making g/s available in the right quantities and locations, when customer want them

-place decisions often have long-run effects and are harder to change than product, promotion and price decisions

-company selling directly to the customer

-orgs may choose this b/c they see it as a way of controlling the whole marketing job, they may think that they can serve customers at a lower cost or more effectively than intermediaries

-since wholesalers and retailers (intermediaries) often carry products of several competing producers, they might not give any 1 item the special emphasis its producer wants.

-firms in direct contact w/their customers are more aware of changes in customer attitudes and can adjust its mkt. mix quickly

-if product needs an aggressive selling effort or special technical service, the mkt. manager can ensure salesppl get neccesary training and motivation

-many business products are sold direct

-service firms often use direct

-direct communication btw a seller and an individual customer using a promotion method other than face-to-face personal selling.

-firms that use direct mkt. use both direct distribution and intermediaries

-if customers have established buying patterns (ex. buying all of their stuff in one place)

-consumers are spread through many geographic areas and often prefer to shop for certain products at specific places (ex. ppl thinking Sears in THE place to buy tires)

-direct often requires investment in facilities, ppl, and info tech, so not good for a company that has limited money or that wants to remain flexible

-intermediaries reduce producer's need for working capital by buying their output and carrying it in inventory until it's sold

-local intermediaries can check credit of potential customers

-most important reason: intermediaries can often help producers serve customer needs better and at a lower cost

-can help reduce discrepancies btw the assortment/quantity of products customers want and the ass/qua of products companies produce

-can help producers who are located far from their customers and who dont know the best way to reach them

-can provide info to customers who dont know about the wide variety of product available

-close to their customers, so can anticipate their needs and forecast demand more accurately, which can reduce inventory costs in the channel and smooth out production

-producers seek them when entering int'l markets

-difference btw the quantity of products it is economical for a producer to make and the quantity final users or consumers normally want

-adjusting for this usually required intermediaries- wholesaler and retailers

-the difference btw the lines a typical producer makes and the assortment final consumers or users want

-intermediaries are needed to adjust for this discrepancy

-adjusts the quantities or assortments of products handled at each level in a channel of distribution

-4 activities: accumulating, bulk-breaking, sorting, and assorting

-when one or more of these activities is needed, a mkt. specialist may develop to fill this need

-1 of the 4 regrouping activities

-involves collecting products from many small producers

-esp. important in less-developed countries and in situations like farming where there are many small producers

-also important w/professional services b/c they often involve the combined work of a number of ppl, each of whom is a specialized producer (ex. hospital accumulates services of medical ppl)

-many internet retailers focus on accumulating

-1 of the 4 regrouping activities

-involves dividing larger quantities into smaller quanitities as products get closer to the final market.

-may involve several levels in the channel

-1 of the 4 regrouping activities

-means separating products into grades and qualities desired by different target markets.

-1 of the 4 regrouping activities

-means putting together a variety of products to give a target market what it wants

-done by those closest to the final consumer or user

-all memebrs of a channel system focus on the same target market at the end of the channel and share the various mkt. functions in appropriate ways

-when they do this, they're better able to compete effectively for the customers business

-vertical conflicts: occur btw firms at diff levels in the channel of distribution (ex. producer and retailer disagree about how much shelf space or promo effort the retailer should give the producer's product)

-horizontal conflicts: occur btw firms at the same level in the channel of distribution

-a manager who helps direct the activities of a whole channel and tries to avoid or solve channel conflicts

-most traditional channels dont have a recognized captain

-producers take the lead in channel relations

-intermediaries often wait to see what the producer intends to do and wants them to do. Then they decide whether their roles will be profitable and whether they want to join in the channel effort

-producer selects the target market and develops the product, sets the price structure, does some consumer and channel promotion, and develops the place setup.

-Intermediaries are then expected to finish the promotion job in their respective places.

-wholesalers and retailes analyze their customers' needs and then seek out producers who can provide these products at reasonable prices.

-wholesalers/retailers handle all of place and promotion decisions and some of the product and price decisions

-ex. powerful chains like Wal-Mart and Toys r Us

-channel systems in which the whole channel focuses on the same target market at the end of the channel

-this type is growing b/c if the final customer doesn't buy the product, the whole channel suffers.

-VMS in the consumer products area have a healthy majority of retail sales and are increasing

-VMS are becoming the major competitive units in the US distribution system

-3 types

-corporate

-administered

-contractual

-1 of the 3 types of vertical mkt. systems

corporate ownership all along the channel

-not a direct mkt. system b/c the firm is handling manufacturing, wholesaling, AND retailing

-can develop by vertical integration

-can be hard b/c some firms find it difficult to be really good at running manufacturing, wholesaling and retailing businesses that are very different from each other

-acquiring firms at different levels of channel activity

-advantages: stable sources of suppliers, better control of distribution and quality, greater buying power, and lower executive overhead.

-If discrepancies of quantity and assortment arent too great at each level in a channel, VI can be profitable

-1 of the 3 types of vertical mkt. systems

-channel members informally agree to cooperate w/each other.

-they can agree to routinize ordering, share inventory and sales info over computer networks, standardize accounting, and coordinate promotion effort.

-members retain some of the flexibility of a traditional channel system

-1 of the 3 types of vertical mkt. systems

-channel members agree by contract to cooperate w/each other.

-members retain some of the flexibility of a traditional channel system

-makes a product available widely enough to satisfy target customers' needs but not exceed them.

-too much exposure only increases the total cost of marketing

-3 types

-1 of the 3 types of ideal exposure

-selling a product through all responsible and suitable wholesalers or retailers who will stock or sell the product

-commonly needed for convenience products and business supplies-customers want such products nearby

-

-intensive distribution

-selective distribution

-exclusive distribution

-as you move from intensive to exclusive, you give up exposure in return for some other advantage-including but not limited to lower cost

-1 of the 3 types of ideal exposure

-selling through only those intermediaries who will give the product a special attention

-covers the broad area of market exposure between intensive and exclusive

-may be suitable for all categories of products

-only the better intermediaries are used

-companies use this to gain some of the advantage of exclusive distribution while still achieving fairly widespread market coverage.

-used to avoid selling to wholesalers/retailers that place orders that are too small to justify making calls, make too many returns or request too much service, have a poor credit rating, or are not in a position to do a satisfactory job

-becoming more popular than intensive as firms see that they dont need 100% coverage of a market to support national adv. Often the majority of sales come from relatively few customers-and the others buy too little compared to the cost of working with them (80/20 rule)

-can produce greater profits not only for the producer but for all channel members-intermediaries are more willing to promote products aggresively if they know they're going to get the majority of sales through their own efforts

-in early part of the life cycle of a new unsought good, a producer may have to use selective distribution, but then move to intensive as the market grows

-1 of the 3 types of ideal exposure

-selling through only one intermediary in a particular geographic area

-can help producers control prices and service offered in a channel

-usually involves a verbal or written agreement stating that channel members will buy all or most of a given product from the seller. in return, these retailers are granted the exclusive rights to that product in their territories

-80% of a company's sales often come from only 20% of its customers until it becomes more selective in choosing customers

-used in selective distribution

-horizontal arrangements -among competing retailers, wholesalers, or producers-to limit sales by customer or territory have consistently been ruled illegal by the US SC.

-court decisions say that you have to be able to legally justify any exclusive vertical arrangement

-occurs when a producer uses several competing channels to reach the same target market-perhaps using several intermediaries in addition to selling directly.

-becoming more common

-channels used to retrieve products that customers no longer want

-ex. recalls, returns, recycling

-exporting

-licensing

-management contracting

-joint venture

-direct investment

-from top (lowest) to bottom (highest) you are generally increasing investment, risk, and control of mkt.

-1st of 5 ways to enter an international market

-selling some of what the firm produces to foreign markets

-low investment of time and money, easy to get out if it doesn't work

-2nd of 5 ways to enter an international market

-selling the rights to use some process, trademark, patent, or other right for a fee or royalty.

-the licensee in the foreign market takes most of the risk, b/c it must make some intitial investment to get started

-licensee does most of the mkt. strategy

-3rd of 5 ways to enter an international market

-means that the seller provides only mgmt and mkt. skills-other own the production and distributino facilities

-company makes no commitment to fixed facilities

-good in unstable or developing nations

-4th of 5 ways to enter an international market

-a domestic firm enters into a partnership w/a foreign firm

-both partners must make significant investments and agree on the mkt. strategy

-once formed, JV difficult to end if things don't work out

-5th of 5 ways to enter an international market

-means that a parent firm has a division (or owns a separate subsidiary firm) in a foreign market

-gives the parent firm complete control of mkt. strategy planning