Marketing Ch. 11 Section 1 – Types of Distribution Channels and Wholesale Intermediaries

Physical Distribution
the activities that move finished goods from manufacturers to final customers, including order processing, warehousing, materials handling, transportation, and inventory control.
Channel of distribution
the series of firms or individuals that facilitates the movement of a product from the producer to the final customer.
Channel intermediaries
firms or individuals such as wholesalers, agents, brokers, or retailers who help move a product from the producer to the consumer or business user. An older term for intermediaries is middlemen.
Break bulking
dividing larger quantities of goods into smaller lots in order to meet the needs of buyers.
Create assortments
to provide a variety of products in one location to meet the needs of buyers
Transportation and storage
Occurs when retailers and other channel members move the goods from the production point to other locations where they can hold them until consumers want them.
facilitating functions
functions of channel intermediaries that make the purchase process easier for customers and manufacturers
Risk-taking functions
the chance retailers take on the loss of a product when they buy a product from a manufacturer because the product sits on the shelf because no customers want it
communication and transaction functions
happens when channel members develop and execute both promotional and other types of communication among members of the channel
Disintermediation (of the channel of distribution)
the elimination of some layers of the channel of distribution in order to cut costs and improve the efficiency of the channel
knowledge management
a comprehensive approach to collecting, organizing, storing, and retrieving a firm’s information assets
intranet
An internal corporate communication network that uses internet technology to link company departments, employees, and databases
online distribution piracy
the theft and unauthorized repurposing of intellectual property via the internet
wholesaling intermediaries
firms that handle the flow of products from the manufacturer to the retailer or business user
independent intermediaries
channel intermediaries that are not controlled by any manufacturer but instead do business with many different manufacturers and many different customers.
merchant wholesalers
intermediaries that buy goods from manufacturers (take title to them) and sell to retailers and other B2B customers
take title
to accept legal ownership of a product and assume that accompanying rights and responsibilities of ownership
full-service merchant wholesalers
wholesalers that provide a wide range of services for their customers, including delivery, credit, product-use assistance, repairs, advertising, and other promotional support.
limited-service merchant wholesalers
wholesalers that provide fewer services for their customers
merchandise agents or brokers
channel intermediaries that provide services in exchange for commissions but never take title to the product.
channel levels
the number of distinct categories of intermediaries that make up a channel of distribution
dual or multiple distribution systems
a system where producers, dealers, wholesalers, retailers, and customers participate in more than one type of channel
hybrid marketing system
a marketing system that uses a number of different channels and communication methods to serve a target market
slotting allowance
a feed paid in exchange for agreeing to place a manufacturer’s products on a retailer’s valuable shelf space