Ch. 11 Textbook

What is meant by “Place” in regards to the 4 p’s of Marketing?
Making goods and services available in the right quantities, at the right locations, when customers want them.
What is a channel of distribution?
Any series of firms or individuals who participate in the flow of products from producer to final user or consumer.
What aspect of a product suggests place objectives?
Product class- sorted by consumers’ urgency to have needs satisfied and willingness to seek information, shop, and compare.
Why might a firm want to use direct distribution?
Firm can control entire marketing job, may be able to serve customers more effectively and for less money than intermediaries, suitable intermediaries might not be available, cuts out the competition of wholesalers and retailers.
What are the benefits of direct contact with customers?
Firm is more aware of changes in customer attitudes, it is easier to adjust marketing mix quickly, direct contact with sales employees.
What types of products are usually sold direct?
Business to business, service products, some consumer products via website, and products sold by direct salespeople (although they are usually not employed by the producer).
How is direct distribution different than direct marketing?
Direct marketing refers to the promotional area, not Place decisions.
Under what circumstances can indirect channels be the best form of distribution?
If customers prefer to shop for certain products at specific places, are spread throughout several geographic areas, and/or if firm has limited financial resources and wants to maintain flexibility.
What role do specialists play in channel distribution?
They provide information to bring buyers and sellers together, and adjust discrepancies in production and separation in location.
What is a discrepancy of quantity?
It is the difference between the quantity of products it is economical for a producer to make and the quantity that final consumers or users normally want.
What is a discrepancy of assortment?
It is the difference between the lines a typical producer makes and the assortment final consumers or users want.
How do channel specialists adjust for these discrepancies?
They use regrouping activities to adjust the quantities or assortments of products handled at each level in a channel of distribution.
What are the 4 types of regrouping activities?
Accumulating, bulk-breaking, sorting, and assorting.
What is accumulating?
Collecting products from many small producers to adjust for quantity discrepancies and get the lowest transporting and/or processing rates (important in agriculture and professional services).
What is bulk-breaking?
Dividing larger quantities into smaller quantities as products get closer to the final market in order to adjust for discrepancies in quantity.
What is sorting?
Separating products into grades and qualities desired by different target markets to adjust for discrepancies in assortment.
What is assorting?
Putting together a variety of products to give a target what it wants and adjust for discrepancies in assortment (usually done by wholesalers and retailers).
How does sharing a product-market commitment benefit the whole distribution channel?
If all members focus on the same target market at the end of the channel and share marketing functions appropriately, they are better able to compete for customers’ business.
What are the disadvantages of traditional channel systems?
Members make little/no effort to cooperate and only does what is in its best interest. Conflict often gets in the way, so channel specialization is more efficient.
What are the two types of conflict that can occur in distribution channels?
Vertical conflicts between firms at different levels of the channel and horizontal conflicts between firms at the same level of the channel.
What is the role of a channel captain?
A manager who helps direct the activities of a whole channel and tries to avoid or solve channel conflicts. However, most traditional channels don’t have a recognized captain.
What are the two groups that can be channel captains?
Producers and intermediaries.
How does a producer-led channel operate?
Producer selects target market, develops product, sets price structure, does some promotion, and develops place set up. Intermediaries then finish promotion jobs in their respective places.
How does a retailer-led (intermediaries) channel operate?
Firms analyze customer needs then seek out producers who can provide products at reasonable prices. Some retailers act like producers by specifying marketing mix for a product and delegating production to a factory.
What is a vertical marketing system?
Systems in which the whole channel focuses on the same target market at the end of the channel. Many marketers are moving away from traditional channels and towards this.
What are the 3 types of vertical marketing systems?
Corporate, administered, and contractual.
How do corporate channel systems work?
Corporation owns the entire channel, often formed by vertical integration, and can shorten channels because corporation is usually handling everything and there is complete cooperation.
How do administered channel systems work?
The channel members informally agree to cooperate with each other, but control is maintained by economic power and leadership.
How do contractual channel systems work?
The channel members agree by contract to cooperate.
What is ideal market exposure?
The idea that a product needs to be available widely enough to satisfy target customers’ needs but not exceed them, otherwise marketing spending is being wasted.
What are the 3 types of distribution that can help achieve the ideal market exposure?
Intensive, selective, or exclusive.
What is intensive distribution and when is it used?
Selling a product through all responsible and suitable wholesalers/retailers who will stock or sell the product, commonly used for convenience products and business supplies.
What is selective distribution and when is it used?
Selling through only those intermediaries who will give the product special attention, often used to gain some of the advantages of exclusive distribution while still achieving fairly widespread market coverage.
What is exclusive distribution and when is it used?
Selling through only one intermediary in a particular geographic area, often used to reduce costs and get better partners.
What is legal and illegal in terms of limiting market exposure?
Horizontal arrangements among competitors are illegal because that directly reduces competition and could harm customers. With vertical arrangements (between producer and intermediaries) it depends on how competition is affected.
What is a multichannel distribution system?
When a producer uses several competing channels to reach the same target market, usually using several intermediaries in addition to selling directly.
What are reverse channels?
Channels used to retrieve products that customers no longer want. New laws require reverse channels in some industries, and they can be more sustainable and even profitable.
What are the five basic ways to enter an international market?
Exporting, licensing, management contracting, joint ventures, and direct investments (investment, risk, and control of marketing mix generally increases).
What is exporting?
Selling some of what the firm produces to foreign markets, little change is made to product.
What is licensing?
Selling the right to use some process, trademark, patent, or other right for a fee or royalty. Risk is taken on by licensee and they do most of the marketing planning.
What is management contracting?
The seller provides only management and marketing skills and others own the production and distribution facilities. So here firms have the advantage of low level of commitment to fixed facilities.
What is a joint venture?
A domestic firm enters a new partnership with a foreign firm, so there is a high level of involvement and cooperation.
What is a direct investment?
A parent firm has a division or owns a separate subsidiary firm in a foreign market. This is the greatest risk and investment, but firm has highest level of control of marketing here.