Term
|
Definition
| The need-satisfying offering of a firm |
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Term
|
Definition
| The external contractual organization which management operates to achieve its distribution objectives |
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Term
| Why marketing channels (rationale for their existence) |
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Definition
Efficiency in Market Exchange
Making transactions routine
Facilitating the search process
Specialization and division of labor
Breaking bulk and creating assortment |
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Term
| Flows (in marketing channels) |
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Definition
Product flow
Negotiation flow
Ownership flow
Information flow
Promotion flow |
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Term
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Definition
| The physical movement of product from manufacturer to consumer |
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Term
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Definition
| The buying and selling functions with the transfer of the title |
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Term
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Definition
| The movement of the title to the product as it's passed from manufacturer to consumer |
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Term
|
Definition
| The exchange of information between all parties, flowing up or down |
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Term
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Definition
| Persuasive communication in the terms of advertising, promotions, sales, and publicity |
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Term
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Definition
| A group of channel members to which a set of distribution tasks has been allocated |
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Term
|
Definition
The group of institutions and parties that assists channel members in performing distribution tasks
(facilitating agents) |
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Term
| Producers and manufacturers |
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Definition
Extracting, growing and making products
Often lack expertise and economies of scale to perform distribution tasks
Also economies of scale of production and distribution may not match |
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Term
| Channel Participants (primary roles) |
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Definition
Wholesalers
Retailers
Facilitating agencies |
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Term
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Definition
| Sells goods for resale or business use |
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Term
| Three kinds of wholesalers |
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Definition
Merchant wholesalers (buy&sell, own)
Agents, brokers, and commission merchants (don't own, book sales)
Manufacturer's sales branches and offices (owned by manufacturer) |
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Term
| What do merchant wholesalers do (for their manufacturers) |
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Definition
Market coverage
Sales contacts
Holding inventory
Processing orders
Market information
Customer support |
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Term
| What do merchant wholesalers do (for their customers) |
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Definition
Product availability
Customer service
Credit and financial assistance
Assortment convenience
Breaking bulk
Advise and technical support |
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Term
| Retailers: what do they do |
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Definition
Facilities (manpower and physical)
Communication
Demand forecasting
Breaking bulk and assortment building
Field/local storage
Risk absorption |
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Term
|
Definition
Assist in the performance of distribution tasks other thank buying, selling, and transferring title
Transportation agencies; storage agencies; order processing agencies; advertising agencies; financial agencies; insurance companies; marketing research firms |
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Term
|
Definition
Economic
Competitive
Socio-cultural
Technological
Legal |
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Term
| The competitive environment |
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Definition
Horizontal competition- similar firms (supermarket v supermarket)
Intertype competition- different firms same channel level (amazon v walmart)
Vertical competition- channel members at diff. levels(wholesaler v manufacturer)
Channel system competition- two entire channels competing |
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Term
| Socio-cutural environment |
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Definition
Age patterns
Changing ethnic mix
Educational trends
Family or household structure
Changing role of women |
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Term
|
Definition
The internet and electronic marketing channels
Scanners, computerized inventory management, and portable computers
Electronic Data Interchange (EDI)
Teleshopping, computer-shopping, and home-shopping |
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Term
|
Definition
Sherman-Antritrust Act >> Anti-monopoly
Clayton Act >> to strengthen Sherman-Antitrust; price discrimination, exclusive dealing; tying clauses, etc.
Federal Trade Commission Act >> Unfair methods of competition
Robinson-Patman Act>> amendment to Clayton>> price discrimination
Celler-Kefauver Act>> Amendment to clayton; mergers and acquisitions, vertical integration |
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Term
| Behavioral processes in marketing channels |
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Definition
| The dominant area of study and research in marketing on distribution channels management |
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Term
| Marketing channel as a social system |
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Definition
Social system- generated by any process of interaction on sociocultural level
Between two or more actors
Actor is individual or collectivity
Individuals or collectivities interacting within marketing channel |
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Term
|
Definition
Interdependent Units:
Overall channel efficiency
Cooperation
Independent Units:
Own individual goals
Competition
Conflict |
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Term
|
Definition
| Conflict > Roles > Power > Communication |
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Term
|
Definition
Cause: When a channel member perceives that another member's actions impede the attainment of his or her goals
Behavioral trademarks: Direct, personal, and opponent-centered behavior |
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Term
|
Definition
Role incongruities
Resource scarcities
Perceptual differences (value things differently)
Expectational differences
Decision domain disagreements (who should make decisions)
Goal incompatibilities
Communication difficulties |
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Term
| How does conflict affect channel efficiency? |
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Definition
| Decrease? Increase? Any effect? |
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Term
| Negative effect: reduced efficiency |
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Definition
| As the level of conflict increases, channel efficiency declines |
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Term
| No effect: efficiency remains constant |
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Definition
Exists in channels characterized by high levels of dependency among members
Channel efficiency is not affected |
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Term
| Positive effect: efficiency increased |
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Definition
Conflict might be impetus for either or both members to reappraise their policies
Channel efficiency increases |
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Term
| Managing channel conflict |
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Definition
| Detecting conflict > Appraising the effect of conflict > resolving conflict |
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Term
| Detecting channel conflict |
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Definition
| Regularly survey other members' perceptions of firm's performance, perform marketing channel audit, or form distributors' advisory councils or channel members' committees |
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Term
| Appraising the effect of conflict |
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Definition
| Subjective processes that relies on manager's judgement |
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Term
|
Definition
Creative action on the part of some party to the conflict is needed if the conflict is to be successfully resolved.
Conversely, if conflict is simply "left alone", it is not likely to be successfully resolved and may get worse |
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Term
| Strategies for managing conflict |
|
Definition
Super-organizational mechanisms
Interpenetration mechanisms
Boundary mechanisms
Bargaining and negotiation |
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Term
| Super-organizational mechanisms |
|
Definition
Super-ordinate goals
Conciliation and mediation
Arbitration |
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Term
| Interpenetration mechanisms |
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Definition
Co-optation
Exchange of persons programs
Trade association membership
Education and propaganda |
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Term
|
Definition
Diplomacy
Boundary Role Person represents buyer or seller to inform them about the other |
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Term
| Bargaining and negotiation |
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Definition
Bargaining strategy
Compromise |
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Term
| Strategies that create and offset distribution channel conflict |
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Definition
Bypassing channels > market partitioning, pass on leads and compete, sell only through resellers
Over saturation > upper limits on dealers numbers guide them to different markets
Too many links in the chain > Margin levels based on performance of functions
New channels > Restrict product assortment and merchandising aids to new channels
Adding cost-cutters > Different product variations to different channels
Inconsistency in behavior > set ground rules and enforce communicate changes early |
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Term
|
Definition
| Prescriptions defining behavior |
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Term
|
Definition
| The capacity of a particular channel member to control or influence the behavior of another |
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Term
| Power in the marketing channel |
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Definition
The capacity of a particular channel member to control or influence the behavior of another channel member
Keys to understanding power: power bases, use of power bases |
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Term
| Sources (or bases) of power |
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Definition
Reward power- one party can reward the other
Coercive power- they can punish you
Legitimate power- power due to position
Referent power- power by associating with someone or something
Expert power- knowledge about something unique |
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Term
| Using power in the marketing channel |
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Definition
Identify available power bases (bases are a function of size of producer or manufacturer, organization of channel, or particular set of circumstances)
Select and use appropriate power bases to better or worsen channel relationships |
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Term
| Communication noise types |
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Definition
|
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Term
| Sources of communication noises (in distribution channels) |
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Definition
Communication overload
Secrecy
Poor timing
Differing goals
Language differences
Perceptual differences |
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Term
| Overcoming Communication noise |
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Definition
Instituting feed back
Specialized languages
Altering technologies
Queing and sequencing
Redundancy
Predetermining information needs |
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|
Term
| The process of conflict in marketing channels |
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Definition
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Term
|
Definition
| Decisions involving the development of new marketing channels either where none had previously existed or to the modification of existing channels |
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Term
| Distinguishing points of the channel design definition include: |
|
Definition
A decision made by the marketer
The creation or modification of channels
The active allocation of distribution tasks in an attempt to develop an efficient structure
The selection of channel members
A strategic tool for gaining a differential advantage |
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Term
| Who engages in channel design? |
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Definition
Firms (producers, manufacturers, service providers, franchisers)-look down the channel toward the market
Wholesalers- look both up and down the channel
Retailers- look up the channel to secure suppliers |
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Term
|
Definition
1. Recognize need for channel design decision
2. Set & coordinate distribution objectives
3. Specify distribution tasks
4. Develop alternative channel structures
5. Evaluate relevant variables
6. Choose the best channel members
7. Select the best channel members |
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Term
| When to make a channel design decision |
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Definition
Developing a new product or product line
Aiming an existing product at a new market
Making a major change in some other component of the marketing mix
Establishing a new firm
Adapting to changing intermediary policies that may inhibit attainment of distribution objectives
Dealing with changes in availability of particular kinds of intermediaries
Opening up new geographic marketing areas
Facing the occurrence of major environmental changes
Meeting the challenge of conflict or other behavioral problems
Reviewing and evaluating |
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Term
| Recognizing the need for decisions |
|
Definition
Product considerations
Pricing considerations
Distribution channel considerations
Market considerations
Environmental considerations |
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Term
|
Definition
| Setting distributions objectives requires knowledge of which, if any, existing objectives & strategies may impinge on these distribution objectives |
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Term
| Setting and coordinating distribution objectives |
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Definition
Know objectives
Explicitly state them
Ensure congruence with other objectives of the company |
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Term
|
Definition
Outlining distribution tasks is specific and situationally dependent on the firm
For example: distribution tasks for a manufacturer of consumer products differs from those for products sold in industrial markets
Distribution tasks are a function of the distribution objectives and the types of firms involved |
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Term
| Specifying the distribution tasks |
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Definition
Channel efficiency and effectiveness
Shifting of functions
Functional spin-off |
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Term
| Channel structure dimensions |
|
Definition
1. Number of levels in the channel
2. Intensity at the various levels (how many channels you have)
3. Types of intermediaries at each level |
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Term
|
Definition
Range from two to five or more
Number of alternatives is limited in two or three choices
Limitations result from the following factors: Particular industry practices, nature & size of the market, availability of intermediaries |
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Term
| Intensity at the various levels |
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Definition
| Relationship between the intensity of distribution dimension & number of retail intermediaries used in a given market area |
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Term
|
Definition
Numerous types
Manager's emphasis on types of distribution tasks performed by these intermediaries
Watch emerging types (electronic online auction firms, industrial products sold in b2b markets) |
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Term
| Variables affecting channel structure |
|
Definition
Market variables
Product variables
Company variables
Intermediary variables
Environmental variables
Behavioral variables |
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Term
|
Definition
Market geography (location, geographical size, & distance from producer)
Market size (number of customers in a market)
Market density (number of buying units per unit of land area)
Market behavior (who buys, & how when and where customers buy) |
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Term
|
Definition
Bulk and weight
Perishability
Unit value
Degree of standardization
Technical versus nontechnical
Newness |
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Term
|
Definition
Size- the range of options is relative to a firms size
Financial capacity-the greater the capital, the lower the dependence on intermediaries
Managerial expertise- intermediaries are necessary when managerial experience is lacking
Objectives & Strategies- marketing & objectives may limit use of intermediaries |
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Term
|
Definition
Availability- availability of intermediaries influences channel structure
Cost- Cost is always a consideration in channel structure
Services- services that intermediaries offer are closely related to the section of channel members |
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Term
|
Definition
The impact of environmental forces is a common reason for making channel design decisions
economic forces
Competitive forces
Legal forces
Technological forces
Sociocultural forces |
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Term
|
Definition
Develop congruent roles for channel members
Be aware of available power bases
Attend to the influence of behavioral problems that can distort communication |
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Term
| Heuristics in channel design |
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Definition
Benefit- fairly simple prescriptions for channel structure
Limitation- mostly useful as rough guide to decision making |
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Term
| Choosing an optimal channel structure |
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Definition
Not possible because management is incapable of knowing all possible alternatives and precise methods for calculating the exact payoffs associated with each alternative structures do not exist
BUT
Techniques exist for developing more exact methods |
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Term
| Approaches for choosing channel structure |
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Definition
"Characteristics of Goods & Parallel systems" approach
Financial approach
Transaction cost analysis approach
Management science approaches
Jusgmental-heuristic approach
Postponement-speculation
Functional spin-off |
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Term
| “Characteristics of Goods and Parallel Systems” approach: all products may be described in terms of the following 5 characteristics: |
|
Definition
- Replacement rate
- Gross margin
- Adjustment
- Time of consumption
- Searching time |
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Term
|
Definition
capital budgeting --- ROI? which one has the highest ROI
*difficult because you cant know which will have the highest ROI until you employ it |
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Term
| Transaction cost analysis approach: 3 variables |
|
Definition
bounded rationality- people act rationally with info given
opportunism-self seeking interest with malace
transaction specific investments- limited in applicability |
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Term
| Management science approach |
|
Definition
similar to financial approach (not in capital and budgeting but in simulation
-create these hypothetical simulation with different actors and let It run
*allows you to see where there are errors |
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Term
| Judgmental-heuristic approach |
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Definition
| assuming that management's ability to make judgments is high, and good empirical data on costs and revenues is available, THEN its possible to make satisfactory channel design choices |
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Term
| Judgmental-heuristic three approaches |
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Definition
Straight qualitative Judgment approach
Weighted factor score approach
Distribution costing approach |
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Term
| Straight qualitative judgment approach |
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Definition
most widely used
*least sophisticated/structured
-strictly relying on info to give your judgment
-can be expertise or tacit and natural to perform |
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Term
| Weighted factor score approach |
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Definition
determine relevant variables/criteria in decision
*judgment comes early in factor weight and heuristics comes late (relying on rule to choose the highest score) |
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Term
| Distribution costing approach |
|
Definition
*big math problem
heuristics comes first and then judgment comes last |
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Term
|
Definition
Postponement- channel members avoid carrying inventory. The product may have to be carried at a centralized location
Speculation- channel members prefer to carry inventory. Will find more stocks of finished goods at decentralized field locations such as retail warehouses |
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|
Term
|
Definition
The 7th and final phase of channel design
Selection may or may not be the result of channel design
Channel member selection may be to replace channel members that have left OR to obtain greater coverage |
|
|
Term
| Selection and distribution intensity |
|
Definition
The greater the intensity of distribution (selling through all reasonable outlets)
The less the emphasis on selection |
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Term
|
Definition
1. Finding prospective channel members
2. Applying selection criteria to determine the suitability of prospective channel members
3. Securing the prospective channel members as actual channel members |
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Term
| Finding members (7 methods) |
|
Definition
Field sales organization
Trade sources
Reseller inquiries
Customers
Advertising
Trade shows
Other sources |
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Term
|
Definition
| Salespeople are the best positioned to know about potential intermediaries (they are often able to pick up info about likely intermediaries and may have lined up prospective intermediaries) BUT the manufacturer must adequately reward salespeople for their time & effort establishing connections |
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Term
|
Definition
Trade associations
Trade publications
Directories
Trade shows
Firms selling similar products
The "grapevine"
For example:industrial distribution magazine, the verified directory of manufacturers' representatives, the national retail federation, etc |
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Term
|
Definition
Many firms learn about direct inquiries from intermediaries interested in handling their product
This is the main source of how info about potential new channel members for some manufacturers
Firms receiving the highest number of inquiries are the more prestigious in their industry |
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Term
|
Definition
Customers are willing to give frank opinions about the intermediaries who call on them
Manufacturer conducts formal or informal surveys of customers' views of various distributers
Manufacturer obtains info about potential intermediaries |
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Term
|
Definition
Trade magazine advertising can generate a large number of inquiries from prospective members
It therefore can provide a large pool from which to make selections |
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Term
|
Definition
Wholesale and retail trade associations hold annual conventions
Attending manufacturers have access to a wide variety of potential channel members
Small manufacturers meet face-to-face with wholesalers & retailers |
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Term
|
Definition
Chambers of commerce, banks, & local real estate dealers
Classified telephone directories or yellow pages
Direct-mail solicitations
Contacts from previous applications
Independent consultations
List brokers that sell lists of names of businesses
Business databases
The internet |
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Term
|
Definition
Credit & financial condition
Sales strength
Product lines
Reputation
Market coverage
Sales performance
Management succession
Management ability
Attitude
Size |
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Term
| Adapting selection criteria |
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Definition
| Because no list of criteria is adequate for a firm under all conditions, the channel manager should be flexible when using selection criteria |
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Term
|
Definition
Producers & manufacturers
Wholesale intermediaries
Retail intermediaries |
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Term
|
Definition
| The supplier produces, the distributor sells, and each is dependent upon the other. Together they form a team, and all teamwork is essential if the association is to prove mutually beneficial |
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Term
|
Definition
Good profitable product line
Advertising & promotional support
Management assistance
Fair dealing policies & friendly relationships |
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Term
| Product line (inducements) |
|
Definition
Manufacturer offers good product line with strong sales and profit potential
Stress value of good product line from channel members' perpective |
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Term
| Advertising & Promotion (inducements) |
|
Definition
Consumer market: gain immediate credibility by using a strong program of national advertising
Industrial market: gain recognition by using a strong program of trade paper advertising |
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Term
| Management assistance (inducements) |
|
Definition
Prospective members want to know whether the manufacturer will help with:
Training programs
Financial analysis & planning
Market analysis
Inventory control procedures
Promotional methods |
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Term
| Fair dealing & friendly relationship |
|
Definition
Manufacturers responsibility:
To convey to prospective channel members that he or she is genuinely interested in establishing a good relationship based on trust and concern for their welfare as both business entities and as people |
|
|
Term
Target markets and channel design strategy:
Market variables |
|
Definition
| The target market's needs and wants should drive the manner in which the channel manager shapes the design of the firm's marketing channels |
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|
Term
| Framework for market analysis-what makes up target markets? |
|
Definition
Market geography
Market size
Market behavior
Market density |
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Term
|
Definition
The geographical extent of markets and where they are located
Channel manager's task: To evaluate market geography relative to channel structure to ensure that the structure is able to serve the markets effectively and efficiently |
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|
Term
| Tracking changes in market geography |
|
Definition
In the US: a high degree of mobility within the US means that market geography changes frequently
Globally: southeast Asian countries & former eastern bloc countries of central and eastern Europe have become key locations |
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Term
|
Definition
| The number of buyers or potential buyers (consumer or industrial) in a given market |
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Term
|
Definition
| As the market becomes larger, the channel structure using intermediaries is lower in vost |
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Term
|
Definition
THe number of buyers or potential buyers per unit of geographical area
This market dimensions's relationship to channel structure is illustrated in the concept of efficient congestion
Manufacturers of a wide array of products seek out distributors and retailers that operate in dense markets |
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Term
|
Definition
| Congested (high-density) markets can promote efficiency in the performance of several basic distribution tasks, particularly those of transportation, storage, communication, and negotiation |
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Term
|
Definition
| The opportunity to achieve a high level of customer access at low cost is higher in dense markets than in more dispersed ones |
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Term
|
Definition
Four sub-dimensions:
When the market buys
Where the market buys
How the market buys
Who buys |
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Term
|
Definition
Variations occur daily, weekly, and seasonally
Implications for the channel manager:
Variations create peaks and valleys in the manufacturer's production schedule
He or she should attempt to select channel members who are in tune with these changing patterns |
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Term
|
Definition
Determined by the types of outlets from which final buyers choose to make their purchases
Determined by the location of those outlets
Implications for the channel manager:
He or she should know where customers generally buy particular types of products
He or she should know whether these patterns may be changing |
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|
Term
|
Definition
Large vs small quantities
Self-service vs salespeople assistance
One-stop shopping vs buying from several stores
Impulse buying vs extensive decision making prior to purchase
Cash vs credit
Shopping at home vs in stores
Expending substantial vs little effort
Demanding extensive vs little service |
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Term
|
Definition
(Who makes physical purchase?) Affects the type of retailers chosen in the consumer market and may influence the kinds of channel members used to serve industrial markets
(Who decides to purchase) In context of family unit at consumer level and buying centers at industrial level |
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Term
|
Definition
Sets of people who participate in industrial buying decisions and who are responsible for the consequences resulting from the decision.
Users
Influencers
Deciders
Approvers
Buyers
Gatekeepers |
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|
Term
| Channel manager's role in changes in market behavior |
|
Definition
Must be tuned in to changes that are likely to occur
Needs to determine whether changes are temporary or long term |
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Term
|
Definition
Good personal selling at the retail level
Retail stores with spartan surroundings, minimum service, and very low prices
Online and mail order
Automobile retailing changes
Internet shopping
Other innovations of channel members |
|
|
Term
| Managing the marketing channel: Channel management vs channel design |
|
Definition
Management- running the channel
Design- setting up the channel |
|
|
Term
|
Definition
| The administration of existing channels to secure the cooperation of channel members in achieving the firm;s distribution objectives |
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|
Term
| Motivating channel members: 3 steps |
|
Definition
Find out the needs and problems of channel members
Offer support to the channel members that is consistent with their needs and problems
Provide leadership through the effective use of power |
|
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Term
|
Definition
| The actions taken by the manufacturers to foster channel member cooperation in implementing the manufacturer's distribution objectives |
|
|
Term
| Finding out the needs and problems of channel members |
|
Definition
| Must understand that the channel member is a different organization with its own individuality |
|
|
Term
| Approaches for learning about channel member needs and problems |
|
Definition
Research studies of channel members (by insiders)
Research studies by outside parties
Marketing channel audits
Distributor advisory councils |
|
|
Term
| Research studies of channel members |
|
Definition
| Less than 1% of manufacturers' research budget is spent on channel member research BUT manufacturer-initiated research can be useful because certain types of needs or problems may not be at all obvious |
|
|
Term
| Research studies by outside parties: why use this? |
|
Definition
They provide a higher assurance of objectivity
They provide a level of expertise that the manufacturer may not possess |
|
|
Term
| Marketing channel audits: focus of channel manager's approach |
|
Definition
Gather data on how channel members perceive the manufacturer's marketing program and its component parts
Locate the strengths and weaknesses in the relationships
Learn what is expected of manufacturers to make the channel relationship viable and optimal |
|
|
Term
| Marketing channel audits: what makes them most effective? |
|
Definition
It should identify and define in detail the issues relevant to the manufacturer-wholesaler and/or manufacturer-retailer relationship
Issues chosen for the audit should be cross-referenced to any relevant channel variables that could be fixed/improved
It must be conducted periodically so as to capture trends and patterns |
|
|
Term
| Distributor advisory councils: who is involved? |
|
Definition
| Top management representatives from the manufacturer and from the channel members |
|
|
Term
| Distributor advisory councils: what are the benefits |
|
Definition
Provides recognition for the channel members
Provides a vehicle for identifying and discussing mutual needs and problems
Results in an overall improvement of channel communications |
|
|
Term
| Supporting channel members: 3 types of programs |
|
Definition
Cooperative
Partnership or strategic alliance
Distribution programming |
|
|
Term
|
Definition
Less sophisticated and least comprehensive
Incentives for extra effort by channel member in the promotion of the products of the manufacturer offering the program
Most common |
|
|
Term
| Partnerships and strategic alliances |
|
Definition
More sophisticated and comprehensive
Based on careful delineation of mutual roles, commitments and support
Objective: well organized team effort |
|
|
Term
|
Definition
Most sophisticated and most comprehensive
Comprehensive plan for managing the channel
All key areas addressed
Usually initiated by the manufacturer (but not necessarily) |
|
|
Term
|
Definition
Focuses on channel member needs & problems
Simple and straightforward
Conveys a clear sense of mutual benefit |
|
|
Term
| Typical types of cooperative programs provided by manufacturers to channel members |
|
Definition
Cooperative advertising allowances
Payments for interior displays
Contests for buyers, salespeople, etc.
Allowances for warehousing functions
Payments for window display space
Detail men who check inventory
Demonstrators
Coupon-handling allowance
Free goods |
|
|
Term
| Partnerships & strategic alliances |
|
Definition
| Focus on a continuing and mutually supportive relationship between the manufacturer and its channel members in an effort to provide a more highly motivated team, network, or alliance of channel members |
|
|
Term
| Three basic phases of partnerships and strategic alliances |
|
Definition
Manufacturer should make explicit statement of policies in areas such as product availability, technical support, pricing, etc.
Manufacturer should assess all existing distributors as to their capabilities for fulfilling their roles
Manufacturer should continually appraise the appropriateness of the policies guiding his or her relationship with the channel members |
|
|
Term
| Distribution programming: steps for developing a program |
|
Definition
Manufacturer develops analysis of marketing objectives & the kinds of levels of support needed from channel members and ascertains channel members' needs & problem areas
Formulate specific channel policies that offer: price concessions to channel members, financial advice, some kind of protection for channel members |
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Term
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Definition
Cooperative arrangements: intermittent interactions between manufacturer and channel members
Partnerships & strategic alliances: continuing & mutually supportive relationship
Distribution programming: deals with virtually all aspects of the channel relationship |
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Term
| Leadership through the selective use of power |
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Definition
The channel manager must exercise effective leadership on a continuing basis to attain a well-motivated team of members
For this, it may use the sources of power carefully and judiciously |
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Term
| Vertical marketing systems and channel management |
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Definition
| VMS: managed as a system with some degree of optimization |
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Term
| Vertical Marketing systems |
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Definition
Administered systems
Contractual systems
Corporate systems |
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Term
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Definition
Conventional
Closely aligned
Good coordination and cooperation
Each individual retains authority
Difference: MATTER OF DEGREE
High inter-organizational management
Often with channel leader |
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Term
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Definition
Retail cooperative organizations
Wholesaler sponsored voluntary chains
Franchised systems |
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Term
| Retail cooperative organizations |
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Definition
Retailers get together
Economies of scale in:buying, advertising, storage, management, etc |
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Term
| Wholesaler sponsored voluntary chain |
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Definition
Initiative of wholesaler
Wholesaler remains privately owned
Economies of scale in buying |
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Term
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Definition
| Product and trademark franchise vs business format franchise |
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Term
| Corporate systems: Why vertical integration? |
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Definition
Competition
Market conditions
Scale economies
Channel conflict
Entrepreneurial drive |
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Term
| Corporate systems: benefits and drawbacks |
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Definition
Benefits: market entry, control of sales, pricing control, protection of reputation
Drawbacks: unnatural mix, too many employees, diseconomies of inventory control, information overload on management, legal limitations |
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Term
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Definition
| all of the elements of the distribution channel, from manufacturing to the stores, under the ownership of a single business |
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Term
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Definition
Franchisor: capital, distribution cost, managerial motivation
Franchisee: reducing uncertainty, trademark, services, ease of entry, return on investment (ROI) |
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Term
| Franchisor revenue sources |
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Definition
Initial franchise fees
Royalty fees
Sales of product
Rental and lease fees
License fees
Management fees |
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Term
| Franchising disadvantages |
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Definition
Not suitable for all businesses
Good potential franchisees are not easy to find
May become inflexible (due to long term contracts)
Loss of control over marketing
Conflict and distrust
Legal and political influence |
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Term
| Product issues in channel management: Marketing mix resources |
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Definition
| By understanding how the other marketing mix variables interface with the channel variable, and the implications of such, the channel manager could coordinate all strategic components to create the synergy needed to meet customers' needs |
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Term
| Product-channel management interfaces: 3 major areas |
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Definition
New product planning and development
The product life cycle
Strategic product management |
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Term
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Definition
What input, if any, can channel members provide into new product planning?
What has been done to assure that new products will be acceptable to the channel members
Do the new products fit into the present channel members'
Will any special education or training be necessary to prepare the channel members to sell the new products effectively?
Will the product cause the channel members any special problems? |
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Term
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Definition
Solicit ideas for new products
Gather feedback on product size or on packaging
Solicit feedback during the test-marketing or commercialization stage |
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Term
| Member acceptance of new products: determining factors |
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Definition
How the product will sell
Whether the product is easy to stock & display
Whether the product will be profitable |
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Term
| Adding products to the assortment: key considerations |
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Definition
Will existing channel members view the new product as appropriate to add to their assortments?
Will channel members feel competent to handle the new product? |
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Term
| Educating channel members |
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Definition
Manufacturer goal: to sell new products successfully
Method: Educate or train channel members in the product's use and the special features to emphasize in sales presentations |
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Term
| Trouble-free new products |
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Definition
| Increase care in new product planning = decrease new product problems |
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Term
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Definition
Introduction
Growth
Maturity
Decline |
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Term
| Product life cycle will vary according to |
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Definition
How general the product is
The degree of competition
The regulatory environment
etc |
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Term
| The marketing channel will vary with PLC in |
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Definition
The number of intermediaries used
The type of promotional strategy used |
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Term
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Definition
Assure sufficient number of channel members for adequate market coverage
Assure adequate supply on channel members' shelves
Intensity: selective distribution |
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Term
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Definition
Assure sufficient number of channel member inventories for adequate market coverage
Distribution is broadened
Key task: place product in those outlets that are patronized by the customer
Monitor the effects of competitive products on channel member support |
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Term
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Definition
Extra emphasis on motivating channel members to mitigate competitive impact
Maintain intensity of distribution
Investigate possibility for changes in channel structure to extend maturity stage & possibly foster new growth stage |
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Term
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Definition
Phase out marginal channel members
Investigate impact of product deletion on channel members
Also phase out some dealer support programs |
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Term
| Successful product strategies depend on: |
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Definition
Product quality, innovativeness, or technological sophistication
Capabilities of managers overseeing product line
Firm's financial capacity & willingness to provide promotional support
Channel members' role in implementing product strategies |
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Term
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Definition
Product differentiation
Product positioning
Product line expansion & contraction
Trading up & trading down
Product brand strategy
Product service strategy |
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Term
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Definition
Creating a differential product involves getting consumers to perceive a difference
Implications for channel management: channel managers should try to select & help develop members who fit the product image when product differentiation strategy is affected by who will be selling the product
Channel managers should provide retailers with the kind of support needed to properly present the product when this strategy is influenced by how the product is sold at retail |
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Term
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Definition
The manufacturer’s attempt to have consumers perceive the product in a particular way relative to competitive products
Implications for channel management:
Possible interfaces between the product positioning strategy and where the product will be displayed and sold to consumers should be considered before the strategy is implemented. Also merchandise presentation and display.
Elicit retailer support through incentives before attempting to implement strategy.
Maintain backup supply of retailer incentives |
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Term
| Product line expansion & contraction |
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Definition
Manufacturers often engage in both expansion and contraction simultaneously
Implications for channel management:
Difficult to balance channel member satisfaction &
Support for reshaped product lines
Channel members are making increasing demands on
Manufacturers to have the right mix of products
Must:
Incorporate channel member views
Explain rationale for products
Provide advance notice when making changes |
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Term
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Definition
Adding lower-priced products or product lines, or higher-priced products or product lines, to a product mix
Implications for channel management:
Whether existing channel members provide adequate coverage of high-end or low-end market segments to which trade-up or trade-down product is aimed
Whether the channel members have confidence in the manufacturer’s ability to successfully market the trade-up or trade-down product |
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Term
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Definition
When manufacturers sell under both national and private brands, direct competition with channel members may result
Implications for channel management:
National and Private Label Brands: “Battle of the Brands.”
Do not sell both national & private brand versions of
products to the same channel members.
Sell national and private brand versions in different
geographical territories.
Physically vary products enough to minimize direct competition.
Delineate possible scenarios in advance |
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Term
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Definition
It is the role of the marketing channel to provide necessary service along with the product to the final user
>>Importance of service must be made clear to channel members
Manufacturers should provide after-sale service(or make arrangements for it)
by offering it directly at the factory
through their own network of service centers
through channel members through authorized independent service centers
by some combination of the above |
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