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.
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.
Dividing larger quantities of goods into smaller lots in order to meet the needs of buyers.
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.
Functions of channel intermediaries that make the purchase process easier for customers and manufacturers.
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 customer wants 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.
A comprehensive approach to collecting, organizing, storing, and retrieving a firm’s information assets.
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.
Firms that handle the flow of products from the manufacturer to the retailer or business user.
Channel intermediaries that are not controlled by any manufacturer but instead do business with many different manufacturers and many different customers.
Intermediaries that buy goods from manufacturers (take title to them) and sell to retailers and other B2B customers.
To accept legal ownership of a product and assume the 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.
The number of distinct categories of intermediaries that make up a channel of distribution.
dual or multiple distribution system
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.
A fee paid in exchange for agreeing to place a manufacturer’s products on a retailer’s valuable shelf space.
The process of developing distribution objectives, evaluating internal and external environmental influences on distribution, and choosing a distribution strategy.
The number of intermediaries at each level of the channel.
conventional marketing system
A multiple-level distribution channel in which channel members work independently of one another.
vertical marketing system (VMS)
A channel of distribution in which there is formal cooperation among members at the manufacturing, wholesaling, and retailing levels.
A vertical marketing system in which channel members remain independent but voluntarily work together because of the power of a single channel member.
A vertical marketing system in which a single firm owns manufacturing, wholesaling, and retailing operations.
A vertical marketing system in which cooperation is enforced by contracts (legal agreements) that spell out each member’s rights and responsibilities and how they will cooperate.
A group of retailers that establishes a wholesaling operation to help them compete more effectively with the large chains.
A contractual vertical marketing system that includes a franchiser (a manufacturer or a service provider) who allows an entrepreneur (the franchisee) to use the franchise name and marketing plan for a fee.
horizontal marketing system
An arrangement within a channel of distribution in which two or more firms at the same channel level work together for a common purpose.
Selling a product through all suitable wholesalers or retailers that are willing to stock and sell the product.
Selling a product only through a single outlet in a particular region.
Distribution using fewer outlets than intensive distribution but more than exclusive distribution.
channel leader of channel captain
The dominant firm that controls the channel.
The ability of one channel member to influence, control, and lead the entire channel based on one or more sources of power.
Occurs when producers, wholesalers, and retailers depend on one another for success.
Incompatible goals, poor communication, and disagreement over roles, responsibilities, and functions among firms at different levels of the same distribution channel that may threaten a manufacturer’s distribution strategy.
The process of designing, managing, and improving the movement of products through the supply chain. Logistics includes purchasing, manufacturing, storage, and transport.
Includes product returns, recycling and material reuse, and waste disposal.
The series of activities that occurs between the time an order comes into the organization and the time a product goes out the door.
enterprise resource planning (ERP) systems
A software system that integrates information from across the entire company, including finance, order fulfillment, manufacturing, and transportation, and then facilitates sharing of the data throughout the firm.
Storing goods in anticipation of sale or transfer to another member of the channel of distribution.
A warehouse that stores goods for short periods of time and that provides other functions, such as breaking bulk.
The moving of products into, within, and out of warehouses.
The mode by which products move among channel members.
Activities to ensure that goods are always available to meet customers’ demands.
radio frequency identification (RFID)
Product tags with tiny chips containing information about the item’s content, origin, and destination.
Zero-inventory situations resulting in lost sales and customer dissatisfaction.
just in time (JIT)
Inventory management and purchasing processes that manufacturers and resellers use to reduce inventory to very low levels and ensure that deliveries from suppliers arrive only when needed.
All the activities necessary to turn raw materials into a good or service and put it in the hands of the consumer or business customer.
inventory turnover or inventory turns
The number of times a firm’s inventory completely cycles through during a defined time frame.
supply chain management
The management of flows among firms in the supply chain to maximize total profitability.
A practice in which a company contracts with a specialist firm to handle all or part of its supply chain operations.