BUSML 3250 Chapter 12

value delivery network
a network composed of the company, suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system in delivering customer value
marketing channel (distribution channel)
a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user
channel level
a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer
direct marketing channel
a marketing channel that has no intermediary levels
indirect marketing channel
a marketing channel containing one or more intermediary levels
channel conflict
disagreements among marketing channel members on goals, roles, and rewards – who should do what and for what rewards
horizontal conflict = among firms at the same level of the channel
vertical conflict = between different levels of the same channel
conventional distribution channel
a channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole
vertical marketing system (VMS)
a channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate
corporate VMS
a vertical marketing system that combines successive stages of production and distribution under single ownership–channel leadership is established through common ownership
contractual VMS
a vertical marketing system in which independent firms at different levels of production and distribution join together through contracts
franchise organization
a contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process
administered VMS
a vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties
horizontal marketing system
a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity
multichannel distribution system
a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments
disintermediation
the cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries
marketing channel design
designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives
intensive distribution
stocking the product in as many outlets as possible
exclusive distribution
giving a limited number of dealers the exclusive right to distribute the company’s products in their territories
selective distribution
the use of more than one but fewer than all of the intermediaries that are willing to carry the company’s products
marketing channel management
selecting, managing, and motivating individual channel members and evaluating their performance over time
marketing logistics (physical distribution)
planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit
supply chain management
managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
integrated logistics management
the logistics concept that emphasizes teamwork–both inside the company and among all the marketing channel organizations–to maximize the performance of the entire distribution system
third-party logistics (3PL)
an independent logistics provider that performs any or all of the functions required to get a client’s product to market
Which of the following terms refers to the wholesalers and retailers that form a vital link between the firm and its customers?
downstream partners
In a(n) ________ channel, the same member both produces and distributes a product or service to consumers.
direct
Channel members depend on one another, but they often act alone in their own short-run best interests and often disagree on who should do what and for what rewards. Which of the following best illustrates horizontal conflict?
One Wendy’s franchise in the Chicago region does not contribute to the general Wendy’s advertising pool, but due to its excellent location, it benefits from the increased traffic generated by the ads.
In a channel, one or more independent producers, wholesalers, and retailers is a separate business seeking to maximize its own profits, perhaps even at the expense of the system as a whole. This type of channel is described as what kind of distribution system?
conventional
In a(n) ________, leadership is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members.
administered VMS
For which product would a company use an exclusive distribution strategy?
luxury cars
________ distribution involves the use of more than one but fewer than all of the intermediaries who are willing to carry a company’s products.
selective
Because logistics is complicated and viewed as a hassle by many firms, increasingly a growing number of firms now outsource some or all of their logistics to firms such as Ryder, Penske Logistics, BAX Global, DHL Logistics, FedEx Logistics, and UPS Business Solutions. What are firms like Ryder and FedEx called?
3PL providers
Using ________, retailers can share real-time data on sales and current inventory levels with suppliers.
vendor managed inventory systems
The Bookworm began delivering books directly to customers through mail instead of selling through brick-and-mortar companies. This is an example of ________.
disintermediation
_______ play an important role in matching supply and demand by providing consumers with a broad assortment of products in small quantities.
intermediaries
A________ is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.
channel level
A(n) ________ consists of one or more independent producers, wholesalers, and retailers, each seeking to maximize its own profits, sometimes even at the expense of the system as a whole.
conventional distribution center
The ________ organization is the most common type of contractual relationship.
franchise
________ distribution is a strategy in which producers of convenience products and raw materials stock their products in as many outlets as possible.
intensive
Reusing, recycling, refurbishing, or disposing of broken, unwanted, or excess products returned by consumers or resellers is known as ________.
reverse logistics
________ or smart tag technology helps companies locate a product’s exact position within its supply chain.
RFID
Piggyback and fishyback are forms of what logistics element?
multimodal transportation
Which of the following is a disadvantage of adding new channels in a multichannel distribution system?
decreasing control over the system
From the economic system’s point of view, the role of ________ is to transform the assortments of products made by producers into the assortments wanted by consumers.
marketing intermediaries
In which of the following situations is the channel a direct marketing channel?
consumer stops at dunkin donuts on the way to work to buy a dozen of donuts for the office
A ________ VMS consists of independent firms at different levels of production and distribution who join together through formal agreements to obtain more economies or sales impact than each could achieve alone.
contractual
For which of the following products would the intensive distribution strategy most likely be used?
soft drinks
________ management refers to the management of upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers.
supply chain
In intermodal transportation, which of the following describes the use of both rail and trucks for transportation?
piggyback
________ occurs when product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones.
disintermediation
The Bookworm began delivering books directly to customers through mail instead of selling through brick-and-mortar companies. This is an example of ________.
disintermediation
Companies can design their distribution channels as long or as short as they choose to make products and services available to customers in different ways. There are two players that are always part of the channel that delivers value. What are those two player roles?
producer and the final consumer
Which of the following is a major type of vertical marketing system?
conventional
A(n) ________ system involves a single firm setting up two or more marketing channels to reach one or more customer segments.
multichannel distribution
Which of the following should be a manufacturer’s first step when designing an effective marketing channel?
analyze consumer needs
Why do firms have difficulty accessing potential market areas in developing countries, such as China and India?
inadequate distribution systems
Conflict that occurs between different levels of the same marketing channel is known as ________ conflict.
vertical
Which of the following is an advantage of adding new channels in a multichannel distribution system?
expanding sales and market coverage
A marketing channel that consists of one or more intermediaries is known as a(n) ________ marketing channel.
indirect
A ________ VMS integrates successive stages of production and distribution under single ownership.
corporate
Why do firms have difficulty accessing potential market areas in developing countries, such as China and India?
inadequate distribution systems