Chapter 15- Distributing Products

administered distribution system
a distribution system in which producers manage all of the marketing functions at a retail level
agens/brokers
marketing intermediaries who bring buyers and sellers together and assist in negotiating an exchange but don’t take title to the goods
cash-and-carry wholesalers
wholesalers that serve mostly smaller retailers with a limited assortment of products
channel of distribution
a whole set of marketing intermediaries, such as agents, brokers, wholesalers, and retailers, that join together to transport and store goods in their path (or channel) from producers to consumers
contractual distribution system
a distribution system in which members are bound to cooperate though contractual agreements
corporate distribution system
a distribution system in which all of the organizations in the channel of distribution are owned by one firm
direct marketing
any activity that directly links manufacturers or intermediaries directly to the consumer
direct selling
selling to consumers in their homes or where they work
drop shippers
wholesalers that solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer
electronic retailing
selling goods and services to ultimate consumers (e.g., you and me) over the Internet
exclusive distribution
distribution that sends products to only one retail outlet in a given geographic area
freight forwarder
an organization that puts many small shipments together to create a single large shipment that can be transported cost-effectively to the final destination
inbound logistics
the area of logistics that involves bringing raw materials, packaging, other goods and services, and information from suppliers to producers
information utility
adding value to products by opening two-way flows of information between marketing participants
intensive distribution
distribution that puts products into as many retail outlets as possible
intermodal shipping
the use of multiple modes of transportation to complete a single long-distance movement of freight
logistics
the marketing activity that involves 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
marketing intermediaries
organizations that assist in moving goods and services from producers to businesses (B2B) and from businesses to consumers (B2C)
materials handling
the movement of goods within a warehouse, from warehouses to the factory floor, and from the factory floor to various workstations
merchant wholesalers
independently owned firms that take title to the goods they handle
outbound logistics
the area of logistics that involves managing the flow of finished products and information to business buyers and ultimate consumers (people like you and me)
place utility
adding value to products by having them where people want them
possession utility
doing whatever is necessary to transfer ownership from one party to another, including providing credit, delivery, installation, guarantees, and follow-up service
rack jobbers
wholesalers that furnish racks or shelves full of merchandise to retailers, display products, and sell on consignment
retailer
an organization that sells to ultimate consumers
reverse logistics
the area of logistics that involves bringing goods back to the manufacturer because of defects or for recycling materials
selective distribution
distribution that send products to only a preferred group of retailers in the area
service utility
adding value by providing fast, friendly service during and after the sake and by teaching customers how to best use the products over time
social commerce
a form of electronic commerce that involves using social media, online media that supports social interaction, and user contributions to assist in the online buying and selling of products and services
supply chain (value chain)
the sequence of linked activities that must be performed by various organizations to move goods from the sources of raw materials to ultimate consumers
supply-chain management
the process of managing the movement of raw materials, parts, works in progress, finished goods, and related information through all the organizations involved in the supply chain; managing the return of such goods, if necessary; and recycling materials when appropriate
telemarketing
the sale of goods and services by telephone
time utility
adding value to products by making them available when they’re needed
utility
in economics the want-satisfying ability, or value, that organizations add to goods or services when the products are made more useful or accessible to consumers than they were before
wholesaler
a marketing intermediary that sells to other organizations
What is a channel of distribution, and what intermediaries participate in it?
A channel of distribution consists of a whole set of marketing intermediaries, such as agents, brokers, wholesalers, and retailers, that joint together to transport and store goods in their path (or channel) from producers to consumers.
Why do we need intermediaries? Illustrate how intermediaries create exchange efficiency.
Intermediaries perform certain marketing tasks–such as transporting, storing, selling, advertising, and relationship building–faster and more cheaply that most manufacturers could. Channels of distribution ensure communication flows and the flow of money and title to goods. They also help ensure that the right quantity and assortment of goods will be available when and where they are needed.
How would you defend intermediaries to someone who said getting rid of them would save consumers millions of dollars?
Marketing intermediaries can be eliminated, but their activities can’t. Without wholesalers and retailers, consumers would have to perform the tasks of transporting and storing goods, finding suppliers, and establishing communication with them. intermediaries add costs to products, but these costs are usually more than offset by the values they create.
Can you give examples of the utilities intermediaries create and how they provide them?
A retail grocer may cut or trim meat, providing some form utility. But marketers are more often responsible for the five other utilities. They provide the time utility by having goods available when people want them, and the palace utility by having goods available where people want them. Possession utility makes it possible for people to own things and includes credit, delivery, installation, guarantees, and anything else that completes the sale. Marketers also inform consumers of the availability of goods and services with advertising, publicity, and other means. That provides information utility. Finally, marketers provide fast, friendly, and efficient service during and after the sale (service utility).
Describe the activities of rack robbers and drop shippers.
Merchant wholesalers are independently owned firms that take title to the goods they handle. Rack jobbers furnish racks or shelves full of merchandise to retailers, display products, and sell on consignment. Cash-and-carry wholesalers serve mostly small retailers with a limited assortment of products. Drop shippers solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer.
What kinds of products would call for each of the different distribution strategies: intensive, selective, and exclusive?
Marketers use three basic strategies: intensive (putting products in as many places as possible) such as candy and magazines, selective (choosing only a few stores in a chosen market) such as furniture and clothing, and exclusive (using only one store in each market area) such as luxury or specialty goods.
What four systems have evolved to tie together members of the channel of distribution?
The four distribution systems that tie firms together are (1) corporate systems, in which all organizations in the channel are owned by one firm; (2) contractual systems, in which members are bound to cooperate though contractual agreements; (3) administered systems, in which all marketing functions at the retail level are managed by manufactures; and (4) supply chains, in which the various firms in the supply chain are linked electronically to provide the most efficient movement of information and goods possible.
How does logistics differ from distribution?/What are inbound logistics, outbound logistics, and reverse logistics?
Distribution generally means transportation. Logistics is more complex. Inbound logistics brings raw materials, packaging, other foods and searches, and information from suppliers and producers. Materials handling is the moving of goods from warehouses to the factory floor and to various workstations. Outbound logistics manages the flow of finished products and information to business buyers and ultimate consumes (people like you and me). Reverse logistics brings goods back to the manufacturer because of defects or for recycling materials.
What is a wholesaler?
A wholesaler is a marketing intermediary that sells to organizations and individuals but not to final consumers.
What is a retailer?
A retailer is an organization that sells to ultimate consumers. Marketers develop several strategies based on retailing.
What are some forms of nonstore retailing?
Nonstore retailing includes electronic retailing; telemarketing (marketing by phone); vending machines, kiosks, and carts (marketing by putting products in convenient locations, such as in the halls of shopping centers); direct selling (marketing by approaching consumers in their homes or places of work); multilevel marketing (marketing by setting up a system of salespeople who recruit other salespeople and help them to sell directly to customers); and direct marketing (direct mail and catalog sales). Telemarketing and online marketing are also forms of direct marketing.
What is logistics?
Logistics includes planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet consumer requirements at a profit.
What are the various transportation modes?
Transportation modes include rail (for heavy shipments within the country or between bordering countries); trucks (for getting goods directly to consumers); ships (for slow, inexpensive movement of goods, often internationally); pipelines (for moving water, oil, and other such goods); and airplanes (for shipping goods quickly).
What is intermodal shipping?
Intermodal shipping is using multiple modes of transportation–highway, air, water, rail–to complete a single long distance movement of freight.
What are the different kinds of warehouses?
A storage warehouses stores products for a relatively long time. Distribution warehouses are used to gather and reattribute products.