work together for a common purpose."

"Exclusive distribution"

"Selling a product only through a single outlet in a particular region."

"Channel leader or channel captain"

The dominant firm that controls the channel

"Reciprocity"

"A trading partnership in which two firms agree to buy from one another."

"Outsourcing"

"The business buying process of obtaining outside vendors to provide goods or services that otherwise might be supplied in house."

"Malware"

"Software designed specifically to damage or disrupt computer systems."

"Encryption"

"The process of scrambling a message so that only another individual (or computer) with the right “key” can unscramble it."

"Order processing"

"The series of activities that occurs between the time an order comes into the organization and the time a product goes out the door."

"Materials handling"

The moving of products into, within, and out of warehouses.

"Inventory turnover or inventory turns"

The number of times a firm's inventory completely cycles through during a defined time frame.

"Derived demand"

"Demand for business or organizational products caused by demand for consumer goods or services."

"Physical distribution"

The activities that move finished goods from manufacturers to final customers, including order processing, warehousing, materials handling, transportation, and inventory control.

"Breaking bulk"

"Dividing larger quantities of goods into smaller lots in order to meet the needs of buyers."

"Create assortments"

"To provide a variety of products in one location to meet the needs of buyers."

"Transportation and storage"

"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."

"Distribution planning"

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

"Contractual VMS"

"A vertical marketing system in which cooperation is enforced by contracts (legal agreements) that spell out each member’s rights and responsibilities and how they will cooperate."

"Retailer cooperative"

"A group of retailers that establishes a wholesaling operation to help them compete more effectively with the large chains."

"Intensive distribution"

"Selling a product through all suitable wholesalers or retailers that are willing to stock and sell the product."

"Customer reference program"

A formalized process by which customers formally share success stories and actively recommend products to other potential clients, usually facilitated through an online community.

"Single sourcing"

"The business practice of buying a particular product from only one supplier."

"Multiple sourcing"

"The business practice of buying a particular product from several different suppliers."

"Distribution center"

A warehouse that stores goods for short periods of time and that provides other functions, such as breaking bulk.

"Government markets"

The federal, state, county, and local governments that buy goods and services to carry out public objectives and to support their operations.

"Just-in-time"

"(JIT) Inventory management and purchasing processes that manufacturers and resellers use to reduce inventory to very low levels and ensure that deliveries from suppliers arrive only when needed."

"Straight rebuy"

"A buying situation in which business buyers make routine purchases that require minimal decision making."

"Communication and transaction functions"

"Happens when channel members develop and execute both promotional and other types of communication among members of the channel."

"Take title"

"To accept legal ownership of a product and assume the accompanying rights and responsibilities of ownership."

"Merchandise agents and brokers"

"Channel intermediaries that provide services in exchange for commissions but never take title to the product."

"Vertical marketing system"

"(VMS) A channel of distribution in which there is formal cooperation among members at the manufacturing, wholesaling and retailing levels”

"Franchise organizations"

"A contractual vertical marketing system that includes a franchiser (a manufacturer or a service provider) who allows an entrepreneur (the franchisee) to use the franchise name and marketing plan for a fee."

"New-task buy"

"A new business-to-business purchase that is complex or risky and that requires extensive decision making."

"Buying center"

"The group of people in an organization who participate in a purchasing decision."

"Business-to-business e-commerce"

"(B2B e-commerce) Online exchanges between two or more businesses or organizations."

"Extranet"

A private, corporate computer network that links company departments, employees, and databases to suppliers, customers, and others outside the organization.

"Firewall"

"A combination of hardware and software that ensures that only authorized individuals gain entry into a computer system."

"Logistics"

The process of designing, managing, and improving the movement of products through the supply chain. Logistics includes purchasing, manufacturing, storage, and transport.

"Transportation"

"The mode by which products move among channel members."

"Buyclass"

"One of three classifications of business buying situations that characterizes the degree of time and effort required to make a decision."

"Merchant wholesalers"

"Intermediaries that buy goods from manufacturers (take title to them) and sell to retailers and other B2B customers."

"Producers"

"The individuals or organizations that purchase products for use in the production of other goods and services."

"Wholesaling intermediaries"

"Firms that handle the flow of products from the manufacturer to the retailer or business user."

"Full-service merchant wholesalers"

Wholesalers that provide a wide range of services for their customers, including delivery, credit, product-use assistance, repairs, advertising, and other promotional support.

"Channel power"

The ability of one channel member to influence, control, and lead the entire channel based on one or more sources of power.

"Selective distribution"

"Distribution using fewer outlets than intensive distribution but more than exclusive distribution."

"Dual or multiple distribution systems"

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