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GB214-
CHP7
| Term | Definition |
|---|---|
| value delivery network | a network composed of the company, suppliers, distributors, and, ultimately, customers who partner to help the entire system deliver better customer value |
| marketing channel | a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user |
| channel level | a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer |
| direct marketing channel | a marketing channel that has no intermediary levels |
| indirect marketing channel | a marketing channel containing one or more intermediary levels |
| channel conflict | disagreements among marketing channel members on goals, roles, and rewards-who should do what and for what rewards |
| conventional distribution channel | a channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole |
| vertical marketing system (vms) | a channel structure in which producers, wholesalers, and retailers act as a unified system. one channel member owns the others, has contracts with them, or has so much power that they all cooperate |
| corporate VMS | a vertical marketing system that combines successive stages of production and distribution under single ownership-channel leadership is established through common ownership |
| contractual VMS | a vertical marketing system in which independent firms at different levels of production and distribution join together through contracts |
| franchise organization | a contractual vertical marketing system in which a channel is a member, called franchisor, links several stages in the production-distribution process |
| administered vms | a vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties |
| horizontal marketing system | a channel arrangement n which two or more companies at one level join together to follow a new marketing opportunity |
| multichannel distribution system | a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments |
| disintermediation | the cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries |
| marketing channel design | designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives |
| intensive distribution | stocking the product in as many outlets as possible |
| exclusive distribution | giving a limited number of dealers the exclusive right to distribute the company's products in their territories |
| selective distribution | the use of more than one but fewer than all of the intermediaries who are willing to carry the company's products |
| marketing channel management | selecting, managing, and motivating individual channel members and evaluating their performance over time |
| marketing logistics (or physical distribution) | planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit |
| supply chain management | managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers |
| distribution center | a large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible |
| intermodal transportation | combining two or more modes of transportation |
| integrated logistics management | the logistics concept that emphasizes teamwork-both inside the company and among all the marketing channel organizations-to maximize the performance of the entire distribution center |
| third-party logistics (3PL) provider | an independent logistics provider that performs any or all of the functions required to get a client's product to market |
| price | the assignment of value, or the amount the consumer must exchange to receive the offering |
| prestige products | products that have a high price and that appeal to status-conscious consumers |
| price elasticity of demand | the percentage change in unit sales that results from a percentage change in price |
| elastic demand | demand in which changes in price have large effects on the amount demanded |
| inelastic demand | demand in which changes in price have little or no effect on the amount demanded |
| cross-elasticity of demand | when changes in the price of one product affect the demand for another item |
| variable costs | the costs of production (raw and processed materials, parts, and labor) that are tied to and vary depending on the number of units produced |
| fixed costs | costs of production that do not change with the number of units produced |
| average fixed cost | the fixed cost per unit produced |
| total cost | the total of the fixed costs and the variable costs for a set number of units produced |
| break-even analysis | a method for determining the number of units that a firm must produce and sell at a given price to cover all its costs |
| break-even point | the point at which the total revenue and total costs are equal and beyond which the company makes a profit; below that point, the firm will suffer a loss |
| contribution per unit | the difference between the price the firm charges for a product and the variable costs |
| marginal analysis | a method that uses cost and demand to identify the price that will maximize profits |
| marginal cost | the increase in total cost that results from producing one additional unit of a product |
| marginal revenue | the increase in total income or revenue that results from selling one additional unit of a product |
| markup | an amount added to the cost of a product to create the price at which a channel member will sell the product |
| gross margin | the markup amount added to the cost of a product to cover the fixed costs of the retailer or wholesaler and leave an amount for a profit |
| retailer margin | the margin added to the cost of a product by a retailer |
| wholesaler margin | the amount added to the cost of a product by a wholesaler |
| list price or manufacturer's suggested retail price (MSRP) | the price the end customer is expected to pay as determined by the manufacturer; also referred to as the suggested retail price. th appropriate price for the end customer to pay as determined by the manufacturer |
| sachets | single use packages of products such as shampoo often sold in developing countries |
| cost-plus pricing | a method of setting prices in which the seller totals all the costs for the product and then adds an amount to arrive at the selling price |
| demand-based pricing | a price-setting method based on estimates of demand at different prices |
| target costing | a process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed; the product is manufactured only if the firm can control costs to meet the required price |
| yield management pricing | a practice of charging different prices to different customers in order to manage capacity while maximizing revenues |
| price leadership | a pricing strategy in which one firm first sets its price and other firms in the industry follow with the same or very similar prices |
| value pricing or everyday low pricing (EDLP) | a pricing strategy in which a firm sets prices that provide ultimate value to customers |
| skimming price | a very high, premium price that a firm charges for its new, highly desirable product |
| penetration pricing | a pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it |
| trial pricing | pricing a new product low for a limited period of time in order to lower the risk for a customer |
| price bundling | selling two or more goods or services as a single package for one price |
| captive pricing | a pricing tactic for two items that must be used together; one item is priced very low, and the firm makes its profit on another, high-margin item essential to the operation of the first item |
| F.O.B. origin pricing | a pricing tactic in which the cost of transporting the product from the factory to the customer's location is the responsibility of the customer |
| F.O.B. delivered pricing | a pricing tactic in which the cost of loading and transporting the product to the customer is included in the selling price and is paid by the manufacturer |
| basing-point pricing | a pricing tactic in which customers pay shipping charges from set basing-point locations, whether the goods are actually shipped from these points or not |
| uniform delivered pricing | a pricing tactic in which a firm adds a standard shipping charge to the price for all customers regardless of location |
| freight absorption pricing | a pricing tactic in which the seller absorbs the total cost of transportation |
| trade discounts | discounts off list price of products to members of the channel of distribution who perform various marketing functions |
| quantity discounts | a pricing tactic of charging reduced prices for purchases of larger quantities of a product |
| cash discounts | a discount offered to a customer to entice the m to pay their bill quickly |
| seasonal discounts | price reductions offered only during certain times of the year |
| dynamic pricing | a pricing strategy in which the pricing can easily be adjusted to meet changes in the marketplace |
| on-line auctions | E-commerce that allows shoppers to purchase products through online bidding |
| freenomics | a business model that encourages giving products away for free because of the increase in profits that can be achieved by getting more people to participate in a market |
| internal reference price | a set price or a price range in consumer's minds that they refer to in evaluating a product's price |
| price lining | the practice of setting a limited number of different specific prices, called price points, for items in a product line |
| bait-and-switch | an illegal marketing practice in which an advertised price special is used as bait to get customers in the store with the intention of switching them to a higher priced item |
| loss-leader pricing | the pricing policy of setting prices very low or even below cost to attract customers into the store |
| unfair sales act | state laws that prohibit suppliers from selling products below cost to protect small businesses from larger competitors |
| price-fixing | the collaboration of two or more firms in setting prices, usually to keep prices high |
| predatory pricing | illegal pricing strategy in which a company sets a very low price for the purpose of driving competitors out of business |
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