12 14 13 Chapter 15 Notes Distribution Products The Emergence of Marketing Intermediaries Marketing intermediaries organizations that assist in moving goods and services from producers to businesses and from businesses to consumers Channel of distribution whole set of marketing intermediaries such as agents brokers wholesalers and retailers that join together to transport and store goods in their path or channel from producers to consumers o Cheaper and faster than more manufacturers can do on their own Agents brokers marketing intermediaries who bring buyers and sellers together and assist in negotiating an exchange but don t take title to the goods o Earn commissions or fees based on a percentage of the sales revenues o Maintain long relationships with people they represent o Agents who represent producers are either manufacturers agents or sales agents o Brokers don t have a continuous relationship Wholesaler a marketing intermediary that sells to other organizations Retailer an organization that sells to ultimate consumers Value of intermediaries o Marketing intermediaries can be eliminated but their activities can t o Intermediary organizations have survived because they perform marketing functions faster and more cheaply than others can o Add costs to products but these costs are usually more than offset by the values they create or services Utilities Created by Intermediaries Utility in economics the want satisfying ability or value that organizations add to goods Form utility changing raw materials into useful products Time utility adding value to products by making them available when they re needed Place utility adding value to products by having them where people want them Possession utility doing whatever is necessary to transfer ownership from one party to another including providing credit delivery installation guarantees and follow up service Information utility adding value to products by opening up two way flow of information between marketing participants Service utility adding value by providing fast friendly service during and after the sale and by teaching customers how to best use products over time Wholesale Intermediaries The sale of goods and services to businesses and institutions like schools or hospitals for use in the business or to wholesalers or retailers for resale Merchant wholesalers independently owned firms that take title to the goods they handle Rack jobbers wholesalers that furnish racks or shelves full of merchandise to retailers display products and sell on consignment Cash and carry wholesalers wholesalers that serve mostly smaller retailers with a limited assortment of products Drop shippers wholesalers that solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer Retail Intermediaries Department stores Discount stores Supermarket Warehouse club Convenience store Category killer Outlet store Specialty store Retail Strategies Intensive distribution distribution that puts products into as many retail outlets as possible Selective distribution distribution that sends products to only a preferred group of retailers Exclusive distribution distribution that sends products to only one retail outlet in a given geographic area Non store Retailing Electronic retailing selling goods and services to ultimate customer over the Internet Telemarketing the sale of goods and services by telephone Vending machines kiosks and carts Direct selling selling to consumers in their homes or where they work Multilevel marketing salespeople earn commissions on their own sales create commissions for the upliners who recruited them and receive commissions from and downliners they recruit to sell Direct marketing any activity that directly links manufacturers or intermediaries with the ultimate consumer o Direct mail catalog sales telemarketing and online marketing Building Cooperation in Channel Systems Cooperate distribution systems a distribution system in which all of the organizations in the cannel of distribution are owned by one firm Contractual distribution systems a distribution system in which members are bound to cooperate through contractual agreements o Franchise systems agrees to all rules regulations and procedures established by the franchisor o Wholesaler sponsored chains each store signs an agreement to use the same name participate in chain promotions and cooperate as a unified system of stores even though each is independently owned and managed o Retail cooperatives retailers agree to focus their purchases on one wholesaler but cooperative retailers could also purchase a wholesale organization to ensure better service Administered distribution system a distribution system in which producers manage all of the marketing functions at the retail level Supply chain value chain the sequence of linked activities that must be performed by various organizations to move goods from the sources of raw materials to ultimate consumers Supply chain management the process of managing the movement of raw materials parts work in progress finished goods and related information through all the organizations involved in the supply chain managing the return of such goods if necessary and recycling materials when appropriate o Suppliers plants manufacturers wholesalers retailers consumers Logistics Getting Goods to Consumers Efficiently Logistics the marketing activity that involves planning implementing and controlling the physical flow of materials final goods and related information from points of origin to points of consumption to meet consumer requirements at a profit Inbound logistics the area of logistics that involves bringing raw materials packaging other goods and services and information from suppliers to producers Materials handling the movement of goods within a warehouse from warehouses to the factory floor and from the factory floor to various workstations Outbound logistics the area of logistics that involves managing the flow of finished products and information to business buyers and ultimate consumers Reverse logistics the area of logistics that involves bringing goods back to the manufacturer because of defects or for recycling material Freight forwarder an organization that puts many small shipments together to create a single large shipment that can be transported cost effectively to the final destination Trucks are good for small shipments to remote locations Water transportation is
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