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Ch15:Marketing

QuestionAnswer
Define: 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
What are the Three Principles of a Marketing Channel? 1. Reducing Transactions 2. Principle of Proximity 3. Principle of Massed Reserves
What are the functions created by intermediaries? 1. Transactional Functions 2. Logistical Functions 3. Facilitating Functions
What is Transactional Functions? Buying, selling, risk taking
What is Logistical Function? Assorting (creating product assortments from several sources to customer) Storing: assembling and protecting products Sorting: purchasing in large quantities and breaking to smaller amounts Transporting: physically moving products to consumers
What is Facilitating Function? Financing: extending credit to customers Grading: inspecting, testing, or judging products and assigning quality grades Marketing info & research
How is value created? Through the four utilities: Time- having product when you want it Place- having a product where you want it Form- enhancing a product to make it more appealing Posession: effforts made by intermediaries to help buyers take posession of a product
List the different forms of intermediaries? Middleman Agent/Broker Wholesaler Retailer Distributor Dealer
What are the considerations needed to select a channel member? 1. Target Market Coverage 2. Satisfying Buyer Requirements 3. Profitability
What is Target Market Coverage? requires attention to density- the number of stores ina geographic area- and the type of intermediaries used
What is the first degress of Target Market Coverage? Intensive: firm tries to place its products in as many outlets as possible, usually chosen for convenience products or services
What is the second degree of TMC? Exclusive: extreme opposite of intensive, only one retailer in a specified geographical area carries the firm's products (for specialty products)
What is the third degree of TMC? Selective: firm selects few retailers ina specified geographical area; gets market coverage benefits and control over reslae
What is Satisfying Buyer Requirements? Gaining access to channels/intermediaries that satify at least ofthe buyer's interests that they might want fulfilled when buying the firm's products/services
What is the first category of interest ing SBR? Information: important requirement when buyers have limited knowledge or desire specific data about a product/service
What is the 2nd category of interest in SBR? Convenience: proximity/driving time to retail outlet, minimum time and hassle, easy to navigate, 8 second rule
What is the 3rd category of interest in SBR? Variety: buyers' interest in having numerous competing and complementary items to choose from enhances attractiveness of retail outlet to buyers
What is the 4th category of interest in SBR? Pre- or Post-sale Services: requirement for products such as large househole appliances that require delivery, installation, and credit
What is Profitability? the margins earned (revenue- cost) for each channel member and for the channel as a whole, channel cost is the critical dimension
What is Dual Distribution? When a firm reaches different buyers by employing two or more types of channels for the same basic product EX: GE sells large appliances directly to home builders, but uses retail stores like Lowes to sell to consumers
What is Veritcal Marketing Systems? professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact
What are the three types of VMS? 1. Corporate Systems 2. Contractual Systems 3. Administered Systems
What are Corporate Systems? the combination of successive stages of production and distribution under a single ownership
What is Forward Integration? when the company might own the intermediary at the next level down in the channel EX: Ralph Lauren manufactures clothing but owns apparel shops
What is Backward Integration? retailer might own a manufacturing operation
What are Contractual Systems? independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could alone
What are the three popular Contractual Systems? 1. Wholesaler-sponsored voluntary chains 2. Retail-sponsored cooperatives 3. Franchising
What is a wholesaler sponsored voluntary chain? when a wholesaler develops a contractual relationship with small, independent retailers to standardize and coordinate buying practices, merchandisng programs, and inventory management efforts
Retail-sponsored Coop? small, independent retailers form an organization that operates a wholesale facility cooperatively
Franchising? a contractual arrangement between a parent company and an individual that allows the franchisee to operate a certain type of business under an established name
What are Administered Systems? achieve coordination at successive stages of production and distribution by the size and influence of one channel member Ex: Wal-Mart
What is Channel Conflict? arises when one channel member believes another channel member is engaged in a behavior that prevents it from achieving its goals
What are the two types of Channel Conflict? Vertical Conflict: occur between different levels in the marketing channel EX: manufacturer and wholesaler Horizontal Conflict: occurs between intermediaries at the same level in a marketing channel EX: Target and Kmart
How is Channel Conflict Reduced? Use of a channel captain: to coordinate, direct, and support other channel members
Who monitors channel practices? The Federal Trade Commission and the Justice Department
What is the Clayton Act? Prohibits: -Exclusive dealing -Tying arrangments -Refusal to seal with existing channel members
What is exclusive dealing? a supplier requires a channel member to only sell its products or restricts distributors from selling directly competitive products
What are tying arrangements? when a supplier requires a distributor buying some products to buy others from the supplier
What is the Sherman Act (1890)? Resale restrictions: suppliers attempt to stipulate to whom distributors may resell the suppliers products
How can Dual Distribution be viewed as illegal? It can be anticompettiive- commonly arises when a manufacturer distributes through its wn vertically integrated channel in competetion with indpendent retailers that also sell its products
How can Vertical Integration be illegal? Under Clayton Act if the practice has the potential to lessen competition or foster monopoly
Broker (def) Independent firms or individuals whose principle function is to bring buyers and sellers together to make sales
Channel Partnership consists of agreements and procedures among channel members for odering and physically distribution a producer's products through the channel members for odering and physically distributing a producer's products through the channel to the ultimate consume
Disintermediation when a channel member bypassses another member and sells or buys products directly
Full Service Merchandise Wholesalers 1. General Merchandise Wholesalers 2. Specialty Merchandise Wholesalers
Limited Service Merchant Wholesalers 1. Rack Jobbers 2. Cash and Carry 3. Drop Shippers 4. Truck Jobbers
Rack Jobbers furnish the racks or shelves that display merchandise in retail stores, sell on consignment to retailers (bills retailers for the merchandise sold)
Cash and Carry take title to merchandise but sell only to buyers who call on them, pay cash, and find own transportation
Drop Shippers wholesalers that own the merchandise they sell but do not phsycially handle, stock, or deliver it
Truck Jobbers small wholesalers with small warehouses which they stock their trucks for distribution to retailers
Created by: bbyjx3 on 2011-12-01



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