Exam 3 Study Guide Chap 13 18 Marketing Channel a set on interdependent organizations that ease the transfer of ownership as products move from producer to business to user or consumer Functions specialization and division of labor creates greater efficiency provides lower costs achieves economies of sale aid producers who lack resources to market directly builds good relationships with customers overcoming discrepancies Discrepancy of Quantity the difference between the amount of product produced and the amount an end user wants to buy Discrepancy of Assortment the lack of al the items a customer needs to receive full satisfaction from a product or products Temporal Discrepancy a situation that occurs when a product is produced but a customer is not ready to buy it Spatial Discrepancy the difference between the location of a producer and the location of widely scattered markets providing contact efficiencies Channel Intermediaries Retailer a channel intermediary that sells mainly to customers Merchant Wholesaler an institution that buys goods from manufacturers takes title to goods stores them and resells and ships them Agents and Brokers wholesaling intermediaries who facilitate the sale of a product by representing channel members Factors Suggesting Type of Wholesaling Intermediary to Use Product Characteristics Buyer Considerations Market Characteristics Factor Nature of Product Technicality of Product Product s Gross Margin Frequency of Ordering Time between order and receipt of shipment Number of Customers Concentration of Customers Merchant Wholesalers Standard Complex High Frequent Shorter Lead Time Agents Brokers Nonstandard Custom Simple Low Infrequent Longer Lead Time Many Dispersed Few Concentrated Channel Functions Performed by Intermediaries transactional functions contacting promotion negotiating risk taking logisitical functions physically disturbing storing sorting facillitating functions researching financing Logistics the process of strategically managing the efficient flow and storage of raw materials in process inventory and finished goods from point of origin to point of consumption Channel Structures Channels for Consumer Products Direct Channel a distribution channel in which producers sell directly to customers Retailer Channel Producer Retailers Consumers Wholesaler Channel Producer Wholesaler Retailer Consumer Agent Broker Channel Producer Agents Brokers Wholesaler Retailer Consumer Channels for Business Products Direct Channel Producer Industrial User Direct Channel Producer Government Buyer Industrial Distributor Producer Industrial Distributer Industrial User Agent Broker Channel Producer Agent Broker Industrial User Agent Broker Industrial Channel Producer Agent Broker Industrial Distributer Industrial User B2B exchanges on the internet forces traditional distributors to expand their models companies drop the intermediary form the supply chain private exchanges with select suppliers automate the supply chain Alternative Channel Arrangements multiple channels nontraditional channels strategic channel alliances Channel Strategy Decisions Factors Affecting Channel Choice market factors customer profiles consumer or industrial customer size of market geographic location product factors product complexity product price product standardization product life cycle product delicacy producer resources number of product lines desire for channel control producer factors level of distribution intensity intensive distribution a form of distribution aimed at having a product available in every outlet objective achieve a mass market selling convenience goods many intermediaries selective distribution a form of distribution achieved by screening dealers to eliminate all but a few in a single area objective work with selected intermediaries shopping specialty goods several intermediaries exclusive distribution a form of distribution that established one or a few dealers within a given area objective work with single intermediary specialty goods and industrial equipment Channel Relationships Relationship Arm s Length Fulfills a one time or unique need low Benefits Cooperative risk involvement Formal contract without capital investment long term commitment happy medium Closely bonded relationship explicitly defined relationships Managing Channel Relationships Social Dimensions of Channels Integrated Hazards Parties unable to develop relationship low trust level Some parties may need more relationship definition High capital investment any failure could affect every channel memeber power a channel member s capacity to control or influence the behavior of other channel members control a situation that occurs when one marketing channel member intentionally affects another member s behavior leadership a member of a marketing channel that exercises authority power over the activities of other members conflict a clash of goals and methods between distribution channels goals ideological differences expectations etc partnering the joint effort of all channel members to create a supply chain that serves customers and create competitive advantage Supply Chains the connect chain of all business entities both internal and external to the company that perform or support the logistics function supply chain management a management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process from the source to the point of consumption resulting in enhanced customer and economic value communicator of customer demand from point of sale to supplier physical flow process that engineers the movement of goods Benefits lower inventory transportation warehousing and packaging costs greater supply chain flexibility improved customer service higher revenues increased profitability supply chain managers making strategic decisions management of info through the supply chain coordinating relationships between company and external partners Supply Chain Integration Relationship integration firm to firm interactions the ability of two or more companies to develop social connections that serve to guide their interactions when working together role specificity when each firm in a supply chain has clarity in terms of knowing which firms is a leader which firms are followers and which responsibilities are assigned to each firm Measurement integration operational planning control the performance assessment of a supply chain as a whole that also