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Definition
All of the activities necessary to turn raw materials into a good or service and put it in the hands of the consumer.
Place portion of the marketing mix. Only element that offers a real, long-term competitive advantage |
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Term
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Definition
The management of flows among firms in a supply chain to maximize total profitability
Want to max. profitability for entire supply chain.
Includes 2 types of partners:
Upstream- companies that supply us with our materials
Downstream- channel members that link us to the customer |
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Term
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Definition
| when a company hires a specialist to handle their supply chain |
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Term
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Definition
| The series of firms or individuals that facilitates the movement of a product from a producer to the final customer. |
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Term
| Distribution Channels (direct/indirect) |
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Definition
Direct: involves a producer and a customer- there are no intermediaries
Indirect: involves one or more intermediaries |
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Term
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Definition
Firms or individuals that help move the product from the producer to the consumer or business user
Examples: Wholesalers, Retailers, Agents, Brokers |
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Term
| Functions of Distribution Channels |
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Definition
Provide utility – provide 3 types: Time, Place, & Ownership
Provide logistics functions
Handle the physical distribution of products
Create efficiencies- by reducing the # of transactions
Breaking bulk: purchase large quantities to sell one of a few at a time
Creating assortments: They provide a variety of products in one location |
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Term
| Other Functions of the Distribution Channels |
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Definition
Transporting/Storing of products until ready to be purchased
Facilitating functions which make the process easier
Provide services (such as setup and maintenance)
Can handle transactions
**Distribution channels serve many valuable functions** |
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Term
| Internet in the Distribution Channel |
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Definition
E-commerce has created radical changes in distribution strategies
Allowed small companies to compete on a national/international level
Disintermediation: when we eliminate traditional intermediaries. Done to reduce costs.
For example: airlines
Knowledge management: sharing information with other supply chain members |
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Term
| Full-Service merchant wholesalers |
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Definition
provide all or most of the services necessary.
Ex. Handle delivery, credit, and repairs |
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Term
| Limited Service Merchant Wholesalers |
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Definition
provide fewer, more specialized services.
Cash-and-carry wholesalers: provide products to small business customers who do not require credit or delivery- able to provide deep discounts
Truck jobbers: deliver products to retailers.
Drop shippers: take orders that are shipped directly from the manufacturer. They take title of the merchandise, but not possession.
Mail-order wholesalers: allows business customers to order through the phone or through catalogs
Rack jobbers: provide display units, check inventories, and stock shelves |
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Term
| Merchandise agents and brokers (4 kinds) |
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Definition
provide services in exchange for a commission or fee.
Manufacturers’ agents: carry several non-competing products
Selling agents: carry a company’s whole product line or total offering.
Commission merchants: seen with agricultural products, where they receive products on consignment. Aka: take possession, but they do not take title
Merchandise brokers: identify buyers and sellers and bring them together |
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Term
| Manufacturer-Owned Intermediaries (3 kinds) |
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Definition
Sales branches: carry inventory, provide sales and support services
Sales offices: do not carry inventory. Provide sales and services
Manufacturers’ showrooms: Provide permanent product displays for customers to visit. |
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Term
B2B channels:
Dual Distribution and Hybrid Marketing |
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Definition
Dual Distribution Channel: a company interacts with one or more types of channels
Hybrid marketing system: a company has added a new channel to serve their business customers. |
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Term
| Distribution decisions interact with the marketing mix in a number of ways |
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Definition
Place influences pricing
Place can position a product
The product itself influences its distribution channels. |
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Term
| Distribution decisions can create ethical dilemmas |
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Definition
Size of channel intermediaries: important b/c it impacts who has the power.
Ex. Wal-Mart using size to have strong impact on other companies |
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Term
Distribution Planning:
1. Develop Distribution objectives |
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Definition
| distribution objectives have to be in line with our overall marketing goals |
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Term
Distribution Planning:
2. Evaluate Internal and External Environment influences |
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Definition
what is going to impact our ability to achieve objectives. Must consider:
company’s ability to handle our distribution
What intermediaries are available to us.
How do our competitors distribute their products |
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Term
Distribution Planning:
3. Choose a distribution Strategy |
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Definition
Channel levels: how many should we have?
Type of system- choose one!
Conventional marketing systems: members work independently. With this system, companies are simply buying from each other.
Vertical marketing systems: Have formal cooperation among members
Horizontal marketing system: companies at the same level work together to reach the customer
Level of distribution intensity- |
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Term
In Choosing a distribution strategy:
Distribution Intensity |
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Definition
Intensive distribution: you are selling through all suitable outlets.
Ex. Pop
Exclusive distribution: selling through a single outlet in a region. not readily available.
Ex. Rolles Royce
Selective distribution: use fewer than intensive but more than exclusive. Falls in the middle.
Appliances |
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Term
Distribution Planning:
4. Develop distribution Tactics |
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Definition
Selecting channel partners
Important b/c normally a long-term commitment.
Managing the channel : done through the following
Channel leader/captain: dominant company that controls the channel. They have this control b/c they have some sort of power
economic: they have the ability to control resources.
Legitimate power: they have the legal authority to call the shots
Reward/Coercive power: they have the ability to give or take away profitable products |
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Term
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Definition
| The process of designing, managing, and improving the movement of products through the supply chain |
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Term
| Logistics: Physical Distribution |
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Definition
All activities that move finished goods from manufacturers to final customers
Includes:
Order Processing
Warehousing
Materials Handling
Transportation
Inventory Control |
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Term
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Definition
1. Order Processing
2. Warehousing
3. Materials Handling
4. Transportation
5. Inventory Control |
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Term
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Definition
Function of Logistics
includes all of the activites that occur between the time an order comes in and a product goes out the door. |
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Term
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Definition
A Function of Logistics
: involves the storage of goods until they are ready to be sold or moved through the distribution channel.
Materials handling: deals with the movement of products into, within, and out-of warehouses. |
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Term
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Definition
A function of logistics
Transportation modes differ in their:
Dependability: looks at safety and punctuality
Cost
Speed of delivery
Accessibility: looks at the locations served.
Capability: looks at the materials handled
Traceability: the ability to locate goods in shipment. |
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Term
| Modes of Transportation (6) |
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Definition
Railroads: carry heavy bulky items over long distances. Cost efficient.
Water: used to carry large items, esp. internationally. Also low cost. Problem: slow and can be affected by the weather
Trucks: carry consumer goods in short hauls. Offer flexibility and are faster than railroads.
Air: the fastest and the most expensive mode. Used for high-value, low bulk items. Also good for perishable products
Pipelines: carry petroleum and chemical products.
Internet: provides many different types of services. |
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Term
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Definition
| Activities to ensure goods are always available to meet customers’ demands |
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Term
| Radio Frequency Identification (RFID) |
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Definition
| Product tags with tiny chips containing information about the item’s content, origin, and destination. |
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Term
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Definition
| ensures that deliveries arrive only when needed. Keeps inventory costs down. |
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Term
| Key Types of Intermediaries |
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Definition
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Term
| Different Types of Channels of Distributions |
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Definition
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Term
| Steps in Distribution Planning |
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Definition
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