Marketing Channels (Ch. 12)

Value Delivery Network
A network composed of the company, suppliers, distributors — customers who partner with each other to improve the performance of the entire system in delivering customer value.
EX: Honda Insight — Honda hires a lot of suppliers and dealers to build the car and provide one final image to consumers
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.
Conventional Distribution Channel
A channel consisting of one or more independent, producers, wholesalers, and retailers — each a separate business seeking to maximize 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 selling system. One channel member owns the others, has contracts with them, or has so much power that they 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 and successive stages of production and distribution through size and power
Horizontal Marketing System
A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
Multi-channel Distribution System
A distribution system in which a single firm sets up two 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 possible
Exclusive Distribution
Giving limited a number of dealers the exclusive right to distribute the companys products in their territories
Selective Distribution
The use of more than one but fewer than all the intermediaries who are willing to carry the company’s product
Marketing Channel Management
Selecting, managing, and motivating individual channel members and evaluating their performance over time
Distribution Center
A large, highly automated warehouse designed to receive goods from various plants/suppliers, take orders, fill them efficiently, and deliver goods to consumers as quickly as possible
Intermodal Transporation
Combining two or more modes of transportation
Intergrated 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 Provider (3PL)
An independent logistics provider that performs any or all of the functions required to get a client’s product to the market