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Marketing 3353 Exam
| Question | Answer |
|---|---|
| define channels of distribution | channels are sets of interdependent organizations that transfer ownership of products as they move from producer to business consumer to consumer |
| why are companies creating a new position for channel manager | comp. are learning that modern channel mgmt have a lare positive impact on increasing sales and profitability |
| Why are channels of distribution important? | 1. they are the least developed and present opportunity. 2. Comp. have prospered and failed due to unchanging channel strat. 3. emergnece of multi-channel shopping provides firms opportunity to provide thru multiple channels. |
| Name 4 qualities of channel manager position | 1. knowledge of cust purch behacior 2 devel mkt/sales prgms. 2. Ability 2 convert data into recommendations/ action plans. 3. knowledge of mkt tools & to appl brand positioning,archit,swot, compet. analysis,devel plans,think in new ways/ leverage research |
| Name 4 more qualities of channel manager position | 5. knowldge of basic sales mgmt concepts, apply mkt strat to sales mgmt initiatives, mng projects ensure successfull delivery, allocate resources,ID risks. Trend Analysis knowledge &able to gather/interpret/apply into strat |
| #1 Key Fact about channels of distribution | Every firm has control over their channels of dist. |
| why has the need for control increased? | 1. intensified compet/fight for mkt share. 2.Incrsed strength of inter/intra channel/brand compet. 3.demand not only unstable but declining. 4. Capital shortages. 5.Need for persnl sellin/post-transact service. 6.Growh req. 7.supply/demand rules-econOFscl |
| #2 Key Fact about channels of distribution | Its very hard to sell whats not there. if your product isnt readily available the cust will: go somewhere else,buy competitor,buy substitute,not buy anything |
| #3 Key Fact about channel of distribution | Effective channels of distribution have a multiplicative effect on sales |
| #4 Key Fact about channel of distribution | A frim must have strong CHANNEL OF DIST THAT ALGN W/ AND ARE PREFERRED CHANNELS FOR THEIR MKT SEGMENTS if they are going to have high mkt . |
| Expand on #4 | The channel of dist must efficiently make the prod available to the types of resellers b2b that the cust wants to use. 2. the strongest reseller in ch. sells the most branded material. 3. theres bias toward purch from spec type of reseller for prod. class |
| #5 Key fact about channel of distribution | you must understand the functional role of the channel member, not what they call themselves. Look at the roles dealers and distrib have in different industries, not the name of their busiiness |
| #6 Key Fact about channel of distribution | Perhaps the best way to understand channel relationships is to provide an analogy to various types of friends. Initial, Growing, Maturing, Declining, Ending. |
| Why are Channels the link tha ties everything else together | ch. enable the flow of prod/services to the mktplce. They build to make prod/serv available to where the cust wants to purch them. Ch. maps become more complex as offerin is make avail. to more segments |
| why are The Economy and NIACS: Business classification important? | Understanding the economy and the types of entities is critical to building a really good set of channels of distribution |
| What is NAICS | North American Industrial Classification System - for use in NAFTA. A suplly-oriented system, 20 sectors, around 1200 industries, 5digits + 6 for country code,Compatible w ISIC rev.3 (UN) |
| What does the economy look like | econ includes 4 basic funct. Grow or make, sell, service, and govt. NAICS breaks these down into sections and then finer classif. to accurately measure activity of spec. type of entity. |
| Channel Members and Types of Relationships: 2 Levels of entity | Vertical- Between entities at two diff levels of the channel. Lateral- between entities at the same level in the channel. |
| Type of Entity | Consumer, Reseller, Sales force extention, shareholders, other vested interests |
| Define Reseller and Sales force extensions | Reseller- purch prod, put them in their inventory and hope to resell at a profit. Sales force extentions- add to your sales efforts. Indep owned and funct under the direction of your sales mgmt. (ex. manufact. reps, brokers, sales agents, commision merch. |
| Role of Reseller and sales force extention types Broker, Manufacturers Rep, Sales Agent | Broker- bring buyers and sellers together. Manufacturer's rep- represent several manufacturers. Sales Agent- Negotiate on producer's behalf. No inventory or financing for these |
| Role of Reseller and sales force extention types: Manufacturer, OEM, Distributor or wholesaler, Dealer or retailer | Manufact- products F/G or components for sale. OEM- Manuface and assemble products into Final Unit. Dist or wholesllr- provides goods to other resellers. dealer/retailer- carries goods for purch by consumers. ALL Have inventory and Financing |
| Channel member types: describe Intermediaries, Alternative entities | Intermediaries- entities that provide assistance in a channel of distribution.(Ex. order entry services. Alternative entities- include many diff types of alliances and ventures. they may or may not include reselling&being an extension of your sales force |
| Channel members: Resellers | manufacturers-distributor wholeseller-dealer/retailer-business/consumer |
| Channel members: Resellers- def distributor/wholseller and Dealer/retailer | (Dist-Dealer B2B, Whlslr-Retailer B2C.)-lrg resellers generally serviceing smaller resellers. Dealer/retailer-gen smaller reseller (rack jobbers) beware of dealer label-it doesnt always mean a small reseller |
| Channel Decisions elements of Success | Interdependency-"weakest link concept". 2. Shared objectives-"channel coordination". 3.Sets of normal Behavior-"understanding eachothers roles,cooperation/participation are elevated |
| Channel Decision: Design- why use various types or mult. channels? | Increase effectiveness, ink mkt segment covered, fill channel gaps, improve service lvls |
| Channel Decision: Design- when should i use resellers? | prod req. local inventory, horizontal mkt/mkt seg., unable to suppor direct sales force/sales person, prod has low unit value,customers widely dispersed, local repackagins,sizing,fabr. is required. |
| Channel Decision: Design- when should i NOT use resellers | prod highly sophisitcated/req lots customization, length missionary selling effors is req, VERY LONG SALES CYCLE IS STANDARD, manufact requires control over prod applications, geographically concentrated buyser, covering lrg accounds .(Gen $1M+) |
| Channel Decisions: How many channels: 3 Key issues | Quality, Control, Cannibalization. Ex. fedex control decision keeping old system of bought out comp.) Multi-channel (Dual) distribution- essentiall the same item under diff brand name(tires, power tool) |
| Channel Decisions: B2B decision Factors | Corporate financial resources, competitive strategies, customer dispersion, availability of good intermediaries, traditional channel patterns, product characteristics |
| Define Corporate financial resources, competitive strategies, customer dispersion, | Corporate financial resources- cant afford other options. Competitive strategies- competitor channels force certain options. customer dispersion- Cust. size/support/typeof dist network are factors in channel decision or geographically dispersed |
| Define Availability of good intermediaries, traditional Channel patters, Product characteristics | availability of good intermediaries- best one R already commited to competitors. traditional channel patterns- its diff to go around established channes bc lrg cust are usually direct sales. Product characteristis- do they req tech competence in dist? |
| Channel Decisions: Design Roles, Expectations, CONTROLS | improve performanc with set roles/expectations and controls for measurement |
| Manufacturer expectaions of Seller: product, proce, place, promotion and profitability | product- inventory for local mkt. Price- Mkt competitive. Place- field target mkt segment. Promo- train employee w/ product selling. PRofitability- increase $ |
| Reseller expectation of Manufacturer: Product, Price, Place, PRomotion, and profitablility | product- never run outa inventory. Price- volume discout/rebate. Place- Expert assitance when training employees in product changes. Promo- Collateral such as literature or ad to educate employees to sell. Profit- inc. $ |
| Channel Decisions: Stucture- def VMS. Which type of VMS is best? | VMS- international vertivle marketing system. Your looking to keep majority control over business. Corporate subsidiary-contractual(reseller,liscensee)-Administered(open/no agreement) |
| Channel decisions: Stucture: Type of systems (2) | Open or Closed system. better to move from open to closed bc it builds long relationship |
| Channel Distribution Intensity: intensive distribution? | (frito-lay) good for product that needs to be sold in as many places as possible |
| Channel Distribution Intensity: exclusivve Distribution | (lexus/Jaguar)- needs to be sold in a set of highly qualified outlets |
| Channel Distribution Intensity: Selective Distribution | needs to be solda a lot of plaves but the brand owner needs control of number and quality of outlets. |
| Channel Distribution Intensity: Questions | What type of product fits best? What type of sales people are required? what support is required? what is the total system cost? |
| Channel Decisions: Channel Map: Steps/ LVLS- why is it needed. # of steps is 1 less than number of lvls | a ch map is very effective in showing the flow of products/ services to the market |
| Def. Channel Power/ Control | the ability of one channel member1 to get another channel member2 to do something that the 2nd channel member2 would not have done |
| Channel Power: what does gaining competitive adcantage require | Requires a clear position in the mkt "called positioning". Understanding the various ch. of dist. you emply and how they fit together. Using tech to your advan. continually improving your cost postion |
| Channel power: types of channels of distribution | Dual (multiple) channels of distribution. Non-traditional Channels. Channels to specialize (niche) mkt |
| Channel power: Types | Coercive power- punish. Noncoercive power- reward base |
| Channel Deciaions Conflict | Horizontal, vertical |
| Channel decisions: Proactive strategies | Channel entropy- wasted efforts in the channel of dist. Use proactive system vs defensive system for better - comeptitive interaction, information sharing, decision support systems, introdutions of new products to existing channels |
| Proactive positions- distributor callse to complain another distibutoer is getting a better deal | answer- explain there is only one program ofr distributors. if another dist is doing or saying something that is inconsistan with the program that is on them. you sales rep might need to speak with other dist. |
| proactive positions: you own a company and call to compalin the manufacturer is selling around you to a small account (disintermediation) | answer- the manufact should ask why your (the reseller) are not selling to the small account in your territory sinfe you have the local sales rep, local inventory |
| Proactive Postions: a distibutor has many returns due to a bad lot | answer: you should quickly determine the porblem area so it doesnt reoccur. then appoligice for the inconvenience and exchange inventory asap at your expence |
| Proactive positions: a dealer wants to run an ad in a special supplememnt that doubles their coop adverstising allowance. | answer- explain you will need to get approval from the mkt depart. as this is not covered in the cooperative advertising program |
| define channel efficiency analysis | the ability to perform a function with a minimum of expense and or effort. |
| Define channel effectiveness analysis | considers the strategiv fit of a channel design with a channel members overall marketing strategy |
| Channel decisions: terminating channel members- | you should have provable and well documented valid reasons for termination "lawsuits. you should have a written track record of issues and under-performance so you ahve doc over time _"coach leach". you should understand the total cost of replacement |
| Internaitonal Distributor deals with | Channel structure, distribution patterns, types of resellers, channel selesteion channel relationships |
| Wholesaling intermediaries. Merchant wholesellers are resellers carrying inventory | merch wholslt-dist-wholesalers. Take title to goods- dealer-retailers. Indep owned- exporter. Distributor/dealer- expor trading company. Fairly standar arrangemtnts -possibly state regulated |
| Wholesaling intermediaries. Representatives are extensions of your sales force | Representatives- Agent. Indep owned- Broker. NEVER take title to goods- export broker. Help geotiate bus. agreements- export mgmt comp. manufaturers rep.. Be careful of payments!!! -freelance sales person |
| channel Strategy: Key factors | Channel strat- approach to target markets &/or mkt segment. CONSIDER: mkt shar/coverage, Ch dist strat, ch. roles, expectaiton, controls, others( presence, alignment,distribution logistics, profitability) |
| Channel Stategy Negatives of building a new channel of ditribution | Risky and expensive, consider an aquisition |
| Channel strat: | to build good ch. of dist. understand the buying choices na preferences of every channel level (specialty store, discount, warehouse, drug store) |
| channel strategy: Direct cons vs indirect cons | direct- dif to mgmt if not familair w mkt, time consuming expensive, costly to maintain w/out volume. Indirect Distribution- lose mkt control in target mkt, depend on others performance, possible reseller conflict of interes, bargaining power of intermed. |
| Distibution intensity: How many locations do i need? | approach 1.est total potential mkt size. 2.determine firms desired mkt share or sales =that to number of customers. 3.est avg sales for reseller closest to customer in ch map. 4. divide #2 by #3 to get the est nubmer of lowest level resellers |
| Channel issue: Selecting channel members Screening and selecting criteria | 1. Must fit the customer profile( Characteristic) 2. meet qualifications. 3 use and acceptable sales style. 4. possess product and mkt seg knowledge. 5.possess industry exper.. 6the prod will fit iwth existing product lines. 7. willing to perform ch roles |
| Channel issue: selecting channel members screening and selecting criteria cont. | team player, sales strategy existin, make sales calls w/ ppl to verify skill, admin/mgmt fit, mgmt orientation and chemistry, risk assesment, references |
| Proactive channel strategies | product differentation-exclusive apealin features. Strat pricing- lrg price differnceials. Intermediary development- give intermed less incentive to cheat. Mkt info systems- better unit tracking to id sources of leaks |
| Channel issue: Power- obtained through diff advantage | Differential advantage or sutainable compeitive adv. can be any of the following: Physical,psychological,purch environment, total cost including price and terms of sale, post-purch satisfaction( COGNITIVE DISSONANCE |
| FCPA 1977 Foreign corrupt practices act | prohibits American comp from making pmts to foreign officials knowing some or all of the funds will be used for the purpose of obtaining, keeping , or directing business and it applies to all employee,distrib,consultant,contractors. |
| Anti-trust laws def. | fine line between being competitive and preventing competitions, smaller companies benefit from antitrust laws as competitive tool. Anti-trust laws- no bribery or coersion. competition is now Intrabrand(resell to same brand) VS interbrand(resell of dif b) |
| Anti-trust laws range of restrictions: absolute confinement | - reseller will not sell outside of its assigned territory |
| Anti-trust laws range of restrictions:Lesser restrictions | limiting which products resellers may sell |
| Area of primary responsibility | the reseller not restricted to its primary territory |
| Anti-trust laws range of restrictions: profit pass0over arrangement | reseller reimburses another reseller for selling in their territory |
| Location clause | spec the primary site of business and natural mkt area :req investments, suppor activies, and sales coverage |
| Sherman Act 1890 | Sec. 1 Eliminated retraint of trade and activities that result in the interstate restraing of trade. Sec2. outlawed the monopoization except where patents provide a monopoly |
| Clayton Act 1914- ess lessens competition | essentially lessens competition. added to antitrust practices, prohibited price ompetition that supstantially lessens competition (broader of sherman act). outlawed tying clauses and exclusing arrangements that supstantially lessen competition |
| Federal Trade Commision Act1914 | Overlords of the whole competition stuff |
| Robinson-patman 1936 | prob most misunderstood. Applies to COMMODITIES not services, applies to PURCHASES not leases. Goods of like grade and quality, where the effect may substantially lessen competition or tend to creat monopoly |
| Robinson-patman | slotting allowances- paid by manufactureres to get the product on the retail shelf |
| Robinson Patman Escape provisions: | escape provisions for items not subject to this law: 1obsolete or perishable merch. 2differences in the cost of manufacture,sale,or delivery. 3effected in good fait to meet a competitors price |
| US legal issues: Tying Arrangements. 1-tying contract, 2.full-line forcing | Tying contract- if you buy this you gotta buy that, get legal assistance before you attempt. 2.full-line forcing- you must buy every item in prod line (only illegal if reseller cannot purchase competitive products) get legal help quickly |
| US legal issues Tying Arrangements 3, exclusive dealing arrangements and 4,franchise agreements | exclusive dealking arrangemnt- legal under sherman act, be careful. 4.franchise agreemnets- with territories are legal |
| Ethics what to do- a person misrepresents themselves or their intentions to gain information about your firm for his employer- your competitor. | you hire a competitive intel firm to gather detailed info about competitor. you hire somone to go thru competitors dumpster |
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