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| Question | Answer |
|---|---|
| marketing channel | •Place •Process of making goods and services available to buyers via direct or indirect methods bringing the product/service and its ownership closer and closer to the final buyer |
| middleman (intermediary) | •A person who acts as a link between people in order to try to bring about an agreement •Make selling goods and services more efficient because they minimize the number of sales contacts necessary to reach a target market |
| Manufacturer’s agent | Works for several producers selling competitive products |
| Selling agents | Works for one producer and responsible for entire marketing function of that product |
| broker | Only matches buyer and seller, negotiates a sale, takes commission then out of the picture |
| dealer | Can mean the same as distributor, retailer, wholesaler, and so forth |
| wholesaler | An intermediary who sells to other intermediaries, usually retailers |
| retailer | Sells to consumers |
| transactional channel functions | Buying, selling, risk taking |
| Logistical channel functions | Assorting, storing, sorting, transporting |
| Facilitating channel functions | Financing, grading, marketing information and research |
| direct channel | manufacturer responsible for carrying out and controlling all required channel o End price to the buyer would need to go up o A producer and ultimate consumers deal directly with each other |
| indirect channel | hire one or more intermediaries (middlemen) on contract to carry out some or all required channel activities o Intermediaries are inserted between the producer and consumers and perform numerous channel functions |
| electronic marketing channel | •Employ the internet to make goods and services available for consumption or use by consumers or business buyers o Combine electronic and traditional intermediaries to create time, place, form, and possession utility for buyers |
| dual distribution | An arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product |
| general wholesaler | carry a broad assortment of merchandise and perform all channel functions |
| specialty wholesaler | offer a relatively narrow range of products but have an extensive assortment within the product lines carried |
| full-service wholesalers | general wholesalers and specialty wholesalers |
| limited service wholesalers | rack jobbers, cash and carry wholesalers, drop shipper, truck jobber |
| Rack jobber | Furnish the racks or shelves that display merchandise in retail stores, perform all channel functions, and sell on consignment to retailers |
| Cash and Carry Wholesaler | Take title to merchandise but sell only to buyers who call on them, pay cash for merchandise, and furnish their own transportation for merchandise |
| Drop Shipper | Wholesalers that own merchandise they sell but do not physically handle, stock, or deliver it |
| Truck Jobber | Small wholesalers that have a small warehouse from which they stock their trucks for distribution to retailers |
| Manufacturer’s branch office | carries a producer’s inventory and performs the functions of a full-service wholesaler |
| Manufacturer’s sales office | does not carry inventory, typically performs only a sales function, and serves as an alternative to agents and brokers |
| vertical marketing system (VMS) | Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact •Created to improve efficiency in performing channel functions and achieving greater marketing effectiveness |
| forward integration | a producer might won the intermediary at the next level down in the channel |
| backward integration | a retailer might own a manufacturing operation |
| corporate VMS | the combination of successive stages of production and distribution under a single ownership |
| contractual VMS | independent production and distribution firm integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone |
| administered VMS | achieve coordination in successive stages of production and distribution by the size and influence of one channel member rather than through ownership |
| franchising | A contractual arrangement between a parent company (a franchisor) and an individual or firm (a franchisee) that allows the franchisee to operate a certain type of business under an established name and according to specific rules |
| channel partnership | Consists of agreements and procedures among channel members for ordering and physically distributing a producer’s products through the channel to the ultimate consumer |
| 4 major factors that affect marketing channel choice | •Environmental factors •Consumer factors •Product factors •Company factors |
| three degrees of distribution density | intensive, exclusive, selective |
| intensive distribution | a firm tries to place its products and services in as many outlets as possible (Coca-Cola) |
| Exclusive distribution | only one retailer in a specified geographical area carries the firm’s products (Gucci) |
| Selective distribution | a firm selects a few retailers in a specific geographical area to carry its products |
| 4 considerations for satisfying buyer requirements when designing distribution channels | •Information •Convenience •Variety •Pre- or post-sale services |
| keiretsu | Bonds producers and intermediaries together to ensure that each channel member benefits from the distribution alignment |
| channel conflict | arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals |
| vertical channel conflict | occurs between different levels in a marketing channel (between a manufacturer and a wholesaler or retailer or between a wholesaler and a retailer) |
| horizontal channel conflict | occurs between intermediaries at the same level (two or more retailers or two or more wholesalers that handle the same manufacturer’s brands) |
| disintermediation | A channel member bypasses another member and sells or buys products direct |
| channel captain | •A channel member that coordinates, directs, and supports other channel members •becomes one by having a strong consumer following |
| resale restrictions | A supplier’s attempt to stipulate to whom distributors may resell the supplier’s products and in what specific geographical areas or territories they may be sold |
| tying arrangements | Occur when a supplier requires a distributor purchasing some products to buy others from the supplier |
| Exclusive dealings | When a supplier requires channel members to sell only its products or restricts distributors from selling directly competitive products |
| the relationship of the Federal Trade Commission and the Justice Department relative to channel practices | • They monitor channel practices that restrain competition, create monopolies, or otherwise represent unfair methods of competition under the Sherman Act and the Clayton Act |
| logistics | Activities involved in getting right product, to right place, at right time, at lowest possible cost and at the right level of customer service |
| supply chain | The sequence of firms that perform activities requires to create and deliver a good or service to consumers or industrial users |
| logistics management | The practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information, from point of origination to point of consumption to satisfy customer requirement |
| ‘flow’ or ‘pipeline’ in regards to supply chain | Suppliers -> producer -> in-process (producer’s manufacturing process) -> produced product x -> channels of distribution for product x -> wholesaler -> retailer -> buyer |
| Two objectives of logistics management | •Minimize logistic costs while •Delivering maximum customer service |
| Three steps in choosing right supply chain | •Understand consumer’s need •Understand the supply chain •Harmonize the supply chain with firm’s marketing strategy |
| responsive supply chain | Achieves product variety and manufacturing efficiency by designing common platforms across several products and using common components |
| efficient supply chain | use inexpensive, but slower, modes of transportation, emphasize economies of scale in its production process, and limits its assembly and inventory storage facilities to a single location where the company is headquartered |
| Objective of information and logistics management in a supply chain | To minimize logistics costs while delivering maximum customer service |
| Electronic data interchange | combines proprietary computer and telecommunication technologies to exchange information among suppliers, manufacturers, and retailers •Role: provides a seamless electronic link from a retail checkout counter to suppliers and manufacturers |
| Extranet | an internet-based network that permits secure business-to-business communication between a manufacturer and its suppliers, distributors, and sometimes other partners |
| Total logistics costs | includes expenses associated with transportation, materials handling and warehousing, inventory, stockouts, order processing, and return goods handling oMany of these costs are interrelated so changes in one will impact the others |
| customer service | the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience •Goal: to balance these four customer service factors against total logistics cost factors |
| Order cycle time (lead time) | The lag from ordering an item until it is received and read for use or sale |
| 4 key logistical functions | •Transportation •Warehousing and materials handling •Order processing •Inventory management |
| 3rd party logistics providers | Hired firms who perform most or all logistics functions for the seller |
| Six basic characteristics used to evaluate all modes of transportation | •Cost •Time •Capability •Dependability •Accessibility •Frequency |
| Intermodal transportation | Involves combining different transportation modes to get the best features of each |
| Freight forwarders | Firms that accumulate small shipments into larger lots and then hire a carrier to move them, usually at reduced costs |
| Distribution centers | designed to facilitate the timely movement of goods and represent a very important part of the supply chain |
| Storage warehouses | products are intended to come to rest for some period of time |
| Major benefit of a distribution center | Used to facilitate sorting and consolidating products from different manufacturing plants or suppliers |
| danger of carrying too little inventory | may result in poor service, stockouts, brand switching, and loss of market share |
| danger of carrying too much inventory | leads to higher costs because of money tied up in inventory and the chance that it may become obsolete |
| 4 types of inventory costs | •Capital costs •Inventory service costs •Storage costs •Risk costs |
| Just-in-time Inventory | An inventory supply system that operates with very low inventories and requires fast, on-time delivery o When parts are needed for production, they arrive from suppliers “just in time” (neither before or after they are needed) |
| Vendor managed inventory | The supplier determines the product amount and assortment a customer needs and automatically delivers the appropriate items |
| Reverse logistics | A process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, manufacturing, redistribution, or disposal |
| retailing | all activities involved in selling, renting, and providing goods and services to the ultimate consumer for personal and family consumption |
| 4 customer utilities retailing provides | •Time •Place •Form •Possession |
| Three key methods of classifying retail operations | •By ownership •By level of service offered •By type of merchandise line offered |
| Three types of retailers from a level of service perspective | •Self-service retailers •Limited-service retailers •Full-service retailers |
| Merchandise line | how many different types of products a store carries and in what assortment |
| Three general forms of retail ownership | •Independent retailer •Corporate chain •Contractual systems |
| Corporate chain retailer | multiple outlets under common ownership |
| contractual systems retailer | independently owned stores that band together to form a chain |
| \Independent retailer | only one outlet under a single ownership |
| Business-format franchising | franchisor provides step-by-step procedures for most aspects of the business and guidelines for the most likely decisions a franchisee will face |
| Breadth of product (merchandise) line | Measure of the # of product categories (lines) carried |
| Depth of product line | # of product items in each product line |
| Limited-line store | just for any target market offering a few lines or categories |
| General merchandise store | carries an extensive set of all kinds of merchandise lines or categories |
| Category killer | Carries almost every line of products related to a certain category |
| Scrambled merchandising | Offers several unrelated product lines in a single store |
| Intertype competition | competition between very dissimilar types of retail outlets |
| non-store retailing | retailing does not take place in a store but rater via automatic vending •Direct mail, TV home shopping, online retailing, telemarketing, direct selling |
| direct selling | \Involves direct sales of goods and services to consumers through personal interactions and demonstrations in their home or office |
| Retail mix | product, price, promotion, place |
| marketing | How much should be added to the cost the retailer paid for the product to reach the final selling price |
| Original markup | difference between retailer cost and initial selling price |
| Maintained markup | difference between the final selling price and retailer cost (AKA gross margin) |
| mark down | Discounting a product when it doesn’t sell at the original price and an adjustment is necessary |
| EDLP strategy | Emphasizing consistently low prices and eliminate most markdowns |
| Shrinkage | An allowance made for reduction in the earnings of a business due to wastage or theft |
| Off price retailing | Involves selling brand-name merchandise at lower than regular prices |
| Five types of retail settings (locations) | •The central business district •The regional center •The community shopping center •The strip mall •The power center |
| Anchor stores | Well-known national or regional stores |
| Power center | huge shopping strip with multiple anchor stores |
| Category management | assigns a manager responsibility for selecting all products that consumers in a market segment might view as substitutes with each other, with the objective of maximizing sales and profits in the category |
| Wheel of retailing | Describes how new forms of retail outlets enter the market |
| Retail life cycle stages | •Early growth •Accelerated development •Maturity •Decline |
| Multichannel retailers | Utilize and integrate a combination of traditional store formats and non-store formats |
| Direct marketing | Customized or personalized directly with consumer to elicit a response in the form of an order, their request for more info, encouraging them to visit certain retail store, etc. |
| promotional mix | •Advertising •Personal selling •Sales promotion •Public relations |
| Three uses of the promotion mix | •Inform prospective buyers about benefits of the product •Persuade them to try it •Remind them later about the benefits they enjoyed by using the product |
| Integrated marketing communication | Designing marketing communications programs that coordinate all promotional activities to provide a consistent message across all audiences |
| 6 elements of communication process | o A source o A message o A channel of communication o A receiver o The processes of encoding and decoding |
| Channels of communication | The means (a salesperson, advertising media, or public relations tools) of conveying a message to a receiver during the communication process |
| Noise | Extraneous factors that can work against effective communication by distorting a message or the feedback received |
| Publicity | nonpersonal, indirectly paid presentation of an organization, good, or service |
| Public relations | A form of communication management that seeks to influence that feelings, opinions, or beliefs held by publics about a company and its products or services |
| Sales promotion | short-term inducement of value offered to arouse interest in buying a good or service |
| Decisions to be made in developing a promotional program | •Prepurchase stage •Purchase stage •Postpurchase stage |
| Push promotion strategy | : manufacturer directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product |
| pull promotion strategy | manufacturer directing its promotional mix at ultimate consumers to encourage them to ask the retailer for the product oFlow of promotion: Producer -> consumer |
| Hierarchy of effects | • The sequence of stages a prospective buyer goes through from initial awareness of a product to eventual action; Stages: oAwareness oInterest oEvaluation oTrial oAdoption |
| Percentage of sales budgeting | funds are allocated to promotion as a percentage of past or anticipated sales (common) |
| Competitive parity budgeting | matching the competitor’s absolute level of spending or the proportion per point of market share |
| All-you-can-afford budgeting | money is allocated to promotion only after all other budget items are covered |
| Objective and task budgeting | the company: oDetermines its promotion objectives oOutlines the tasks to accomplish these objectives oDetermines the promotion cost of performing these tasks |
| Advertising | Any paid form of nonpersonal communication about an organization, a good, a service, or an idea by an identified sponsor |
| Product advertisements | focuses on the sale of the good or service |
| pioneer product advertisement | tell people what a product is, what it can do, and where it can be found |
| institutional advertisement | focuses on bringing company’s name to the attention of the target market |
| Comparative ads | Shows one brand’s strengths relative to those of competitors |
| Focus of an advertising message | The key benefits of the product that are important to a prospective buyer in making trial and adoption decisions |
| Two elements of most advertising messages | •Informational elements •Persuasive elements |
| Television | oAdvantages- communicates with sight, sound, and motion; reaches large audiences; can target specific audiences oDisadvantages- high cost; short exposure time; difficult to convey complex info |
| radio | oAdvantages- low cost; target local audiences; ads can be placed quickly; an use sound, humor, and intimacy oDisadvantages- no visual element; short exposure time; difficult to convey complex info |
| magazines | oAdvantages- can target specific audiences; high-quality color; long life; ads can be clipped and saved; can convey complex info oDisadvantages- log time needed; relatively high cost; compete for attention |
| Newspapers | oAdvantages- coverage of local markets; ads can be quick; ads can be saved; quick consumer response; low cost oDisadvantages- ads compete for attention; short life span; poor color |
| Yellow pages | oAdvantages- coverage of geographic segments; long use period; 24 hours/365 days oDisadvantages- proliferation of competitive directories in many markets; difficult to keep up-to-date |
| Internet | oAdvantages- video and audio capabilities; animation; ads can be interactive and have links oDisadvantages- animation requires large files and more time to load; effectiveness still uncertain |
| Outdoor | oAdvantages- low cost; local market focus; high visibility; opportunity for repeat exposures oDisadvantages- must be short and simple; low selectivity of audience; criticized as a traffic hazard |
| Direct mail | oAdvantages- High selectivity of audience; can contain complex info and personalized messages; high-quality graphics oDisadvantages- high cost per contact; poor image (junk mail) |
| reach | the number of different people or households exposed to an advertisement |
| rating | percentage of households in a market that are tuned to a particular TV show or radio station |
| frequency | average number of times a person in the target market is exposed to a message or advertisement |
| gross rating points | reach x frequency |
| cost per thousand (CPM) | the cost of reaching 1,000 individuals or households with the advertising message in a given medium |
| Three key factors to be used in selection of media for an advertising campaign | •Knowing the media habits of the target audience •Occasionally product attributes necessitate that certain media is used (color major aspect=no radio) •Cost |
| Infomercial | Program-length (30-minute) advertisements that take an educational approach to communication with potential customers |
| Three approaches to setting advertising schedules | •Continuous (steady) schedule •Flighting (intermittent) schedule •Pulse (burst) schedule- combo of the other two |
| 5 common approaches to posttests | oAided recall (reading, viewing, or listening) oUnaided recall oAttitude tests oInquiry tests oSales tests |
| Full-service agency | provides the most complete range of services |
| Limited-service agency | specialize in one aspect of the advertising process |
| In-house agency | made up of company’s own advertising staff and may provide full services or limited range of services |
| Customer-oriented sales promotions | directed to ultimate consumers and are sales tools used to support a company’s advertising and personal selling oCoupons, deals, premiums, contests, samples, loyalty programs |
| Trade-oriented sales promotions | sales tools used to support a company’s advertising and personal selling directed to wholesalers, retailers, or distributors oAllowances & discounts, cooperative advertising, training of distributers’ salesforces |
| Couponing objective | to stimulate demand |
| Sampling objective | encourage new product trial |
| Loyalty programs objective | encourage repeat purchases |
| Point-of-purchase displays objective | Increase product trial; provide in-store support for other promotions |
| Cooperative advertising | To encourage both better quality and greater quantity in the local advertising efforts of resellers |
Created by:
jillian7290