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 producedand 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 CharacteristicsFactor Merchant Wholesalers Agents/BrokersNature of Product Standard Nonstandard, CustomTechnicality of Product Complex SimpleProduct’s Gross Margin High LowFrequency of Ordering Frequent InfrequentTime between order and receipt of shipmentShorter Lead Time Longer Lead TimeNumber of Customers Many FewConcentration of Customers Dispersed 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 consumptionChannel 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 alliancesChannel 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 factors-producer resources-number of product lines-desire for channel control-level of distribution intensity-intensive distribution: a form of distribution aimed at having a product available in everyoutlet-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 equipmentChannel RelationshipsRelationship Benefits HazardsArm’s Length Fulfills a one time or unique need: low risk/involvementParties unable to develop relationship; low trust levelCooperative Formal contract without capital investment/ long term commitment; “happy medium”Some parties may need more relationship definitionIntegrated Closely bonded relationship; explicitly defined relationshipsHigh capital investment; any failure could affect every channel memeberManaging Channel Relationships-Social Dimensions of Channels:-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 affectsanother 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 customersand create competitive advantageSupply 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 partnersSupply 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