Ch15:Marketing
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| 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
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| What are the Three Principles of a Marketing Channel? | 1. Reducing Transactions
2. Principle of Proximity
3. Principle of Massed Reserves
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| What are the functions created by intermediaries? | 1. Transactional Functions
2. Logistical Functions
3. Facilitating Functions
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| What is Transactional Functions? | Buying, selling, risk taking
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| 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
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| What is Facilitating Function? | Financing: extending credit to customers
Grading: inspecting, testing, or judging products and assigning quality grades
Marketing info & research
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| 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
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| List the different forms of intermediaries? | Middleman
Agent/Broker
Wholesaler
Retailer
Distributor
Dealer
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| What are the considerations needed to select a channel member? | 1. Target Market Coverage
2. Satisfying Buyer Requirements
3. Profitability
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| What is Target Market Coverage? | requires attention to density- the number of stores ina geographic area- and the type of intermediaries used
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| 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
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| 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)
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| What is the third degree of TMC? | Selective: firm selects few retailers ina specified geographical area; gets market coverage benefits and control over reslae
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| 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
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| 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
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| 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
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| 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
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| 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
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| 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
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| 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
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| What is Veritcal Marketing Systems? | professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact
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| What are the three types of VMS? | 1. Corporate Systems
2. Contractual Systems
3. Administered Systems
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| What are Corporate Systems? | the combination of successive stages of production and distribution under a single ownership
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| 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
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| What is Backward Integration? | retailer might own a manufacturing operation
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| 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
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| What are the three popular Contractual Systems? | 1. Wholesaler-sponsored voluntary chains
2. Retail-sponsored cooperatives
3. Franchising
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| 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
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| Retail-sponsored Coop? | small, independent retailers form an organization that operates a wholesale facility cooperatively
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| 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
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| 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
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| 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
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| 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
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| How is Channel Conflict Reduced? | Use of a channel captain: to coordinate, direct, and support other channel members
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| Who monitors channel practices? | The Federal Trade Commission and the Justice Department
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| What is the Clayton Act? | Prohibits:
-Exclusive dealing
-Tying arrangments
-Refusal to seal with existing channel members
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| What is exclusive dealing? | a supplier requires a channel member to only sell its products or restricts distributors from selling directly competitive products
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| What are tying arrangements? | when a supplier requires a distributor buying some products to buy others from the supplier
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| What is the Sherman Act (1890)? | Resale restrictions: suppliers attempt to stipulate to whom distributors may resell the suppliers products
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| 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
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| How can Vertical Integration be illegal? | Under Clayton Act if the practice has the potential to lessen competition or foster monopoly
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| Broker (def) | Independent firms or individuals whose principle function is to bring buyers and sellers together to make sales
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| 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
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| Disintermediation | when a channel member bypassses another member and sells or buys products directly
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| Full Service Merchandise Wholesalers | 1. General Merchandise Wholesalers
2. Specialty Merchandise Wholesalers
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| Limited Service Merchant Wholesalers | 1. Rack Jobbers
2. Cash and Carry
3. Drop Shippers
4. Truck Jobbers
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| Rack Jobbers | furnish the racks or shelves that display merchandise in retail stores, sell on consignment to retailers (bills retailers for the merchandise sold)
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| Cash and Carry | take title to merchandise but sell only to buyers who call on them, pay cash, and find own transportation
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| Drop Shippers | wholesalers that own the merchandise they sell but do not phsycially handle, stock, or deliver it
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| Truck Jobbers | small wholesalers with small warehouses which they stock their trucks for distribution to retailers
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