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Team Leaders
Keep everyone on taskLead discussionsKeep area clean/all papers up at the end of
the dayPass out and get all supplies when need for
table activitiesQuestions? Table leader asks teacherStart w/ 100; points deducted for not
leading tableChanges every week
Marketing 3.07
Acquire foundational knowledge of channel
management to understand its role in marketing
What is channel management? Controlling the movement of the
product(s) through the system. Logistics deals with the movement of
goods and timing of the deliveriesDistribution involves the movement,
storage and inventory control of the product(s).
What is a channel?
The path (channel) a product travels from the producer (manufacturer) to the ultimate consumer
MARKETING MIX & FUNCTIONS
Remember the Marketing Mix?Remember the 6 functions?________ MGMT = _________
Channel management decisions
Select channel membersManage and motivate channel membersEvaluate channel membersWhat is the best means to distribute the
product?
Who is an intermediary (middleman)?
Channel members who assist the producer in getting the goods and services to the final user
ACTIVITY 1
Get with your 10 o’clock and get a Marketing Essential book and got to pp 376-377
Various intermediaries include Wholesalers Retailers Agents
Define and give a
Complete example
What is a direct channel?Distribution that occurs directly
from the producer to the consumer For example: A consumer buys
apples from an apple farmer Cuts out the middleman
What is an indirect channel?
Distribution that occurs through one or more intermediaries before reaching the final user
For example: The apple farmer sells his apples to Harris Teeter and Harris Teeter sells them to the consumer
Indirect channel is used….
When a producer doesn’t want responsibility for the selling activities of a large retailerProducer to agent to retailer to consumer
Because wholesalers usually buy in large quantitiesProducer to wholesaler to retailer to consumer
Transportation is…
Physically moving from
Place A Place B
Methods include:Trucking or motor carriers Railroads Marine shipping Pipelines Air cargo services
Inventory is…..
Storing of merchandise before it is soldPerpetual inventory controlPhysical inventory control
Methods for checking inventoryBlind check method Direct check method Spot check method Quality check method
ACTIVITY 2Get with your 7 o’clock appointmentsComplete “Channels of Distribution Match Up”You have 15 minutes
Choices Direct or indirect (as a group)Consumer goods, industrial goods,
wholesaler, retailer, producer, or consumerWhatever term fits the scenario, write –
should at least have two in each category
Purpose of channel members
Channel members add value to a product by performing certain channel activities expertlyMarketingPackagingFinancingStorageDeliveryMerchandisingPersonal selling
Distribution planning involves…
Decisions about a product’s physical movement and transfer of ownership from producer to consumer.
Some of the major considerations are:Multiple channelsControl vs. costsIntensity of distribution desiredInvolvement in e-commerce
Multiple channels….
Some products meet the needs of both industrial and consumer markets.
J & J Snack Foods sells its pretzels, drinks and cookies using multiple channels to:SupermarketsMovie TheatersStadiumsSchoolsHospitals
Distribution IntensityDistribution intensity is how widely a
product will be distributed; marketers want to achieve the ideal market exposureExclusive distribution – protected territories
for distribution of a product in a given geographic area; business maintains tight control over a product
Ex. Franchisor legally requires a franchisee to sell only the franchisor’s productsIntegrated distribution is where the manufacturer
acts as wholesaler and retailer for its own products. Ex. The Gap sells its clothing in company-owned retail stores.
Distribution IntensitySelective distribution – a limited number of
outlets in a given geographical area are used to sell the product.
Very important to select channel members that can maintain the image of the product and are good credit risks, aggressive marketers and good inventory planners.
Ex. Dana Buckman sells its clothing only through top department stores that appeal to the affluent customers who buy its merchandise. It does not sell in a chain megastore or a variety store.
Distribution Intensity
Intensive distribution – the use of all suitable outlets to sell a product.
The objective is complete market coverage and the ultimate goal is to sell to as many customers as possible, wherever they choose to shop.
Ex. Motor oil is sold in quick-lube shops, farm stores, auto parts retailers, supermarkets, drugstores, hardware stores, warehouse clubs, and other mass merchandisers.
Dual distribution
A manufacturer may sell its products through multiple outlets at the same time:Toll-free phone systemCompany websiteMultiple retailers
Horizontal and Vertical Conflict
Horizontal Conflict: occurs between channel members at the same levelGood, old-fashioned business competitionEx: two retailers selling pet supplies compete to
sell to the same target market
Vertical Conflict: occurs between channel members at different levels within the same channelProducers and wholesalers or producers and
retailers
Customer service and appropriate channel management
Ensures timely delivery of productsEffective communication is important
Order processingCorrect shipping informationCorrect productsHandling complaintsReducing the probability of complaintsNice and friendly people
Customer Service and Channel ManagementGrey-market strategy – selling product
in foreign countries for a lower price than customers can get domestically
Full-line forcing - Producer or supplier insistence that the dealer must carry the full range of products in the line. This policy may not be illegal if it can be established that it serves a legitimate business need.
Bad Customer service and Channel ManagementVendor consistently has back orders
Product not available when ordered
Coercion – large business threatening to stop using a supplier unless given major concessionsTying agreement - Purchase agreement in
which the customer is forced to purchase a slow-selling or unknown brand or product with a fast-selling or well known one. Such coercion is usually illegal.
Use of Technology in Distribution
Some businesses have the capacity to distribute most or all of their products through the internete-commerce: Products are sold to customers
and industrial buyers through the Internet.e-marketplace
Satellite tracking = a dispatcher has current knowledge of a delivery truck’s location and destination
Use of Technology in Distribution
Tracking of packageBar coding on packagePackage scanned at transition points in
distribution chainCustomer uses internet to follow package along
distribution chain; e-mail may be usedGlobal distribution: in some countries the postal
service is not reliable; package tracking facilitates global trade
WHAT’S NEXT?CONTINUE TO WORK ON GUM
PROJECT DUE TOMORROW!NOTE:
STAY FOCUSED ON YOUR GROUPNO EXTRA TIME AND EXCUSES WILL BE
GIVEN TOMORROWPRACTICE, PRACTICE, PRACTICE!
PROJECT SHOULD BE MEMORIZED AND YOU SHOULD BE COMPLETELY PREPARED!
Activity 3Get with your 3 o’clock Complete 3.07 ReviewWe will review 3.00
questions in 10 minutes!
C1. Sales begin to level off on a 5 year old product because customers are purchasing the competitor's brand. What strategy would be most appropriate to use in this situation?
A. Take the product off the market
B. Do nothing; fluctuations in sales are common
C. Modify the product to renew customer interest
D. Triple the advertising budget for the product
D2. Which activity is addressed in the product/service management function? A. Setting discounts to clear products from inventory
B. Determining where products will be offered for sale
C. Focusing promotions on a new-product release
D. Eliminating products that are slow sellers
B3. Which of the following is a way that a business can extend the life cycle of an established product?
A. By promoting the product to current users
B. By finding new uses for the product
C. By restricting distribution
D. By attracting consumers who are innovators
D4. Why does a company need to know what stage of the product life cycle its products are in?
A. To prevent imitators from entering the market
B. To find new uses for the product
C. To predict the length of the life cycle
D. To adapt its marketing strategies
C5. Why might profits sometimes decline for the company that first introduced the product during the growth stage of a product's life cycle?
A. Because sales decline in the growth stage
B. Because marketing strategies are adjusted
C. Because competitors have entered the market
D. Because production is more efficient
D6. What is a technologically advanced method that allows businesses to produce products that are?
A. Intermittent conversion
B. Automatic production
C. Computerized robotics
D. Mass customization
B7. What is one way businesses use computer technology to obtain information to improve their product/service mix?
A. Mailing questionnaires to customers
B. Tracking visitors to their web sites
C. Compiling detailed databases
D. Preparing interactive software programs
B8. What is an example of an ethical issue that a product/service manager might face?
A. Use of color on the label
B. Use of environmentally friendly packaging
C. Use of packaging as a means of promotion
D. Use of nutrition information on a food label
B9. Why is the quality level of a product an important product/service management decision?
A. It identifies a product's brand.
B. It reflects the image of the business.
C. It protects the consumers.
D. It refers to the way the product works.
B10. A company advertises that its products are durable lightweight, and come in a variety of colors. What strategy is the company using to position its product?
A. Price and quality
B. Features and benefits
C. Unique characteristics
D. Relationship to other products
D11. "Great taste, great price" is what product positioning strategy?
A. Relationship to other products
B. Features and benefits
C. Unique characteristics
D. Price and quality
A12. In what stage of brand loyalty do people become aware of the brand?
A. Recognition
B. Satisfaction
C. Insistence
D. Preference
C13. What costs do businesses usually include in the price of their products?
A. Regulations
B. Inflation
C. Transportation
D. Orientation
D14. What would be the most appropriate pricing strategy for a business in a small town where unemployment has skyrocketed and the economy is in a downturn?
A. Below-cost pricing
B. High-level pricing
C. Odd-cents pricing
D. Flexible pricing
C15. What is the advantage to a business of using bar-code pricing?
A. Easier for customers to read
B. Reduces required business security
C. Easier to change prices
A16. A business charges a small company a higher price for a product than it charges a large company What does this represent?
A. Price discrimination
B. Controlled pricing
C. Price competition
D. Regulated pricing
B17. A group of companies recently decided to sell their products for the same price. In what unethical activity are the businesses engaging?
A. Bait-and-switch
B. Price fixing
C. Loss-leader pricing
D. Gray markets
C18. What is an external factor that affects the price that a business charges for its products?
A. Operating costs
B. Variable expenses
C. Economic conditions
D. Employee benefits
A19. What do marketers want to achieve by determining distribution intensity?
A. Ideal market exposure
B. Complete market coverage
C. Perfect market balance
D. Total market saturation
D20. Which of the following is an aspect of channel management that impacts customer service?
A. Advertising
B. Taxes
C. Protectionism
D. Timeliness
C21. What is one action that customer service can take to facilitate order processing?
A. Negotiate aggressively
B. Oversee assembly
C. Communicate effectively
D. Monitor inventory
B22. What indirect channel of distribution is used to reach large retailers when the producer doesn’t want responsibility for the selling activities?
A. Producer to wholesaler to retailer to consumer
B. Producer to agent to retailer to consumer
C. Producer to wholesaler to consumer
D. Producer to consumer
C23. What factor could determine legal ownership of goods in the distribution process?
A. Country in which the product is produced
B. Availability of the product
C. Involvement of agents
D. Physical characteristics of the product
D24. What legal example is represented by a manufacturer selling its products through a toll-free phone system, a company web site, and several retailers?
A. Restricted sales territories
B. Exclusive dealing
C. Tying agreements
D. Dual distribution
C25. What is an example of a large business using coercion in the distribution channel
A. Buying products from unauthorized intermediaries
B. Requiring a specific type of packaging material
C. Threatening to stop using a supplier unless given a major concession
D. Returning shipments w/o proper authorization
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