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Lecture 10

MKT 300 Lecture 10: MKT 300 Chapter 10 Notes

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MKT 300
Susan Fant

Marketing Chapter 10 Notes First Stop: Netflix’s Channel Innovation • Innovation distribution model of video entertainment: ➢ DVDs by mail ➢ Watch instantly service ➢ Video streaming on almost any device ➢ Original content development Supply Chains • Upstream partners supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service • Downstream partners serve as distribution channels that link the firm and its customers Value Delivery Network • Company, suppliers, distributors, and customers who partner with each other to improve the performance of the entire system Marketing Channels (Distribution Channels) • Interdependent organizations that help make a product or service available for use or consumption • Channel decisions ➢ Affect every other marketing decision ➢ Can lead to competitive advantage ➢ May involve long-term commitments to other firms How Channel Members Add Value • Intermediaries create greater efficiency in making goods available to target markets • Role of marketing intermediaries ➢ Transform the assortments of products made by producers into the assortments wanted by consumers • Bridge the major time, place, and possession gaps that separate goods and services from users Key Functions Performed by Channel Members • Help to complete transactions ➢ Information ➢ Promotion ➢ Contact ➢ Matching ➢ Negotiation • Help to fulfill the completed transactions ➢ Physical distribution ➢ Financing ➢ Risk taking Number of Channel Levels • Channel level: a layer of intermediaries that performs work in bringing the product and its ownership closer to the final buyer ➢ Direct marketing channel: no intermediary levels ➢ Indirect marketing channels: one or more intermediary levels • Types of flows that connect the institutions in the channel: ➢ Physical flow of products ➢ Flow of ownership ➢ Payment flow ➢ Information flow ➢ Promotion flow Channel Behavior • Channel conflict: disagreements among marketing channel members on goals, roles, and rewards ➢ Horizontal conflict occurs among firms at the same level of the channel ➢ Vertical conflict occurs between different levels of the same channel Vertical Marketing Systems • Conventional distribution channel ➢ Consists of one or more independent producers, wholesalers, and retailers ➢ Each member is a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole • Vertical marketing system (VMS) ➢ Producers, wholesalers, and retailers act as a unified system ➢ Types: corporate, contractual, and administered Horizontal Marketing System • Two or more companies at one level join together to follow a new marketing opportunity Multichannel Distribution Systems • A single firm sets up two or more marketing channels to reach customer segments • Advantages: ➢ Expansion of sales and marketing coverage ➢ Tailor-made products and services for the specific needs of customer segments • Disadvantages: ➢ Harder to control ➢ Generates conflict Disintermediation • Occurs when product or service producers cut out marketing channel intermediaries or when radically new types of channel intermediaries displace traditional ones Channel Design Decisions • Marketing channel design involves designing effective marketing channels by: ➢ Analyzing customer needs ➢ Setting channel objectives ➢ Identifying major channel alternatives ➢ Evaluating the alternatives Designing International Channels • Channel strategies should be adapted to the existing structures within each country • Distribution systems can have many layers and a large number of intermediaries • Customs and government regulation can restrict distribution in global markets Marketing Channel Management • Selecting channel members • Managing and motivating channel members • Evaluating channel members Public Policy and Distribution Decisions • Exclusive distribution • Exclusive dealing • Clayton Act of 1914: exclusive arrangements are legal as long as the parties: ➢ Do not substantially lessen competition or tend to create a monopoly ➢ Enter into the agreement voluntarily Marketing Logistics (Physical Distribution) • Planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to consumption • Customer-centered logistics: marketplace to the factory or sources of supply ➢ Outbound logistics ➢ Inbound logistics ➢ Reverse logistics Marketing Logistics and Supply Chain Management • The goal of marketing logistics is to deliver a targeted level of customer service at the least cost • Logistics functions include: ➢ Warehousing ➢ Inventory management ➢ Transportation ➢ Logistics information management Warehousing • Storage warehouses store goods for moderate to long periods • Distribution centers are large, highly automated warehouses that receive goods, take orders, fill them, and deliver goods to customers Inventory Management • Should be done in a cot effective and profitable manner ➢ Just in time logistics systems ➢ Radio frequency identification (RFID), smart tag technol
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