Marketing Chapter 15

• consists of individuals and firms involved in the process of making a product or service available for use
• or consumption by consumers or industrial users

any intermediary between manufacturer and end-user markets

any intermediary with legal authority to act on behalf of the manufacturer

• work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory-
• used for selling

• represent a single producer and are responsible for the entire marketing function of that producer (design
• promotional plans, set prices, determine distribution policies)

• independent firms or individuals whose principle function is to bring buyers and sellers
• together to make sales; usually have no continuous relationship with the buyer
• or seller but negotiate contracts between the two parties

• an intermediary who sells to other intermediaries, usually to retailers; term usually applies to consumer
• markets

independently owned firms that take title to the merchandise they handle

carry a broad assortment of merchandise and perform all channel functions (hardware, drug, clothing)

• offer a relatively narrow range of products but have an extensive assortment within
• the product lines carried (health foods, seafood, automotive parts) four types: rack jobbers, cash and carry, drop shippers/desk jobbers, truck jobbers

furnish racks or shelves in stores and bill retailers only for merchandise sold

sell only to buyers who call to them, pay cash for merchandise and furnish their own transportation for merchandise (groceries, office supplies)

• own the merchandise they sell but do not physically handle, stock, or deliver it; have merchandise
• shipped directly from a producer to a buyer (coal, lumber, chemicals) sold in
• large quantities

• small wholesalers that have small warehouse from which
• they stock their trucks for distribution to retailers (bakery items, dairy,
• meat)

an intermediary who sells to consumers

• an imprecise term, usually used to describe intermediaries who perform a variety of distribution
• functions, including selling, maintaining inventories, extending credit and so
• on

means the same as distributor, retailer, wholesaler

assuming business risks in the ownership of inventory that can become obsolete or deteriorate

buying, selling, risk taking

assorting, storing, transporting

financing (extending credit to customers), grading (inspecting, testing, judging), marketing information and research (providing info to customers and suppliers including competitive conditions/trends

time (get it when u want it), place (having it where people want it), form (enhancing a product or service), possession

a producer and ultimate consumers deal directly with each other

producer retailer consumer, producer wholesaler retailer consumer, producer agent wholesaler retailer consumer

• performs a variety of marketing channel functions, including selling, stocking, delivering a full
• product assortment and financing

• employs the internet to make goods ands services available for consumption or use by consumers or
• business buyers

• allow consumers to buy products by interacting with various advertising media without face to face
• meeting with a salesperson (mail-order selling, catalog sales, televised home
• shopping)

• blending of different communication and delivery channels that are mutually reinforcing in
• attracting, retaining and building relationships with consumers who shop and
• buy in traditional intermediaries and online

an arrangement whereby afirm reaches different buyers by employing two or more different types ofchannels for the same basic product (Hallmark with Hallmark cards and Ambassador brand of cards)

one firm’s marketing channel is used to sell another firm’s products

• combination of successive stages of production and distribution under a single ownership is corporate
• vertical marketing system

a producer might own the intermediary at the next level down in the channel

retailer might own a manufacturing operation

• independent production and distribution firms integrate their efforts on a contractual
• basis to obtain greater functional economies and marketing impact than they
• could achieve alone- most popular

• involve a wholesaler that develops a contractual relationship with small, independent retailers to
• standardize and coordinate buying practices, merchandising programs, and
• inventory management efforts

exist when small,independent retailers form an organization that operates a wholesale facilitycooperatively

• Manufacturer-sponsored retail franchise systems: prominent in the
• automobile industry (Ford licenses dealers to sell its cars); Manufacturer-sponsored
• whole systems: exist in the soft-drink industry, where Pepsi-Cola licenses wholesalers (bottlers) that purchase concentrate from Pepsi-Cola and then carbonate, bottle, promote, and distribute
• its products to supermarkets and restaurants; Service-Sponsored Retail Franchise Systems: provided by
• firms that have designed a unique approach for performing a service and wish to profit by selling the franchise to others (McDonalds); service Sponsored Franchise Systems: exist when franchisors license individuals or firms to dispense a service under a trade name and specific guidelines

• achieve coordination at successive stages of production and distribution by the size
• and influence of one channel member rather than through ownership

• consists of agreements and procedures among channel members for ordering and physically distributing a
• producer’s products through the channel to the ultimate consumer. Collaboration

• achieving the best coverage of the target market requires attention to the density, the number of stores in
• a geographical area - three types: intensive, exclusive, selective distrubtion

• firms tries to place its products and services in as many outlets as possible. Usually chosen for
• convenience products or services such as candy, fast food, newspapers

• extreme opposite of intensive distribution because only one retail outlet in a specified
• geographical area carries the firm’s products; usually for specialty products
• or services (fragrances, apparel, accessories, yachts)

• lies between these two extremes and means that a firm selects a few retail outlets in a specific
• geographical area to carry its products; most common

• gaining access to channels and intermediaries that satisfy at least some of the interests buyers might
• want fulfilled when they purchase a firm’s products or services; fall into four
• broad categories: information, convenience, variety, pre or post sale services

when buyers have limited knowledge or desire specific data about a product or service

• proximity or driving time, minimum of time and hassle, website (easy to locate, navigate,
• fast)

reflects buyers’ interest in having numerous competing and complementary items from which to choose

• provided by intermediaries are an important buying requirement for products such as large household
• appliances that require delivery, installation and credit (Whirlpool)

• determined by the margins earned (revenue – cost) for each channel member and for the channel as a whole. Includes distribution, advertising, selling expenses associated with different
• types of marketing channels

• arises when one channel member believes another channel member is engaged in behavior that prevents it
• from achieving its goals- vertical and horizontal conflict

• occurs between different levels in a marketing channel- between a manufacturer and a wholesaler or
• retailer or between a wholesaler and a retailer; three types: (1)disintermediation, (2) disagreement
• over how profit margins are distributed among channel members produced conflicts, (3) manufacturers
• believe wholesalers or retailers are not giving their products adequate attention

type of vertical conflict- conflict arises when a channel member bypasses another member and sells or buys products direct

• occurs between intermediaries at the same level in a marketing channel, such as between two or
• more retailers (Target and Kmart) or two or more wholesalers hat handle the same manufacturer’s brands

• (1)Arises when a manufacturer increases its distribution coverage in a geographical area
• (2) Dual distribution causes conflict when different types of retailers carry the same
• brands

• a channel member that coordinates, directs, and supports other channel members; can be producers,
• wholesalers, or retailers