| A | B |
|---|
| Marketing Channel (channel of distribution) | a set of interdependent organizations that ease the transfer og ownership as products move from producer to business user/consumer |
| Channel Members | all parties in the marketing chain that negotiate with one another (from producer to consumer) |
| Supply Chain | the connected chain of all the business entities, both internal and external to the company, that perform or support the logistics function |
| Supply Chain Mangement | The seamless mangement of all activities through which raw materials are transformed into products and made available to final consumers |
| Specializaton and Division of Labor | Breaking down of a complex task into smaller, simpler ones and allocating them to specialists that will increase efficiency and lower average production costs |
| Descrepancy of Quantity | the difference between the amount of product produced and the amount of product the end user wants to by (eg. Pillsbury can efficiently make 5000 boxes of pancake mix a day, even Dee could not eat that many pancakes in a year) |
| Discrepancy of Assortment | the lack of all the items a consumer needs to recieve full satisfaction from a product or products (eg. Pillsbury sells pancake mix, but it does not sell plates, forks, butter, eggs, milk, and other things people may consume pancakes with) |
| Temporal Discrepancy | a situation that occurs when a product is produced but a consumer is not ready to buy it (textbook manufactures print books all year, but make most of their sales in late August and Early January) |
| Spatial Discrepancy | The difference between the location of a producer and the location of widely scattered markets (eg. Egglands best eggs are harvested in a few chicken farms, but a consmer three states from the nearest farm is not going to drive there for a dozen eggs, so they need an intermediary like Kroger) |
| Contact Efficiency | Using an intermediary to decrease the number of contacts consumers must make (eg. Buying a T.V.: without an intermediary, you would have to contact Visio, Sony, JVC, and Toshiba individually to compare price; With an intermediary, like BestBuy, you go to one place and thus you number of contacts is reduced from 4 to 1) |
| Taking Title | (in reference to intermediaries) ownership of merchandise and control of the terms of sale |
| Retailers | a channel intermediary that sells mainly to consumers (they take title) |
| Determinants of the Type of Intermediary Used | Product Characteristics; Buyer Characteristics; Market Characteristics |
| Product Characteristics | (Intermediary Determinant) Is the product customized (such as a vacation requiring a travel agent) or is it standardized (such as bubble gum requiring a wholesaler to ship to retailers) |
| Buyer Characteristics | (Intermediary Determinant) How often the product is purchased and how long the buyer is willing to wait to get it (eg. at the start of the semester, a student will wait 5 days for chegg to ship a textbook, but if he waits until the night before the test to buy, he will not wait on chegg and will hit the bookstore) |
| Market Characteristics | (Intermediary Determinant) How many buyers are in the market and are they spread out (eg. gum has a wide market and requires a wholesaler who can reach every retailer; a person selling their home has a very local market and can use a local real estate agent) |
| Three Functions of Intermediaries | Transactional; Logistical; Facilitating (individual channel members may be added or eliminated, someone will perform these functions always) |
| Transactional Functions | (function of Intermediaries) Contacting and Promoting; Negotiation; Risk Taking |
| Logistical Functions | (function of Intermediaries) Physically Distributing; Storing; Sorting (sorting out, accumulating, allocating, assorting) |
| Facilitating Functions | (function of Intermediaries) Researching; Financing |
| Direct Channel (Industrial and Consumer) | (distribution channel) Pro ducer ---> Consumers |
| Consumer Retailer Channel | (distribution channel) Producer ---> Retailer ---> Consumers |
| Consumer Wholesaler Channel | (distribution channel) Producer ---> Wholesaler ---> Retailer ---> Consumers |
| Consumer Agent/Broker Channel | (distribution channel) Producer ---> Agent or Broker ---> Wholesaler ---> Retailer ---> Consumer (note that the Agent/Broker does not take title) |
| Industrial Distributor Channel | (distribution channel) Producer ---> Industrial Distributer ---> Industrial User |
| Industrial Agent/Broker Channel | (distribution channel) Producer ---> Agent/Broker ---> Industrial User |
| Indstrial Agent/Broker-Industrial Distributer Channel | (distribution channel) Producer ---> Agent/Broker ---> Industrial Distributor ---> Industrial User |
| Dual Distribution (Multiple Distribution) | when a producer selects 2 or more channels to distribute the same product (L.L. Bean sells online and in a catalog) |
| Nontraditional Channels | Avoid the use of intermediaries through new or unorthodox practiced (internet, infomercials, mail-order channels) |
| Strategic Channel Alliances | a cooperative agreement between businesses to use the other's already established distribution channel (eg. Starbucks joining with Pepsi to produce and bottle Frappuccino and DoubleShot) |
| "Total Visibility" | (applies to Supply Chain Management) The idea that, by visualizing the entire supply chain, MGMT can max. efficiency at each level that will create a customer driven supply system that can immediately respond to changes in S & D |
| Factors Affecting Channel Choice | Market Factors, Product Factors, Producer Factors |
| Market Factors | (Channel Choice Factor) Who are the potential customers? What do they Buy? Where do they buy? When do they Buy? How do they buy? |
| Product Factors | (Channel Choice Factor) Is the product complex (shorter channel) or relatively simple (longer channel); Is it perishable (short channel) |
| Producer Factors | (Channel Choice Factor) Several Factors: Larger firms with well established financial and managerial systems are able to afford more direct channels while weaker firms must rely on intermediaries for distribution; Companies with many related product lines can sell more directly; companies desiring to control price or image (Prada) tend to have more direct channels |
| Levels of Distribution Intensity | Intensive; Selective; Exclusive |
| Intensive Distribution | (Level of Distribution Intensity) the manufacturer strives to have the product available in every outlet where a consumer may want to buy |
| Selective Distribution | (Level of Distribution Intensity) screening dealers to eliminate all but a few in a single area; often to achieve the image of a superior product |
| Exclusive Distribution | (Level of Distribution Intensity) establishes one or a small few dealers within a given area (Porsche) |
