Channels Flashcards
What is a Marketing Channel
A set of interdependent organizations that help make a product or service available for use to consumers
Part of the supply chain
True or False - Marketing Channels are like people, it takes time to find the right suppliers and retailers
True
What are Direct Channels
distribution channels with no intermediaries
Apple selling products in its own stores, D2C
What are Indirect Channels
Distribution channels with middle-men (wholesalers & retailers), that do work for the suppliers/producers
True or False - Having an intermediary (wholesalers/retailers) is beneficial to the firm because less transactions are made
True
Multichannel Distribution
Involves both direct and indirect channels within one business’ supply chain
Having Direct to Consumer stores, products sold in retail stores, and selling online
Vertical Marketing System
Where producers, distributors and retailers operate dependently (not independently) to achieve higher efficiency, higher profits and optimal pricing
Each level of the supply chain is connected and works together to make money
Define Corporate VMS
A VMS when a single company owns all stages of the supply chain
Also, a VMS is where the corporation owns the majority of the brands it sells (like Luxotica)
For instance, Zara owns the production facilities it operates in, and its retail stores (it doesn’t franchise), so they have a Corporate VMS
Contractual VMS
A channel network that coordinates its activities through contractual agreements, such as franchisees
At Boston Pizza, new franchisees open up locations for them (expanding their reach), but there are guidelines that the franchisee must follow
Administered VMS
The activities of companies involved in the channel are affected by the size and power of one of them, although there’s no contract
Some examples are P&G and Walmart
Horizontal Marketing System
When two companies at the same channel level join forces to follow a new marketing opportunity
Example: Starbucks & Safeway share retail space to attract more customers… Starbucks’ customers may increase Safeway sales, and Safeway’s customers may increase Starbucks sales
Horizontal Conflict
When conflict exists at the same marketing channel level: having two Pizza Hut franchises opened close to each other, or having two car dealerships operating nearby each other
the primary issue in horizontal conflict arises from stealing one anothers’ sales/customers
Vertical Conflict
Conflict that occurs at different channel levels (wholesalers to retailers)
when a retailer doesn’t give a producer enough shelf space, or when a business that historically only sold through D2C salesmen begins selling in a retail store
Define Wholesaling
Selling products and services to those buying for resale or business use
Collects market information for suppliers, and breaks bulk
Define Retailing
Any activities involved in selling goods to final consumers
Retailers can differ on price, product line and level of services they offer
