Chapter 12 Marketing Channels Value Delivery Network network composed of the company suppliers distributors and customers who partner to help the entire system deliver better customer value Marketing Distribution Chanel set of interdependent organizations that help make a product or service available for use or consumption by the consumer of business user Channel Level layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer ie Producer wholesaler retailer consumer Direct Marketing Channel marketing channel that has no intermediary levels ie Mary Kay and Geico sell direct Indirect Marketing Channel marketing channel containing one or more intermediary levels Channel Conflict disagreements among marketing channel members on goals roles and rewards who should do what for what rewards Conventional Distribution Channel channel consisting of one or more independent producers wholesalers and retailers each a separate business seeking to maximize its own profits perhaps at the expense of profits for the system as a whole opposite of vertical Vertical Marketing System VMS channel structure in which producers wholesalers and retailers act as a unified system One channel member owns the others has contracts with them or has so much power that they all cooperate Corporate VMS vertical marketing system that combines successive stages of production and distribution under single ownership channel leadership is established through common ownership example stores like Walmart and Walgreens running their own brands Contractual VMS VMS in which independent firms at different levels of product and distribution join together through contracts Franchise Organization contractual VMS in which a channel member called a franchiser links several stages in the production distribution process McDonalds Hertz Holiday Inn Administered VMS VMS that coordinates successive stages of production and distribution through the size and power of one of the parties GE and P G can control retailers b c of their popularity Horizontal Marketing System channel arrangement in which 2 companies at one level join together to follow a new marketing opportunity Walmart Subway Multichannel Distribution System single firm sets up 2 marketing channels to reach one or more customer segments John Deere selling to agriculture industry and people in Walmart Disintermediation cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries American Airlines not using Orbitz and selling direct Marketing Channel Design designing effective marketing channels by analyzing customer needs setting channel objectives identifying major channel alternatives and evaluating those alternatives o Intensive Distribution stocking product in as many outlets as possible o Exclusive Distribution giving a limited number of dealers exclusive right to distribute o Selective Distribution use of more than one but fewer than all of intermediaries who are company s products in their territories willing to carry the company s products Marketing Channel Management selecting managing and motivating individual channel members and evaluating their performance over time Marketing Logistics physical distribution planning implementing and controlling the physical flow of materials final goods and related information from points of origin to points of consumption to meet customer requirements at a profit Supply Chain Management managing upstream and downstream value added flows of materials final goods and related information among suppliers the company resellers and final consumers Distribution Center large highly automated warehouse designed to receive goods from various plants and suppliers take orders fill them efficiently and deliver goods to customers as quickly as possible Intermodal Transportation combing 2 modes of transportation Integrated Logistics Management logistics concept that emphasized team work both inside the company and among all the marketing channel organizations to maximize the performance of the entire distribution system Third Party Logistics 3PL Provider independent logistics provider that performs any or all function to get a client s product to market Chapter 14 Media Integrated Marketing Communication IMC strategic business process that marketers use to plan develop execute and evaluate coordinated measurable persuasive brand communication programs over time to targeted audiences reaching consumers over time Multichannel Promotional Strategy marketing communication strategy where they combine traditional advertising sales promotion and public relations activities with online buzz building activities Communication Model process whereby meaning is transferred from a source to a receiver o Encoding process of translating an idea into a form of communication that will convey meaning audience media o Source organization or individual that sends a message o Message communication in physical form that goes from a sender to its receiver o Medium communication vehicle through which a message is transmitted to a target o Receiver organization or individual that intercepts and interprets the message o Decoding process by which a receiver assigns meaning to the message o Noise anything that interferes with effective communication o Feedback receivers reactions to the message Promotion Mix major elements of marketer controlled communication including advertising sales promotion public relations personal selling and direct marketing Mass Communication relates to television radio magazines and newspapers o Advertising nonpersonal communication from an identified sponsor using the mass o Sales Promotion coupons contests other incentives to encourage purchase o Public Relations create and maintain positive image Groundswell social trend in which people use technology to get things they need from each other rather than from traditional institutions like corporations getting information over Facebook sharing of feedback prices service experiences Buzz word of mouth communication that customers view as authentic Viral Marketing marketing activities aimed to increase brand awareness or sales by consumers passing a message along to other consumers Brand Ambassadors Evangelists loyal customers of a brand recruited to communicate or be salespeople with other consumers for a brand they care about Social