Term
| 5 Marketing Channel Environments |
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Definition
1) Economic environment
2) Competitive environment
3) Sociocultural environment
4) Technological environment
5) Legal environment |
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Definition
Recession
Inflation
Deflation |
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Term
| 2) Competitive environment |
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Definition
Horizontal competition
Intertype competition
Vertical competition
Channel System competition |
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Definition
| Competition between firms of the same type, such as auto manufacturer vs. another auto manufacturer, plumbing supply wholesaler vs. another plumbing supply wholesaler, or supermarket vs. supermarket. |
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Definition
| Competition between different firms at the same channel level, such as off-price store vs. department store, or merchant wholesaler vs. agents and brokers. |
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Definition
| Competition between channel members at different levels in the channel, such as retailer vs. wholesaler, wholesaler vs. manufacturer, or manufacturer vs. retailer |
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Term
| Channel System competition |
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Definition
Complete channels competing with other complete channels.
Referred to as vertical marketing systems. |
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Term
| Vertical marketing systems. |
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Definition
Channel System Competition - 3 types:
- Corporate – production and marketing facilities are owned by the same company
- Contractual – independent channel members – producers or manufacturers, wholesalers, and retailers – are linked by a formal contractual agreement.
- Administered – result from strong domination by one of the channel members, frequently a manufacturer, over the other members |
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Term
| 3) Sociocultural environment |
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Definition
Age patterns of the population
Changing ethnic mix
Educational trends
Family or household structure
Changing role of women |
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Term
| 4) Technological environment |
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Definition
Internet and electronic marketing channels
Scanners, computerized inventory management, and portable computers
Electronic data interchange (EDI) – the linking together of channel member information systems to provide real-time responses to communication between channel members
Teleshopping – purchase of products by consumers using a remote electronic device in conjunction with a TV set
Computershopping – internet shopping
Home shopping – cable TV shows that offer products on “infomercials” |
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Term
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Definition
| Legislation affecting marketing channels |
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Term
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Definition
| 1890, the fundamental anti-monopoly law of the United States. Philosophy of the act: the public welfare is served best through competition |
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Definition
| 1914, attempted to strengthen the Sherman Antitrust Act by prohibiting price discrimination, tying clauses, exclusive dealing, intercorporate stockholding, and interlocking corporate directorates among competing firms if these practices tend to substantially lessen competition or tend to create monopolies. |
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Term
| 3. Federal Trade Commission Act |
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Definition
| 1914, established the FTC. Granted the power to investigate, enforce unfair methods of competition in interstate commerce. Expanded the scope of the Federal government in the regulation of interstate commerce. |
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Definition
1936, amendment to the Clayton Act, added stuff that the Clayton Act left out.
Sections 2a and 2b prohibit persons engaged in interstate commerce from discriminating in price or terms of sale for goods of like grade and quality if the effects of such discrimination are to substantially lessen competition or foster monopolies
Section 2c covers unearned brokerage fees, which are a device used by buyers to gain a lower price from the seller. The buyer would set up a phony brokerage firm that was part of his own firm, and bill the seller for the “cost” of the brokerage fee.
Sections 2d and 2e – covers promotional allowances and services. These are various forms of assistance from the seller to the buyer, often in the form of cooperative advertising allowances, payments for display of supplier’s products, point of purchase materials, catalogs, display equipment, training programs, management assistance, etc. |
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Definition
| 1950, amendment to Section 7 of Clayton Antitrust Act; prohibited acquisitions or mergers that tended to lessen competition or create monopolies. Broadened the scope of the Clayton Act so that the prohibitions against acquisitions and mergers that tended to lessen competition and foster monopolies as a result of horizontal mergers between firms would also apply to vertical mergers and acquisitions. |
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Term
| Legal Issues in Channel Management |
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Definition
Dual Distribution
Exclusive Dealing
Full-Line Forcing
Price Discrimination
Price Maintenance
Refusal to Deal
Resale Restrictions
Tying Agreements
Vertical Integration |
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Term
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Definition
| Refers to the practice whereby a producer or manufacturer uses two or more different channel structures for distributing the same product to his target market. The selling of the same or similar products under different brand names for distribution through two or more channels is also a form of dual distribution. Not illegal under federal antitrust laws. |
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Term
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Definition
| Occurs when a supplier requires its channel members to sell only its products or at least to refrain from selling products from directly competitive suppliers. Exclusive dealing arrangements are in violation of the antitrust provisions of the Clayton Act if their effect is to substantially lessen competition or foster monopolies. |
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Definition
| Exists when a supplier requires channel members to carry a broad group of its products (full line) in order to sell any particular products in the supplier’s line. Full-line forcing is practiced to varying degrees in a wide range of industries. |
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Definition
| Refers to the practice whereby a supplier, either directly or indirectly, sells at different prices to the same class of channel members to the extent that such price differentials tend to lessen competition. Covered specifically under the Robinson-Patman Act. |
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Definition
| Refers to a supplier’s attempt to control the prices charged by its channel members for the supplier’s products. The supplier, in effect, dictates the prices charged by channel members to their customers. |
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Definition
| In general, suppliers may select whomever they want as channel embers and refuse to deal with whomever they want. This right is based on the precedent established in a classic Supreme Court case of 119 (U.S. v. Colgate and Company) and is often referred to as the “Colgate doctrine.” Thus, there are no legal barriers to sellers using their own criteria and judgment in the selection of channel members and announcing in advance the conditions under which they will refuse to deal. |
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Definition
| Refer to a manufacturer’s attempt to stipulate to whom channel members may resell the manufacturer’s products and in what specific geographical market areas (territories) they may be sold. |
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Definition
| Agreements whereby a supplier sells a product to a channel member on condition that the channel member also purchase another product as well, or at least agrees not to purchase that product from any other supplier. Full-line forcing is a special case of tying agreements. Tying agreements that require channel members to purchase most or all of the products used in their businesses from the tied supplier are likely to be considered violations of the Sherman Act if the same products could be purchased from other suppliers. |
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