Chapter 7 Marketing Channel And Supply Chain Strategy And Management

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Marketing channel

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-consists of individuals and organizations involved in the process of making a product or service available for consumption or use by consumers and industrial users
-determine whether the target markets sought by an organization are reached

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Effectiveness of communication strategy

Back 2

determined by the ability and willingness of channel intermediaries to perform sales, advertising, and promotion activities

Front 3

organizations price strategy

Back 3

influenced by the markup and discount policies of intermediaries

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product strategy

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-affected by intermediaries’ branding policies
-willingness to stock and customize offerings
- ability to augment offerings through installation or maintenance services
-the extension of credit

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go- to- market strategy

Back 5

describe how their organizations select and employ marketing channels to cost- effectively deliver a value proposition to each of its chosen target markets

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supply chain

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consists of individuals and organizations that perform logistical activities required to create or source and deliver a product or service to consumers and industrial users

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logistical activities

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consists of individuals and organizations that perform logistical activities required to create or source and deliver a product or service to consumers and industrial users

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marketing channels

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link a producer of goods to the goods’ buyer

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supply chain

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includes suppliers to a producer as well as intermediaries between the producer and its final customers

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supply chain management

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focuses on the integration of logistics activities and information communication across organizations in a supply chain

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process of channel selection

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specifying the type, location, density, and functions of intermediaries, if any, in a marketing channel

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direct distribution is employed when

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-when target markets are composed of easily identifiable buyers
- when personal selling is a major component of the organization’s communication program
- when the organization has a wide variety of offerings for the target market
-and when sufficient resources are available to satisfy target market requirements that would normally be handled by intermediaries

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electronic marketing channels

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use some form of electronic communication, including the Internet, to make products and services available for consumption or use by consumers and industrial users

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Three questions that need to be answered when choosing a marketing channel and intermediaries

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1. Which channel and intermediaries will provide the best coverage of the target market?
2. Which channel and intermediaries will best satisfy the buying requirements of the target market?
3. Which channel and intermediaries will be the most profitable?

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three degrees of distribution density increase

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intensive, exclusive, and selective

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intensive distribution

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at the retail level means that a manager attempts to distribute the organization’s offerings through as many retail outlets as possible

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exclusive distribution

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typically one retail outlet in a geographic area or one retail chain carries the manufacturer’s line

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selective distribution

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calls for a manufacturer to select a few retail outlets in a geographic area or authorize a few retail chains to carry its offering

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effective distribution

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limited number of outlets at the retail level account for a significant fraction of the market potential

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satisfying buyers requirements

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1. information
2. convenience
3. variety
4. attendant services

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Information

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an important requirement when buyers have limited knowledge or desire specific data about a product or service

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8 second rule

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Consumers will abandon their efforts to enter or navigate a Web site if download time exceeds 8 seconds

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variety

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reflects buyers’ interest in having numerous competing and complementary items from which to choose

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profitability

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margins earned for each channel member and for the channel as a whole

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channel cost

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include distribution, advertising, and selling expenses associated with different types of marketing channels

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dual distribution

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when an organization distributes its offering through two or more different marketing channels that may or may not compete for similar buyers

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multi-channel marketing

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involves the blending of an electronic marketing channel and a traditional channel in ways that are mutually reinforcing in attracting, retaining, and building relationships with customers

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disintermediation

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the practice whereby a traditional intermediary member is dropped from a marketing channel and replaced by an electronic storefront

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channel conflict

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arises when one channel member believes another channel member is engaged in behavior that is preventing it from achieving its goals

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four sources of conflict

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-conflict arises when a channel member bypasses another member and sells or buys direct
-how profit margins are distributed among channel members
-when manufacturers believe wholesalers or retailers are not giving their products adequate attention
-when a manufacturer engages in dual distribution and particularly when different retailers or dealers carry the same brands

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channel captain

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channel member power to influence the behavior of other channel members

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channel power four forms

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-economic power
-expertness
-identification
-legitimate right

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cross-docking

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practice that involves unloading products from suppliers, sorting products for individual stores, and quickly reloading products onto its trucks for a particular store