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31 Cards in this Set
- Front
- Back
channel of distribution
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any series of firms or individuals who participate in the flow of products from producer to final user or consumer
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place decisions...
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1. are suggested by product classes
2. may involve several different places/arrangements 3. have long run effects, harder to change than any of other 4 Ps |
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direct distribution channel
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producer handles all distribution: goes directly to customer
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advantages of direct distribution
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greater control of marketing process; lower cost; direct contact with customers/more aware of changes; don't have to deal w/ middlemen; internet makes it easier
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direct distribution most common for...
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in B2B markets (larger orders, fewer transactions, e-commerce can handle replenishment), most service firms (ex. accounting firm), very few consumer products (ex. vacuum cleaners, or through online direct orders)
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direct marketing
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direct communication between a seller and an individual customer using a promotion method other than face-to-face personal selling (more promotion related than distribution)
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indirect distribution channel
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many times not feasible for producer to handle whole distribution job; most consumer products must use indirect for convenience for the customer
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middlemen (wholesalers and retailers)/channel specialists
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can supply information to bring buyers and sellers together, can also resolve discrepancies in quantity and assortment
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discrepancy of quantity
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the difference between the quantity of products it is economical for a producer to make and the quantity that consumers or users really want
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discrepancy of assortment
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the difference between the lines of products a producer typically makes and the assortments final consumers or users want
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regrouping activities
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activities that adjust discrepancies in quantity and assortment
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RgA: Accumulating
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collecting products from many small producers: important in less-developed countries, agricultural markets, and for professional services (eg hospitals)
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RgA: Bulk-Breaking
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dividing large quantities into smaller quantities (usually as products get closer to final market)
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RgA: Sorting
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separating products into grades and qualities desired by different target markets
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RgA: Assorting
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putting together a variety of products to give a target market what it wants (usually done by those closest to the final consumer)
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whole-channel product-market commitment
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all channel members must focus on the same target market at the end of the channel and share the various marketing functions in appropriate ways
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conflict in channel
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can be vertical: between two firms at different levels (ex. producer v wholesaler) or horizontal: between two firms at the same level of distribution (ex. two retailers)
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channel captain
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a manager who guides channel relationships and helps direct the activities of the whole channel and tries to avoid or resolve channel conflicts
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different firms as channel leaders
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producers or middlemen can be channel captains, but functions may be split or shared in different ways (chopped up 4P diagram) and some big firm leaders can alter channel's structure (say, by eliminating a wholesaler from the process)
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traditional marketing system
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little/no cooperation between different firms in channel, no leader or control, firms act as 'independents'
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vertical marketing system
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whole channel focuses on same target market at the end of the channel. 3 types: administered, contractual, and corporate
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VMS: administered
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informal agreement by channel members to cooperate; may use routine ordering or accounting standardization; most economically powerful is the leader; ex=GE
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VMS: contractual
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formal agreement by contract to cooperate channel activities; communication is usually better in these; ex=McDonald's
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VMS: corporate
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one company owns all firms in distribution channel; full communication and no questions of leadership
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ideal market exposure
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desired or ideal level of exposure in each geographic market; can be exclusive, selective, or intensive; makes a product available widely enough to satisfy target customers’ needs but not exceed them
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IME: intensive
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selling the product through all responsible and suitable wholesalers and retailers who will stock and/or sell the product; pretty much 'sell it where they buy it'
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IME: selective
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selling only through middlemen who give product special attention; pretty much 'sell it where it sells best' *this can grow to intensive if market grows*
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IME: exclusive
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selling through only one middleman for a particular geographic area (usually for specialty products only)
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horizontal vs. vertical arrangements
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vertical arrangements (between firms at different levels) are legal, horizontal arrangements (between firms at same level) are illegal
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dual distribution (also multichannel distribution)
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occurs when a producer uses several competing channels to reach the same target market
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reverse channels
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channels used to retrieve products from consumers; a comprehensive distribution strategy means that reverse channels must be planned for in the event they are needed
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