D C MIKA > Unit 4- Distribution Decisions > Flashcards

Unit 4- Distribution Decisions Flashcards

(44 cards)

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1
Q

Commercial Distribution - Definition

A

Set of activities that make goods and services available in the right time, place and form to final buyers.

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2
Q

Role of Distribution

A

A strategic marketing-mix variable that strongly influences sales and is difficult for manufacturers to fully control.

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3
Q

Distribution vs Commerce

A
  • Distribution: focuses on delivering value to customers.
  • Commerce: economic activity of buying and selling products.
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4
Q

Value Delivery Network

A

Network of company, suppliers, distributors and customers cooperating to deliver customer value.

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5
Q

Distribution Channel

A

Set of interdependent organizations that make a product or service available for use or consumption.

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6
Q

Why Use Intermediaries

A

Reduce costs, increase efficiency and deliver more value through specialization and scale.

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7
Q

Main Functions of Distribution Channels

A
  • Information
  • promotion
  • negotiation
  • ordering
  • financing
  • risk taking
  • storage
  • transportation
  • payment
  • transfer of ownership.
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8
Q

Channel Level

A

A layer of intermediaries performing work to bring the product closer to the final buyer.

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9
Q

Channel Length

A

Number of intermediary levels in a distribution channel.

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10
Q

Direct Channel

A
  • Direct channel: no intermediaries.

Producer => Consumer

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11
Q

Indirect channel

A
  • One or more intermediaries.

1: Producer > Retailer > Consumer

2: Producer > Wholesaler > Retailer > Consumer

3: Producer > Wholesaler > Dealer > Retailer > Consumer

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12
Q

Factors Affecting Channel Structure

A

Channel structure depends on: environmental, market-related, firm-related and product-related factors.

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13
Q

Channel Design

A
  1. Analysis of customer needs and wants
  2. Setting channel objectives and goals
  3. Identification of main channel alternatives
  4. Evaluation of channel alternatives
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14
Q

Customer Needs in Channel Design

A

Lot size, waiting and delivery time, ease to purchase, product variety, support services

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15
Q

Channel Objectives

A

Companies must balance customer service levels against costs by adapting their distribution goals to product traits, market segments, and external factors like competition.

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16
Q

Channel Alternatives

A

Channel alternatives differ by:

  1. Type of intermediaries
  2. Number of intermediaries
  3. Conditions/responsibilities.
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17
Q

Types of Intermediaries

A
  • Agents: do not take ownership, perform limited tasks. (meetings, negotiating)
  • Merchants: take ownership and perform distribution functions. (Warehousing, Transportation…)
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18
Q

Wholesalers

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A

Buy in large quantities and sell smaller quantities to retailers or other intermediaries. (METRO)

19
Q

Number of Intermediaries

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A
  1. Intensive distribution
  2. Selective distribution
  3. Exclusive distribution
20
Q

Retailers

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A

Organizations that sell directly to final consumers. (Mercadona)

21
Q

Intensive distribution

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A

Implies having the product available in as many points of sale as possible, so that it is where and when consumers require it. Low control.
(Coca-Cola)

22
Q

Selective distribution

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A

Use of only a few intermediaries, company obtains adequate market coverage with greater control and lower costs.
(Nike shoes)

23
Q

Exklusive distribution

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A

Very limited outlets, manufacturer wishes to ensure that resellers make more intensive sales efforts and better informed sales.
(Rolex)

24
Q

Conditions and responsibilities

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A

Main element of “commercial relationship mix” are:

  • Terms of sale (payment requirements and manufacturer warranties)
  • Territorial rights of distribution
  • Mutual responsibilities and services
25
Evaluation of Channel Alternatives
Channel evaluation criteria: economic performance, control and flexibility.
26
Conventional Distribution System
consists of independent businesses (manufacturer, wholesaler, retailer) that operate without central leadership, each focusing on maximizing their own profits rather than the efficiency of the entire channel. - Manufacturer: Produces the goods. - Wholesaler: Buys in bulk, stores them, and sells to shops. - Retailer: Sells small quantities to the end consumer.
27
Vertical Marketing System (VMS)
Producers, wholesalers and retailers act as a unified system to improve efficiency and reduce conflict.
28
Types of Vertical Marketing Systems
- Corporate VMS: coordination through ownership. (ZARA, APPLE) - Contractual VMS: coordination through contracts. (McDonalds, franchises) - Administered VMS: coordination through power and size. (Walmart, Amazon)
29
Horizontal Marketing System
Two or more companies at the same level of the distribution channel cooperate to exploit market opportunities. They combine their financial, production or marketing resources to achieve more than they could individually. (Coca-Cola and Nestle partnering on ready-to-drink coffee)
30
Multichannel Distribution
A single company uses various independent channels (Websites, stores, social media) to reach customers. (Apple -> you can buy it on Apple.com (direct) AppleStore (direct) or at MediaMarkt (Retailer))
31
Channel Conflict
- Horizontal conflict: between members at the same level. - Vertical conflict: between different channel levels. - Multichannel conflict: between different channels serving the same market.
32
Horizontal System Spatial/Non-spatial
Spatial: Open shoping centers, wholesalers (companies share physical space) (Zara & H&M in Nevada Shopping) Non-spatial: Purchasing centers (share platforms or resources but not the same physical space) (Sky & DAZN bundles)
33
Multichannel Distribution advantages/disadvantages
Advantages: ❑ Increased sales and market coverage. ❑ Improved satisfaction of different customer segments Disadvantages: ❑ Difficult to control ❑ Frequent occurrence of channel conflicts
34
Disintermediation process
Is the process by which a producer "cuts out the middleman" (wholesalers and retailers) and sells directly to the final consumer, often by technology. Books -> You can order books at Amazon -> Amazon Kindle
35
Causes of Channel Conflict
Incompatible goals, unclear roles, perception differences and dependence.
36
Managing Channel Conflict
Strategic justification, negotiation, higher-order goals, diplomacy or legal action.
37
Marketing Logistics
Planning, implementing and controlling the physical flow of goods and information from points of origin to consumption to meet customer requirements at a profit.
38
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.
39
Supply chain objectives
Deliver the right product, at the right place and time, at minimum cost.
40
Outbound logistics
Transporting products from the factory to the final consumer.
41
Inbound logistics
Bringing raw materials and materials from suppliers to the factory.
42
Reverse logistics
Return of spoiled, unwanted or surplus products
43
Push Model (Make-to-Stock)
The manufacturer pushes products through the distribution channel by motivating intermediaries to stock, promote and sell them.
44
Pull Model (Make-to-Order)
The manufacturer creates consumer demand directly, so customers pull the product through the channel by requesting it from retailers.
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