Mktg 325

supply chain
set of institutions that move goods from the point of production to the point of consumption
supply chain consists of 5 things
o Consumer behavior
o Competitive behavior
o Socioeconomic environment
o Technological environment
o Legal and ethic enviroment
logistics network
consists of all the firms throughout the supply chain that are involved in moving physical inventory from it intitial source to the retail store
logistics inventory
physical inventory that is in the logistics network
• Total cost of business- process when costs beyond simpoly producing a product are considered and includes all of the direct and indirect costs of manufacturing, distributing, and marketing a product
• Primary marketing institutions
channel memebers who take title to the goodsa s they move through the marketing channel.
• Facilitating marketing insititutions-
do not actuyally take title but assist in the marketing process by specializing in the performance of certain marketing functions
o Manufacturers
o Wholesalers
o Retailers
Drop-ship retailer
– retailer does not hold inventory, but instead transmits customers orders and shipping details to either to manufacturer or whole sales
public warehouse
– facility that stores goods for safekeeping for any owner in return for a fee, usually based on space occupied
third party logistics provider
• Thirs-party logistics provider- firms that provide service to retailers, and other customers, of oursourced logistics services for part, or all, of their storage, transporting, sorting, infor gatherinh, and risk management
o Direct supply chain
channel that results when a manufacturer sells its goods directly to the final consumer or end user
intensive distibution
means that all possible retailers are used in a trade area
selective distribution
means that a moderate number of retailers are used in a trade area
exclusive distribution
means only one retailer is used to cover a trading area.
o Conventional marketing channel-
one in which each channel member is loosely aligned with the others and take a short-term orientation
vertical marketing channels
capital-intensive networks of severeal levels that are professionally managed and centrally programmed to realize the techonological, managerial, and promotional economies of a long-term relationship orientation
types of vertical marketing channels
corp, contractual, administered
corporate vertical marketing channels
using a contract to govern the working relationship between channel members and include voluntarty groups, retailer-owned cooperatives, and franchised retail programs
wholesales sponsored voluntary groups
wholesaler that brings together a group of independently owned retailers and offeres them a coordinated merchandising and buying program that will provide them with economies like those their chain store rivals are able to obtain
retailer-owned cooperatives
wholesale institutions, organized and owned by member retailors, that offer scale economies and services to member retailers, which allows them to competet with larger chain buying organizations
form of licensing by which the owner of a product service, or business method obtains distribution through affiliated dealers
administered vertical marketing channels
when one of the channel members taked the initiative to lead the channel by applying the principles of effective interorganizational management
types of contracual marketing channels
wholesale sponsored voluntary groups, retailer owned cooperatives, franchise
quick response systems
(efficient consumer response) intergrated info, production, and logistical systems that obtain real time info on consumer actions by capturing sales data at point of purchase terminals and then transmitting this info back through the entire channel to enable efficient production and distribution scheduling
interorganizational management consists of…
dependency, power, conflict, collaboration
ability of one channel member to influence the decision of the other channel members
reward power
based on B’s perception that A has the ability to provide rewards for B
expertise power
is based on B’s perception that A has some special knowledge
referent power
is based on the identification of B with A
coercive power
is based on B;s belief that A has the capability to punish or harm B if B doesn’t do what A wants
legitimate power
is boased on A’s right to influence B, or B’s belief that B should accept A’s influence
types of power
perceptual incongruity
occurs when the retailer and supplier have different perceptions of reality
goal incompatability
occurs when achieving the goals of either the supplier or the retailer would hamper the performance of the other
dual distribution
occurs when a manufacturer sells to independent retailers and also through its own retail outlets
domain disagreements
when there is disagreement about which member of the marketing channel should make decisions
unauthorized member of a channel who buys and sells excess merchandise to and from authorized channel members
gray marketing
when branded merchandise flows across national boundaries and through authorized channels
when a consumer seeks info from a full store and buys online for cheaper
mutual trust
when both the retailer and its suppliers have faith that each will be truthfyl and fair in their dealing with the other
two-way communication
occurs when both retailer and supplier communicate openly their ideas, concerns, and plans
high value is placed on the relationship between a supplier and retailer
category management
process of managing all SKU within a product category and involves the simultaneous management of proce, shelf space, merchandising strategy, promotional effort, and other elements of the retail mix within the category based on the firms goals, the changing environment, and consumer behvaior
horizonatl price fixing
occurs when group of competing retailers establishes a fixed price at which to sell certain brands of products
• illegal
vertical price fixing
occurs when a retailer collaborates with the manufacturer or wholesaler to resell an item at an agreed upon price
price descrimination
occurs when two retailers buy an identical amount of like grade and quality merchandise from the same supplier but pay different prices
• Interstate commerce
• Potential for a substantial lessening must exist
deceptive pricing
when a misleading price is udes to lure customers into the store and then hidden charges are added
predatory pricing
exists when a retail chain charges different prices in different geographic area to eliminate competition in selected geographic areas
palming off
when a retailer represents that merchandise is made by a firm other than the true manufacturer
what law does decepting pricing break
wheeler lea
what law does predatory pricing break
price discrimination is only illegal if 2 things…
interstate commerce, potential for substantail lessening
promotional contraints break what law
FTC, wheeler lea
deceptive advertising
when a retailer makes false or misleading advertising claims about the physical makerup of a product, the benefits to be gained by its use, or the appropriate uses for the product
bait and switch advertising
advertising or promoting a product at an unrealistically low price to serve as bat and then trying to switch the customer to a higher priced product
deceptive sales practice included
failing to be honest or ommiting key facts; using deceptive credit concepts
product contraints
safety, liability laws, warranties
product liability laws
deal with the sellers responsibility to marker safe products
expressed warranties
either written or verbalized agreemeings about the performance of a product and can cover all attributes of the merchandise or only one attribute
implied warranty of merchantability
made by every retailer sellds goods and implies that the merchandise sold is fit for the ordinary purpose for which such goods are typically used
impled warranty of fitness
warranty that implies that the merchandise is fit for a particular purpose and arises when the customer relies on the retailer to assist or make the selection of goods to serve a particular purpose
warranties is covered in what act..
magnuson moss wanranty act
territorial contraints
attempts by the supplier to limit the geographice area in which a rateiler may resell its merchandise
dual distribution.
when a manufacturer sells to independent retailers and also through its own retail outlets
one way exclusive dealing
occurs when the supplier agrees to give the retailer the exclusive right to sell the suppliers product in a particular trade area
two way exclusive dealing
occurs when the suppliers offers the retailer the exclusive distribution of a merchandise line or product in a particular trade area if in return the retailer will agree to do something for the manufacturer such as heavily promote the supplier’s products or not handle competing brands
tying agreement
exists when a seller with a strong product or service requires a buyer to purchase a weak product or service as a condition for buying the strong product or service
full line policy
having to hold all inventory in order to hold the best products
set of rules for human moral behavior
what does the two way exclusive dealing break?
clayton act is they substantially lessen competition or tend to create a monopoly
The full line policy breaks what act?
sherman, clayton, and ftc
explicit code of ethics
cosnsists of a written policy that states what is ethical and unethical behavior
implicit code of ethics
unwritten but well understood set of rules or astandars of moral responsibility
slotting files
fees paid by a vendor for space or a slot on a retailers shelves, as well as having its UPC number given a slot in the retailers computer system
markdown money
what retailers charge to cuppliers when merchandise does not sell at what the vendor intended
buying merchandise consists of what qulatities
product, sourcing, sustainability, slotting fees, bribery
selling merchandise consists of what qualities
products sold, selling practices
retailer employee relationships consists of what qualities
missuse of company assets, job switching, employee theft
home page
introductory or first material viewrs see when they access a retailers internet site
virtual store
otal collection of all the pages of info on the retailers internet site
ease of access
consumer ability to easily and quickly find a retailers web site in cyberspace
target market qualties
store-based retailers
operate from a fixed store location that requires customers to travel to the store to view and select merchandise or services
central business districts
consists of an unplanned shopping area around the geographic point at which all public transportation systems converge
strengths of cbd
easy access to transp
wide product assortment
variety in store images
weakenesses of cbd
inadequate parking
older stores
higher rents and taced
traffic congestion
high crime rate
decaying conditions of cities
secondary business district
hopping area that is smaller than the CBD and that revolved around at leaset one department or variety store at a major street intersection
neighborhood business district
shopping area that evolves to satisfy the convenience oriented shpping needs of a neighborhood, generally contains several small stores and is located on a major atery of a residential area
anchor stores
stores in a shopping center that are the most dominant and are expected to draw customers to the shopping center
freestanding retailer
generally locates along major traffic arteries and does not have ny adjacent retailers to share traffic
nonstore base retailers
intercept customers at home, work, or at a place other than a store where they might be susceptible to purchasing
geographic info system
computerized system that combines physical geography with cultural geography
buffer that people have created between themselves and the raw physical environment and includes the characteristics of the population, man-made objects, and mobile physical structures
thematic maps
use visual techniques such as colors, shading, and lines to display cultural characteristics of the physical space
uses of GIS
market selection
site analysis
trade and definition
new store cannibilization
advertising management
merchandise management
evaluation of store managers
trading area
geographic area from which a retailer, group of retailers, or community draws its customers
retail gravity theory
suggests that there are underlying consistencies in shopping behavior that yield to mathematical analysis and prediction based on the notion or concept of gravity
reillys law of retail gravitation
based on Newtonian gravitational principles, explains how large urbanized area attract customers from smaller rural communities
point of indifference
breaking point between two cities where customers are indifferent to shopping in either city
retail store saturation
condition where there are just enough store facilities for a given type of store to efficiently and satisfactorily serve the population and yield a fair profit to the owners
where the number of stores in relation to houselholds is relatively low so that engaging in retailing is an attractive economic endeavor
number of stores in relation to households is so large that to engage in retailing is usually unprofitable or marginally profitable
index of retail saturation
• Index of retail saturation- ration of demand for a product (households in the geographic area multiplied by annual retail expenditures for a particular line of trade per househole) divided by the available supply (square footage of retail facilities of a particular line of trade in the grographic area)
o IRS = (H X RE)/RF
market demand potential
pop charach
buyer behavior charach
household income
househole age profile
household composition
community life cycle
population density
market supply factors
square feet per store
square feet per employee
growth in store
quality of competition
site analysis
evaluation of the density of demand and supply within each market with the goal of identifying the best retail site
demand denisty
extent to which the potential demand for the retailers goods and services is concentrated in certain census tracts, ZIP cod areas, or parts of the community
eminent domain law
inherent power of the government to seize private property without the owner’s consent in order to benefit the community
100 percent location
when there is no better use for a site than the retail store that is being planned for that site
store comatibility
exists when two similar retail businesses locate next to or nearby each other and they realize a sales volume greater than what they would have achieved if they were located apart from eachother
retail clusters
group of stores closely located that share similar characteristics such as product category, store format, or customer demographics.