Chapter 12.docx

4 Pages

Business Administration
Course Code
BUS 343
Zaheer Jiwani

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Chapter 12 Place: the final frontier Supply chain: All the activities necessary to turn raw materials into a good or service and put it in the hands of the consumer or business customer.  Links in the supply chain Supply chain management: The management of flows among firms in the supply chain to maximize total profitability. Insourcing: A practice in which a company contracts with a specialist firm to handle all or part of its supply chain operations. Channel of distribution: The series of firms or individuals that facilitates the movement of a product from the producer to the final customer. Distribution channels: get it there Channel intermediaries: Firms or individuals such as wholesalers, agents, brokers, or retailers who help move a product from the producer to the consumer or business user; an older term for intermediaries is middlemen.  Functions of distribution channels Breaking bulk: Dividing larger quantities of goods into smaller lots in order to meet the needs of buyers. Creating assortments: Providing a variety of products in one location to meet the needs of buyers. Facilitating functions: Functions of channel intermediaries that make the purchase process easier for customers and manufactures.  The internet in the distribution channel Disintermediation (of the channel of distribution): The elimination of some layers of the channel of distribution in order to cut costs and improve the efficiency of the channel. Knowledge management: A comprehensive approach to collecting, organizing, storing, and retrieving a firm’s information assets. Online distribution piracy: The theft and unauthorized repurposing of intellectual property via the internet. Wholesaling intermediaries Wholesaling intermediaries: Firms that handle the flow of products from the manufacturer to the retailer or business user.  Independent intermediaries Independent intermediaries: Channel intermediaries that are not controlled by any manufacturer but instead do business with many different manufacturers and many different customers. Merchant wholesalers: Intermediaries that buy goods from manufacturer (take title to them) and sell to retailers and other B2B customers. Take tile: To accept legal ownership of a product and assume the accompanying rights and responsibilities of ownership.  Merchandise agents or brokers Merchandise agents or brokers: Channel intermediaries that provide services in exchange for commissions but never take title to the product. Types of distribution channels Channel levels: The number of distinct categories of intermediaries that populate a channel of distribution.  Dual and hybrid distribution systems Hybrid marketing system: A marketing system that uses a number of different channels and communication methods to serve a target market. Plan a channel strategy  Step1: develop distribution objectives  Step2: evaluate internal and external environmental influences  Step3: choose a distributions strategy  Conventional, vertical, or horizontal marketing system? Conventional marketing system: A multiple-level distribution channel in which channel members work independently of one another. Vertical marketing system (VMS): A channel of distribution in which there is formal cooperation among members at the manufacturing, wholesaling, and retailing levels. Horizontal marketing system: An arrangement within a channel of distribution in which two or more firms at the same channel level work together for a common purpose.  Intensive, exclusive, or selective distribution? Intensive distribution: Selling a product through all suitable wholesalers or retailers that are willing to stock and sell the product. Exclusive distribution: Selling a product only through a single outlet in a particular region. Selective distribution: Distribution using fewer outlets than intensive distribution but more than exclusive distribution.  Step4: Develop distribution tactics  Manage the channel Channel leader: A firm at one level of distribution that takes a leadership role, establishing operating norms and processes based on its power relative to other channel members. Logistics: implement the supply chain Logistics: The process of designing, managing, and improving the movement of products through the supply chain; it includes purchasing, manufacturing, storage, and transport. Physical distribution: The activities that move finished goods from manufacturers to final customers, including order processing, warehousing, materials handling, transportation, and inventory control.  Logistics functions  Order processing Order processing: The series of activities that occurs between the time an order comes into the organization and the time a product goes out the door. Enterprise resource planning (ERP) system: A software system that integrates information form across the entire company, including finance, order fulfillment, manufacturing, and transportation and then facilitates sharing of the data throughout the firm.  Warehousing Warehousing: Storing goods in anticipation of sale or transfer to another member of the channel of distribution.  Materials handling Materials handling: The moving of products into, within, and out of warehouses.  Transportation Transportation: The mode by which products move among channel members.  Inventory control: JIT, RFID, and fast fashion Inventory control: Activities to ensure that goods are always available to meet customers’ demands. Radio frequency identification (RFID): Product tags with tiny chips containing information about the item’s content, origin, and destination. Just in time (JIT): Inventory management and purchasing processes that manufacturers and resellers use to reduce inventory to very low levels and ensure that deliveries from suppliers arrive only when needed. Retailing: special delivery Retailing: The final stop in the distribution channel in which organizations sell goods and services to consumers for their personal use.  The evolution of retailing  The wheel of retailing Wheel-of-retailing hypothesis: A theory that explains
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