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MARKETING CH 12

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VERTICAL MARKETING SYSTEM (VMS)
CONSISTS OF PRODUCERS, WHOLESALERS, & RETAILERS ACTING AS A UNIFIED SYSTEM; CAN BE DOMINATED BY ANY ENTITY; CAME INTO BEING TO CONTROL CHANNEL BEHAVIOR & MANAGE CHANNEL CONFLICT
CORPORATE VMS
COMBINES SUCCESSIVE STAGES OF PRODUCTION & DISTRIBUTION UNDER SINGLE OWNERSHIP
VERTICAL CONFLICT
CONFLICTS BETWEEN DIFFERENT LEVELS OF THE SAME CHANNEL
3 MAJOR TYPES OF VMS
1.CORPORATE
2.CONTRACTUAL
3.ADMINISTERED
CONTRACTUAL VMS
CONSISTS OF INDEPENDENT FIRMS AT DIFFERENT LEVELS OF PRODUCTION & DISTRIBUTION WHO JOIN TOGETHER THROUGH CONTRACTS TO OBTAIN MORE ECONOMIES OR SALES IMPACT THAN EACH COULD ACHIEVE ALONE
CONVENTION DISTRIBUTION CHANNELS
LOOSE COLLECTIONS OF INDEPENDENT COMPANIES; EACH SHOWING LITTLE CONCERN FOR OVERALL CHANNEL PERFORMANCE; LACK STRONG LEADERSHIP & HAVE BEEN TROUBLED BY DAMAGING CONFLICT & POOR PERFORMANCE
4 MAJOR QUESTIONS REGARDING DISTRIBUTION CHANNELS
1.WHAT IS THE NATURE?
2.HOW DO CHANNEL FIRMS ORGANIZE TO DO THE WORK OF THE CHANNEL?
3.WHAT PROBLEMS DO COMPANIES FACE IN DESIGNING CHANNELS?
4.WHAT ROLE DOES PHYSICAL DISTRIBUTION PLAY IN ATTRACTING & SATISFYING CUSTOMERS?
WHY DO PRODUCERS USE INTERMEDIARIES?
1.CONTACTS
2.EXPERIENCE
3.SPECIALIZATION
4.SCALE OF OPERATION
FUNCTIONS OF THE MARKETING CHANNEL IN COMPLETING TRANSACTIONS
1.INFORMATION
2.PROMOTION
3.CONTACT
4.MATCHING
5.NEGOTIATION
FUNCTIONS OF THE MARKETING CHANNEL IN FULFILLING COMPLETED TRANSACTIONS
1.PHYSICAL DISTRIBUTION
2.FINANCING
3.RISK TAKING
CHANNEL LEVEL
EACH LAYER OF MARKETING INTERMEDIARIES THAT PERFORMS SOME WORK IN BRINGING THE PRODUCT CLOSER TO THE FINAL BUYER
DIRECT MARKETING CHANNEL
NO INTERMEDIARY LEVELS, CONSISTS OF A COMPANY SELLING DIRECTLY TO CONSUMERS
INDIRECT MARKETING CHANNEL
CHANNEL CONTAINING ONE OR MORE INTERMEDIARY LEVELS
CONSUMER DISTRIBUTION CHANNELS
1.DIRECT MARKETING CHANNEL
2.1 INTERMEDIARY LEVEL (RETAILER)
3.2 INTERMEDIARY LEVELS (WHOLESALER & RETAILER)
4.3 INTERMEDIARY LEVELS (WHOLESALER, JOBBER, RETAILER)
TYPES OF FLOWS
1.PHYSICAL FLOW OF PRODUCTS
2.FLOW OF OWNERSHIP
3.PAYMENT FLOW
4.INFORMATION FLOW
5.PROMOTION FLOW
CHANNEL CONFLICT
DISAGREEMENT AMONG MARKETING CHANNEL MEMBERS ON GOALS & ROLES--WHO SHOULD DO WHAT & FOR WHAT REWARDS
HORIZONTAL CONFLICT
OCCURS AMONG FIRMS AT THE SAME LEVEL OF THE CHANNEL
3 TYPES OF CONTRACTUAL VMSs
1.WHOLESALER-SPONSORED VOLUNTARY CHAINS
2.RETAILER COOPERATIVES
3.FRANCHISE ORGANIZATIONS
WHOLESALER SPONSORED VOLUNTARY CHAINS
WHOLESALERS ORGANIZE VOLUNTARY CHAINS OF INDEPENDENT RETAILERS TO HELP THEM COMPETE WITH LARGE CHAIN ORGANIZATIONS
RETAILER COOPERATIVES
RETAILERS ORGANIZE A NEW JOINTLY OWNED BUSINESS TO CARRY ON WHOLESALING & POSSIBLY PRODUCTION
3 FORMS OF FRANCHISES
1.MANUFACTURER-SPONSORED RETAILER FRANCHISE SYSTEM
2.MANUFACTURER-SPONSORED WHOLESALER FRANCHISE SYSTEM
3.SERVICE-FIRM-SPONSORED RETAILER FRANCHISE SYSTEM
ADMINISTERED VMS
COORDINATES SUCCESSIVE STAGES OF PRODUCTION & DISTRIBUTION THROUGH THE SIZE & POWER OF 1 OF THE PARTIES, LEADERSHIP IS ASSUMED BY 1 DOMINANT CHANNEL MEMBERS
HORIZONTAL MARKETING SYSTEM
2 OR MORE COMPANIES AT 1 LEVEL JOIN TOGETHER TO FOLLOW A NEW MARKETING OPPORTUNITY
HYBRID MARKETING CHANNELS
(MULTICHANNEL DISTRIBUTION SYSTEMS)OCCURS WHEN A SINGLE FIRM SETS UP 2 OR MORE MARKETING CHANNELS TO REACH 1 OR CUSTOMER SEGMENTS
DISINTERMEDIATION
THE ELIMINATION OF A LAYER OF INTERMEDIARIES FROM A MARKETING CHANNEL OR THE DISPLACEMENT OF TRADITIONAL RESELLERS BY RADICALLY NEW TYPES OF INTERMEDIARIES
CUSTOMER VALUE DELIVERY SYSTEMS
ANOTHER WAY TO THINK OF MARKETING CHANNELS, IN WHICH EACH CHANNEL ADDS VALUE FOR THE CUSTOMER
IDENTIFYING MAJOR ALTERNATIVES
1.TYPES OF INTERMEDIARIES
2.NUMBER OF INTERMEDIARIES
3.RESPONSIBILITIES OF EACH CHANNEL MEMBER
TYPES OF CHANNEL MEMBERS
1.COMPANY SALES FORCE
2.MANUFACTURER'S AGENCY
3.INDUSTRIAL DISTRIBUTORS
3 NUMBER OF MARKETING INTERMEDIARIES STRATEGY
1.INTENSIVE DISTRIBUTION
2.EXCLUSIVE DISTRIBUTION
3.SELECTIVE DISTRIBUTION
INTENSIVE DISTRIBUTION
STRATEGY IN WHICH COMPANIES STOCK THEIR PRODUCTS IN AS MANY OUTLETS AS POSSIBLE
EXCLUSIVE DISTRIBUTION
WHEN THE SELLER ALLOWS ONLY CERTAIN OUTLETS TO CARRY ITS PRODUCTS
SELECTIVE DISTRIBUTION
USE OF MORE THAN 1, BUT FEWER THAN ALL, OF THE INTERMEDIARIES WHO ARE WILLING TO CARRY A COMPANY'S PRODUCTS
CHANNEL ALTERNATIVE EVALUATION CRITERIA
1.ECONOMIC CRITERIA
2.CONTROL ISSUES
3.ADAPTIVE CRITERIA
ECONOMIC CRITERIA
WHERE A COMPANY COMPARES THE LIKELY PROFITABILITY OF DIFFERENT CHANNEL ALTERNATIVES
EXCLUSIVE DEALING
WHEN THE SELLER REQUIRES THAT THESE DEALERS NOT HANDLE COMPETITORS PRODUCTS
EXCLUSIVE TERRITORIAL AGREEMENTS
WHERE THE PRODUCER MAY AGREE NOT TO SELL TO OTHER DEALERS IN A GIVEN AREA OR THE BUYER MAY AGREE TO SELL ONLY IN ITS OWN TERRITORY
PHYSICAL DISTRIBUTION
(MARKETING LOGISTICS) INVOLVES PLANNING, IMPLEMENTING, & CONTROLLING THE PHYSICAL FLOW OF MATERIALS & FINAL GOODS FROM POINTS OF ORIGIN TO POINTS OF CONSUMPTION TO MEET CUSTOMER REQUIREMENTS AT A PROFIT
MARKET LOGISTICS THINKING
STARTS WITH THE MARKETPLACE & WORKS BACKWARD TO THE FACTORY
OUTBOUND DISTRIBUTION
MOVING PRODUCTS FROM THE FACTORY TO CUSTOMERS
INBOUND DISTRIBUTION
MOVING PRODUCTS & MATERIALS FROM SUPPLIERS TO THE FACTORY
2 PROBLEMS OF MARKET LOGISTICS
1.OUTBOUND DISTRIBUTION
2.INBOUND DISTRIBUTION
SUPPLY CHAINS
VALUE-ADDED FLOWS FROM SUPPLIERS TO FINAL USERS
MAJOR LOGISTICS FUNCTIONS
1.ORDER PROCESSING
2.WAREHOUSING
3.INVENTORY MANAGEMENT
4.TRANSPORTATION
STORAGE WAREHOUSES
STORE GOODS FOR MODERATE TO LONG PERIODS
DISTRIBUTION CENTERS
DESIGNED TO MOVE GOODS RATHER THAN JUST STORE THEM
5 TRANSPORTATION MODES
1.RAIL
2.WATER
3.TRUCK
4.AIR
5.PIPELINE
INTERMODAL TRANSPORTATION
COMBINING 2 OR MORE MODES OF TRANSPORTATION
PIGGYBACK
RAIL & TRUCKS
FISHYBACK
WATER & TRUCKS
TRAINSHIP
WATER & RAIL
AIRTRUCK
AIR & TRUCKS
INTERGRATED LOGISTICS MANAGEMENT
LOGISTICS CONCEPT THAT EMPHASIZES TEAMWORK, BOTH INSIDE THE COMPANY & AMONG ALL THE MARKETING CHANNEL ORGANIZATIONS, TO MAXIMIZE THE PERFORMANCE OF THE DISTRIBUTION SYSTEM
CHANNEL PARTNERSHIPS
1.CROSS-FUNCTIONAL, CROSS-COMPANY TEAMS
2.SHARED PROJECTS
3.INFORMATION SHARING
4.CONTINUOUS INVENTORY REPLENISHMENT SYSTEMS
REASONS FOR THIRD-PARTY LOGISTICS
1.PROVIDERS CAN GET PRODUCT TO MARKET MORE EFFICIENTLY & AT LOWER COST THAN CLIENTS
2.OUTSOURCING LOGISTICS FREES A COMPANY TO FOCUS ON ITS CORE BUSINESS
3.INTEGRATED LOGISTICS COMPANIES UNDERSTAND INCREASINGLY COMPLEX LOGISTICS ENVIRONMENTS
FRANCHISE ORGANIZATIONS
A CONTRACTUAL VMS IN WHICH A CHANNEL MEMBER, CALLED A FRANCHISER, LINKS SEVERAL STAGES IN THE PRODUCTION-DISTRIBUTION PROCESS
DISTRIBUTION CHANNEL
A SET OF ORGANIZATIONS INVOLVED IN THE PROCESS OF MAKING A PRODUCT AVAILABLE FOR CONSUMPTION BY THE CONSUMER OR BUSINESS USER
THIRD PARTY LOGISTICS PROVIDERS
AN INDEPENDENT LOGISTICS PROVIDER THAT PERFORMS ANY OR ALL OF THE FUNCTIONS REQUIRED TO GT THEIR CLIENTS' PRODUCT TO MARKET
REASONS FOR GREATER EMPHASIS ON LOGISTICS
1.CUSTOMER SERVICE & SATISFACTION HAVE BECOME THE CORNERSTONES OF MARKETING STRATEGY (DISTRIBUTION IS IMPORTANT ELEMENT)
2.LOGISTICS IS A MAJOR COST ELEMENT FOR MOST COMPANIES
3.EXPLOSION IN PRODUCT VARIETY HAS CREATED A NEED FOR IMPROVED LOGISTICS MANAGEMENT
4.IMPROVEMENTS IN INFORMATION TECHNOLOGY HAVE CREATED OPPORTUNITIES FOR MAJOR GAINS IN DISTRIBUTION EFFICIENCY
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