Marketing Chpt. 14

Front 1

middleman

Back 1

a business firm that renders services related directly to the sale and/or purchase of a product as it flows from producer to consumer - you can eliminate them, but not the essential distribution activities they perform

Front 2

merchant middlemen

Back 2

take title to the products they help to market - wholesalers and retailers

Front 3

agent middlemen

Back 3

never own the products, but they do arrange the transfer of title - real estate brokers, manufacturers' agents, travel agents

Front 4

middleman activities - producer

Back 4

producer (sales specialists) - provides market info, interprets consumers' wants, promotes producers' products, creates assortments, stores products, negotiates with customers, provides financing, owns products, shares risks

Front 5

middleman activities - consumer

Back 5

purchasing agent for buyers -
anticipates wants, subdivides large quantities of a product, stores products, transports products, creates assortments, provides financing, makes products readily available, guarantees products, shares risks

Front 6

distribution channel

Back 6

consists of the set of people and firms involved in the transfer of title to a product as the product moves from producer to ultimate consumer or business user - always includes the producer and final customer for product as well as middlemen

Front 7

designing dist. channels: specify the role of distribution

Back 7

a channel strategy should be designed within the context of the entire marketing mix - firm's marketing objectives reviewed, then roles assigned to product, price, promotion specified.

Front 8

designing dist. channels: select the type of channel

Back 8

the most suitable type of channel for the company's product must be determined - middlemen used? - which types

Front 9

designing dist. channels: determine intensity of distribution

Back 9

the number of middlemen used at the wholesale and retail levels in a particular territory - depend on target market buying behavior and product's nature

Front 10

designing dist. channels: choose specific channel members

Back 10

usually has various companies from which to choose for each type of institution that will form the channel - what is the financial strength of the middleman? intensity of distribution? - varies territory to territory.

Front 11

remember about distribution

Back 11

when selecting specific firms to be part of a channel, a producer should consider whether the middleman sells to the customers that the manufacturer wants to reach and whether the middleman's product mix, pricing structure, promotion, and customer service are all compatible with the manufacturer's needs.

Front 12

direct distribution

Back 12

a channel consisting only of producer and final customer, with no middlemen providing assistance - cleaning services

Front 13

indirect distribution

Back 13

a channel of producer, final customer, and at least one level of middlemen - need to figure out what type of middlemen will best serve its needs - wholesaler or retailer

Front 14

producer --> consumer (c)

Back 14

shortest, simplest distribution channel for consumer goods - no middlemen (door to door, mail)

Front 15

producer --> retailer --> consumer (c)

Back 15

many large retailers buy directly from manufacturers and agricultural producers (Wal-mart)

Front 16

producer --> wholesaler --> retailer --> consumer (c)

Back 16

if there is a traditional channel for consumer goods, this is it - small retailers and manufacturersfind this economically feasible

Front 17

producer --> agent --> retailer --> consumer (c)

Back 17

rely on agent middlemen to reach the retail market, especially large scale retailers (using sales and marketing agency)

Front 18

producer --> agent --> wholesaler --> retailer --> consumer (c)

Back 18

to reach small retailer, use agent middlemen who call on wholesalers that sell to large retail chains and/or small retail stores.

Front 19

not uncommon for employers to use multiple distribution channels (c)

Back 19

-

Front 20

producer --> user (b)

Back 20

direct channel accounts for greater dollar volume of business products than any other distribution structure (large installations - jet engines, elevators) usually sold this way

Front 21

producer --> industrial distributor --> user (b)

Back 21

producers of operating supplies and small accessory equipment use this to reach their markets (building materials and air-conditioning equipment)

Front 22

producer --> industrial distributor --> reseller --> user (b)

Back 22

common for computer products and related high-tech items. distributors buy various prodcuts from manufacturers and bundle them with related products for resale. resalers are smaller firms work closely with end users to meet buyers needs

Front 23

producer --> agent --> user (b)

Back 23

firms without their own sales departments find this channel good - introduce new product or enter new market

Front 24

producer --> agent-> industrial distributor --> user (b)

Back 24

used when it is not feasible to sell through agents directly to business user (order size too small or inventory may be needed to supply users rapidly)

Front 25

producer --> consumer (s)

Back 25

service is intangible - production process requires personal contact between producer and customer (professional services - health care/legal service)

Front 26

producer --> agent --> consumer (s)

Back 26

agents assist a services producer with transfer of ownership - travel, lodging, entertainment, insurance - sold through agents

Front 27

multiple distribution channels

Back 27

for reasons such as reaching two or more target markets or avoiding total dependence on a single arrangement

Front 28

use mult. dist. channels when selling/reach segments

Back 28

same product to consumer and business markets.
-relatively unrelated products (education and consulting)
- size of buyers varies greatly (airline to travel in big departments or agents to reach small businesses/consumers)
-geographic concentration differs across parts of the market

Front 29

dual distribution

Back 29

selling the same brand to a single market through channels that compete with each other - independent insurance agencies are arranging for banks to sell or internet selling

Front 30

vertical marketing system

Back 30

tightly coordinated distribution channel designed specifically to improve operating efficiency and marketing effectiveness

Front 31

corporate vertical marketing system

Back 31

a firm at one level of a channel owns the firms at the next level or owns the entire channel (nike, owns retail outlets)

Front 32

contractual vertical marketing system

Back 32

independent producers, wholesalers, and retailers operate under contracts specifying how they will try to improve the effectiveness and efficiency of their distribution - wholesaler-sponsored voluntary chains (SUPERVALU grocery) - retailer-owned cooperatives (ace hardware) and franchise systems (domino's pizza)

Front 33

administered vertical marketing system

Back 33

coordinates distribution activities through 1) the market and/or economic power of one channel member or 2) the willing cooperation of channel members (Kraft)

Front 34

Choice of channels: market - type of market

Back 34

consumers differ from business people, have to be reached through different distribution channels

Front 35

choice of channels: market - number of potential customers

Back 35

with few, may use its own sales force to sell directly to ultimate consumers/business users - if a lot, use middlement

Front 36

choice of channels: market - geographic concentration of the market

Back 36

when most customers are in a certain area, direct channel makes sense (textile/manufacturing industries)

Front 37

choice of channels: market - order sizes

Back 37

large orders should use direct distribution, smaller orders should use middlemen

Front 38

choice of channels: middlemen - services provided

Back 38

affects the choice of channel - choose based on if producer is unable to provide or cannot economically perform

Front 39

choice of channels: middlemen - availability of desired middlemen

Back 39

may not be available or may be carrying competitor's product and not wanting to undertake the other product line

Front 40

choice of channels: middlemen - producer and middlemen's policies

Back 40

may not participate in channel if producer policies are not good - levels of inventory excessive from producer, may not participate due to insiduous costs or if they want you to carry more inventory than necessary

Front 41

choice of channels: company - desire for channel control

Back 41

maintain control of product, you need shorter channel of distribution - like set price at retail and use aggressive promotion, what level?

Front 42

choice of channels: company - services provided by the seller

Back 42

producer/seller needs to determine what service they're in/provide

Front 43

choice of channels: company - ability of management

Back 43

producers can produce products but may have little knowledge in distribution, transportation, installation, etc.

Front 44

choice of channels: company - financial resources

Back 44

make sure its enough - the financially weak use middlemen

Front 45

intensive distribution

Back 45

a producer sells its product through every available outlet in a market where a consumer might reasonably look for it - convenience goods

Front 46

selective distribution

Back 46

a producer sells its product through multiple, but not all possible, wholesalers and retailers in a market where a consumer might reasonably look for it - shopping goods - to enhance product image (selectivity), strengthen customer service (who sells it to people); improve quality control; maintain some influence over price

Front 47

exclusive distribution

Back 47

supplier agrees to sell its product only to a single wholesaling middleman and/or retailer in a given market - done for specialty goods or in business market when there is installation and repair services; middlemen more likely to promote and when producer is successful, producer likely to crop distributors and use own sale force

Front 48

channel conflict

Back 48

exists when one channel member perceives another channel member to be acting in a way that prevents the first member from achieving its distribution objectives

Front 49

chargeback

Back 49

a penalty that a retailer or wholesaler assesses to a vendor that actually or allegedly violates an agreed-upon distribution policy or procedure - improperly boxed merchandise, damaged merchandise

Front 50

horizontal conflict

Back 50

occurs among firms on the same level of distribution - Toys R us vs. Wal-mart or cellphone distributors
- middlemen of same type or different types of middlemen on the same level

Front 51

scrambled merchandising

Back 51

middlemen diversify by adding product lines not traditionally carried by their type of business - supermarkets carrying personal care products

Front 52

vertical conflict

Back 52

occurs between producer and wholesaler or between producer and retailer

Front 53

producer vs. wholesaler

Back 53

disagree on points of view - manufacturers think wholesalers don't promote products aggressively or hold sufficient inventories. wholesalers think producers expect too much

Front 54

to bypass wholesalers, producer

Back 54

sells directly to consumers or sell directly to retailers (have to buy large quantities of a limited line of products)

Front 55

wholesalers to improve competitive positions

Back 55

improve internal performance or provide management assistance to customers or form a voluntary chain or develop middlemen's brands

Front 56

producer vs. retailers

Back 56

arise when producers compete with retailers by selling through producer-owned stores or over the internet or they may disagree about terms of sale or conditions of the relationship between the 2 parties

Front 57

manufacturers to gain more control

Back 57

build strong customer brand loyalty, establish one or more forms of a vertical marketing system, refuse to sell to uncooperative retailers, arrange alternative retailers

Front 58

retailers can more control

Back 58

develop store loyalty among consumers, improve computerized information systems, form a retailer cooperative

Front 59

channel control

Back 59

every firm would like to regulate the behavior of the other members in its distribution channel - company able to do so

Front 60

channel control: expertise

Back 60

possessing vital technical knowledge about the product or valuable information about customers

Front 61

channel control: rewards

Back 61

providing financial benefits to cooperative channel members

Front 62

channel control: sanctions

Back 62

penalizing uncooperative firms or even removing them from the channel

Front 63

changes in channel control

Back 63

historically, manuf/producers were viewed as controlling channels (number of outlets, how, participation of middlemen) - no longer the case now. large retailers now control many channels - driven fundamental change in customer service and cost
- faced with providing less than truckload quantities, faced with mixed pallets, advanced shipping notices (large distribution centers)

Front 64

channel as partnership

Back 64

view channel as a partnership aimed at satisfying end users' needs.
- entail a variety of cooperative activities that benefit both parties.
-firm provide a supplier with info about past/projected sales and/or existing inventory levels so it can better schedule its production and fulfill orders in timely manner

Front 65

benefits/risks of partnering

Back 65

-lower inventory and operating costs, improved quality of products and service, more rapid filling of orders.
-close working relationship requires sharing sensitive info which may be misused, may wind up in competitors hands

Front 66

category management

Back 66

a retailer allows a large supplier to manage an entire product category (carbonated beverages in supermarket)

Front 67

relationship marketing

Back 67

a concerted effort by a company not only to work closely with customers to better understand and satisfy their needs but also to develop long-term, mutually beneficial relationships with them