Textbook Notes (368,122)
Canada (161,660)
Commerce (1,690)
Chapter 11

Chapter 11 Textbook Notes.docx

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Department
Commerce
Course
COMMERCE 2MA3
Professor
Stephen Charko
Semester
Fall

Description
Chapter 11: Marketing Channels and Supply Chain Management • Distribution: movement of goods and services from producers to customers o Two critical components 1. Marketing (Distribution) Channel: system of marketing institutions that enhances the physical flow of goods and services, along with ownership title, from producer to consumer or business user 1. Logistics and Supply-Chain Management  Logistics: process of coordinating the flow of information, goods, and services among members of the distribution channel • Physical Distribution: broad range of activities aimed at efficient movement of finished goods from the end of the production line to the consumer • Customer Service • Inventory Control • Materials Handling • Protective Packaging • Order Processing • Warehousing  Supply-Chain Management: control of the activities of purchasing, processing, and delivery though which raw materials are transformed into products and made available to final consumers Marketing Channels… • Marketing Channels perform four important functions: 1. Facilitate the exchange process by reducing the number of marketplace contacts necessary to make a sale 1. Adjust discrepancies in the market's assortment of goods and services via a process known as sorting 1. Standardizing exchange transactions by setting expectations for products 1. Facilitate searches by both buyers and sellers • Types of Marketing Channels: o Direct Channel: marketing channel that moves goods directly from a producer to the business purchaser or ultimate user • Direct Selling: strategy designed to establish direct sales contact between producer and final user o Channels Using Marketing Intermediaries • Most channel options involve at least one marketing intermediary  Marketing Intermediary (Middleman): wholesaler or retailer that operate between producers and consumers or business users • Wholesaler: channel intermediary that takes title to the goods it handles and then distributes these goods to retailers, other distributors, or B2B customers  Producer to Wholesaler to Retailer to Consumer  Producer to Wholesaler to Business User i. Producer to Agent to Wholesaler to Retailer to Customer ii. Producer to Agent to Wholesaler to Business Unit • Manufacturers' Representative: agent wholesaling intermediary that represents manufacturers of related but noncompeting products and receives a commission on each sale i. Producer to Agent to Business User o Dual Distribution: network that moves products to a firm's target market through more than one marketing channel o Reverse Channel: channel designed to return goods to their producer Channel Strategy Decisions… • Selection of a Marketing Channel o Market Factors • Geographical location and size o Product Factors • Perishable foods or trendy products need short channels o Organizational and Competitive Factors • Companies with strong financial management and marketing resources may not need help from intermediaries as much as smaller firms do • Determining Distribution Intensity o Intensive Distribution: distribution of a product through all available channels o Selective Distribution: distribution of a product through a limited number of channels o Exclusive Distribution: distribution of a product through a single wholesaler or retailer in a specific geographic region • Presents potential legal problems i. Exclusive Dealing i. Market Restriction • Closed Sales Territories: exclusive geographic selling region of a distributor i. Tied Selling • Tying Agreements: an arrangement that requires a marketing intermediary to carry items other than those they want to sell • Who should perform channel functions? • Channel Management and Leadership o Channel Captain: dominant and controlling member of a marketing channel • Channel Conflict o Horizontal Conflict • Disagreements among channel members at the same level o Vertical Conflict • Disputes between channel
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