Chapter 10 Flashcards
Marketing channels
The through which products, owners, communication, finance and payments flow through
Benefits:
1. Divides labour and allows for specialisation
2. Helps overcome issue
3. Allows of effective communication
Functions of marketing channels
- Transaction
Contact and promotion
Negotiation
Risk-taking - Logistics
Physical distribution
Sorting - Facilitating
Research
Financing
Marketing Channel structure
- Direct channel:
- producer-to-consumer - Retailer channel:
- Producer to retailer to consumer - Wholesaler channel
- Producer to wholesaler to retailer to consumer - Agent/ broker channel
- producer to agent to wholesaler to retailer to consumer
Internet usage:
1. Disintermediation: elimination of a channel intermediary
Lower cost
Higher speed
- Reintermediation: reintroduction of channel members
Added value to customers
Utilising alternative marketing channel arrangements
Channels:
Multiple- two or more channels
Non- traditional- internet, mail, farmers market
Strategic alliances- use of another’s channels
Reverse- consumer back to manufacturer
Factors that influence marketing channel strategies
- market factors
- product factors
- producer factors
Levels of distribution intensity
- intensive distribution (More outlets)
- selective distribution
- exclusive distribution (Fewer outlets)
Potential Channel conflict:
Horizontal conflict = develops among channel members at the same level
Vertical conflict= occurs between channel members at different levels
Intergration
Forward integration = when a producer or manufacturer establishes/buys its own wholesaler/retailer
Backward integration = when an intermediary establishes/buys a production facility
Importance of physical distribution
Physical distribution = all business activities concerned with stocking and transporting materials and parts or finished inventory so they arrive at the right place when needed and in usable condition, to meet consumer needs
Logistics = a broad term encompassing physical distribution, including procuring and managing raw materials and component parts for production
The nature of physical distribution subsystems
- Warehouse
- Material handling
- packaging
- automatic identification and barcoding
- unitisation and containerisation - Inventory control- just-in-time inventory management
- Order process
- flow of goods and information
- benefits of automation - Transportation
- Railways
- Road haulage
- Pipelines
- Water transportation
- Airways
Criteria for choosing a mode of transportation
- Cost
- Transit time
- Reliability
- Capability
- Accessibility
- Traceability
Intermedaries
Merchant wholesalers:
- Take ownership of products
- Full-service merchant wholesalers
- Limited service merchant wholesalers
Agents and brokers:
- Do not take the title of products
- Facilitate sales
- Fee/commission based on sales volume
- Types of ownership
- Single
- Multiple/ Chain stores
- Manufacturer owned
- State owned
Types of shops:
- Department store
- Specialty store
- Supermarket
- Convenience store
- Full-line discount store
- Warehouse club
- Off-price retailer
Location
- Regional shopping centres
- Community centres
- Neighbourhood centres
- Local centres
Size of market area
- convenience goods shop= small area
- more mobile consumers= larger area
- large shop floor area= large area
- competitor distance far away= larger area
