Comm 223 Review - Lecture 9, Part 1

Front 1

Why role do intermediaries fill?

Back 1

Manufacturers make narrow assortments in large quantities.
Consumers demand broad assortments in small quantities.
Specialists can bridge these differences more efficiently.

Front 2

Why use intermediaries?

Back 2

Intermediaries greatly reduce the number of contacts necessary to sell products. Instead of manufacturers maintaining connections with each customer and customer maintaining connections with each manufacturer, each only need be connected to one intermediary, simplifying the web of connections.

Front 3

What is the value added from marketing channels?

Back 3

- Reduces transaction fees.
- Serves transactional functions: buying, selling, risk taking.
- Logistical functions: assortments, warehousing, transporting.
- Facilitating functions: financing, market information, quality control.

Front 4

What are the three steps of channel design?

Back 4

1. Analyze consumer needs.
- Do customers highly value location?
- What kinds of transactions do customers prefer?
- Do customers value assortment?
2. Setting channel objectives.
- Targeted levels of customer service.
- What segments to serve.
- Minimize the cost of meeting customer service requirements.
3. Channel structure.
- Direct/indirect/hybrid

Front 5

What are three type of channel structure?

Back 5

1. Direct channel.
- Manufacturer => consumer.
2. Single-level channel.
- Manufacturer => retailer => consumer.
3. Two-level channel.
- Manufacturer => wholesaler => retailer => consumer.

Front 6

What are the advantages of direct distribution?

Back 6

- Greater control.
- Lower cost.
- Internet makes direct distribution cheaper.
- Direct contact with customer needs.
- Quicker response or change in marketing mix.

Front 7

What are advantages and disadvantages of multichannel distribution?

Back 7

Advantages:
- Gain opportunities to tailor products and services to the specific needs of diverse customer segments.
- Expanded sales and marketing coverage.
Disadvantages:
- (More) difficult to control.
- Generate more conflict as more channels compete for customers sales.

Front 8

What are the three intensities of channel structure?

Back 8

1. Intensive - convenience products. Ex. Coke.
2. Selective - shopping products. Ex. Sony PS4
3. Exclusive - specialty products. Ex. Porsche.

Front 9

What are the five forms of direct marketing?

Back 9

1. Telephone marketing.
- Outbound/inbound, suffers from consumer burnout.
2. Direct mail marketing.
- Flexible, personalized, but suffers from junk mail image.
3. Catalogue marketing.
- Huge cost efficiencies by moving catalogue offering online.
4. Direct-response television marketing.
- Infomercials work, despite a poor reputation.
5. Kiosk marketing.
- Going where customers are.

Front 10

What is channel conflict?

Back 10

Occurs when channel members disagree on roles, activities, or rewards.

Front 11

What are the two types of channel conflict?

Back 11

1. Horizontal conflict: occurs among firms at the same channel level.
2. Vertical conflict: occurs among firms at different channel levels.

Front 12

What are some solutions to vertical channel conflicts?

Back 12

1. Quantity discount - the more retailers sell, the higher the margins are on all the products sold.
2. Two-part pricing - one margin for first 10,000 units, one margin for every successive unit.
3. Increase competition among distributors, forcing retailers to lower the price.
4. Vertical integration - distribute manufacturer's own products.
5. Build relationships with distributors.
6. MSRP

Front 13

What are some solutions to horizontal channel conflicts?

Back 13

1. Ensure fairness.
- Cooperation promotion. Manufacturer pays 50% of retailer advertising if product mentioned.
2. Reduce competition.
- Different models in different retailers. Each retailer can claim uniqueness of their product.

Front 14

What is a corporate vertical marketing system?

Back 14

- Combines successive stages of production and distribution under single ownership.
- Control over almost every aspect of supply chain.

Front 15

What is a contractual vertical marketing system?

Back 15

Independent firms at differernt levels of production and distribution join together through contracts to obtain more economies of scale or sales impact than they could achieve alone.