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Key Terms

accumulating

relates to intermediaries buying in bulk from different manufacturers

adjusting for discrepancy of assortment

occurs when an intermediary buys from manufacturers, then regroups products into different assortments based on what consumers are demanding from retailers

administered VMS

one type of vertical marketing system where there is no ownership of channel members but instead one member who is large enough to coordinate and manage the distribution activities of other channels members

agent

a type of intermediary who acts as an extension to the manufacturer

bulk and weight

the density and heaviness of one unit of product

bulk-breaking

occurs when an intermediary takes a large bundling of a manufacturer’s product and breaks it down into single units to be distributed to retailers based on the retailer’s order

business-to-business (B2B)

a market comprised of companies who buy from and/or sell to other companies

business-to-consumer (B2C)

a market comprised of companies that manufacture and sell products or services directly to a final consumer or end user

channel conflict

disagreements between companies in the marketing channel due to a competitive versus a collaborative mindset

channel length

relates to the number of intermediaries in the marketing channel

channel member (intermediary)

a company that works in a network with other companies to help gets products from manufacturers to final consumers

contractual VMS

independent companies that have joined together by contract for a mutually beneficial purpose

corporate VMS

when one member of the distribution channel owns the other members

customer-perceived value

the overall perception that a consumer has about a company, brand, or product and is measured by what the consumer is willing to pay in return for the features and benefits in the market offering

direct channel

when companies sell and distribute their products directly to consumers

direct marketing channel

when a manufacturer does not use intermediaries but rather involves the manufacturer distributing its market offering directly to consumers

disintermediation

the process of removing an intermediary from a marketing channel

distribution

the process of making products and services available and accessible to consumers to purchase

distributor

a type of intermediary that takes ownership of the product and tends to align itself closely with a manufacturer

exclusive distribution

a strategy that involves allowing a limited number of intermediaries to distribute a company’s market offering

facilitating functions

activities such as financing and information sharing in the marketing channel

final consumer

the end user of a good or service

horizontal conflict

when there is disagreement among firms at the same level in the marketing channel

horizontal marketing system

a group of unrelated companies that offer products and services in a shared space

indirect channel

involves the utilization of one or more intermediaries to distribute a market offering to consumers

intensive distribution

a distribution strategy that entails distributing a company’s market offering through all possible intermediaries

inventory management

a function that involves identifying the type of inventory and how much a company has on hand at any given time

inventory turnover rate

a metric that measures how quickly inventory is turned over, or sold

logistical functions

the handling, packing, inventorying, transporting, warehousing, and ensuring the security of products as they make their way to the customer

logistics

the coordination of all supply chain activities, such as warehousing, inventory management, and transportation

marketing channel

system of people, organizations, and activities that work together to make goods and services available to consumers for use

multichannel distribution system

where a single company sets up multiple distribution channels to reach customers

omnichannel marketing system

multichannel approach whereby companies give consumers a variety of ways to purchase, receive, and return products

order accuracy rate

a metric that measures the percentage of orders that are processed, fulfilled, and shipped to consumers without any errors

percentage of on-time shipments

a metric used to evaluate how well a channel member meets its promise of delivering goods on time

perishability

relates to the likelihood that a product will spoil, decay, or expire if not used in a timely manner

post-sale service

all activities provided by a company that reinforce the value of the product or service for the buyer

pre-sale service

all activities provided by a company that help a buyer make a purchase decision

producer

a company that supplies the raw materials that manufacturers need to create consumer products

producer to retailer to consumer channel

when manufacturers or producers sell to retailers without the use of wholesalers or distributors

product life cycle

the various stages that a product goes through from its introduction phase, to its growth and maturity phase, and in some cases to its decline phase

purchasing

the process of buying materials needed to manufacture products

retailer

a type of intermediary where retailers take ownership of the product and their sole focus is on reaching the end user or customer directly

selective distribution

a strategy that includes choosing more than one, but fewer than all possible intermediaries to distribute a company’s market offering

standardized

products that have no difference in how they are manufactured

supply chain

a network between a company and its suppliers to produce and distribute a specific product to the final buyer

supply chain management

all members and activities from the procurement and transformation of raw materials into finished goods through their distribution to targeted consumers

sustainability

a company’s effort to reduce its impact on the environment as products move from source procurement through production through distribution to final consumers

sustainable sourcing

the process of considering suppliers’ social, ethical, and environmental performance

target market coverage

resources and capabilities needed to reach consumers in a company’s target market

third-party logistics (3PL) provider

a company that is contracted by a channel member to handle one or more of the functional areas of logistics; often warehouses, distribution centers, or fulfillment centers that have expertise in managing certain logistical activities

time to ship

also known as order cycle time, the length of time from when a customer places an order to when it reaches them

total number of orders

the sum of all orders that a company received in a given time period

total units in storage

a metric used to evaluate warehouse efficiency that changes as items are sold and leave the warehouse and new inventory moves in

transactional functions

buying, selling, and risk-bearing that goes along with the movement of products along the marketing channel

unit value

the price that a company charges for one unit or item

vertical conflict

a conflict that exists between different levels of a vertical channel

vertical marketing system

companies in the marketing channel that work together in a coordinated, collaborative, and customer-centric way

warehousing

the stocking, maintaining, and controlling of products while they await the next step in their journey to the final consumer

wholesaler

similar to distributors in that they take ownership of products; buys products in large quantities for the purpose of distributing an assortment of products to retailers

 

 

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