Marketing Channels, 8th ed Marketing Channels Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third pa.
Marketing Channels Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Marketing Channels A Management View EIGHTH EDITION BERT ROSENBLOOM Drexel University Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it This is an electronic version of the print textbook Due to electronic rights restrictions, some third party content may be suppressed Editorial review has deemed that any suppressed content does not materially affect the overall learning experience The publisher reserves the right to remove content from this title at any time if subsequent rights restrictions require it For valuable information on pricing, previous editions, changes to current editions, and alternate formats, please visit www.cengage.com/highered to search by ISBN#, author, title, or keyword for materials in your areas of interest Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Marketing Channels: A Management View, Eighth Edition Bert Rosenbloom Vice President of Editorial, Business: Jack W Calhoun Editor-in-Chief: Melissa Aca Executive Editor: Michael Roche © 2013, 2004 South-Western, Cengage Learning ALL RIGHTS RESERVED No part of this work covered by the copyright herein may be reproduced, transmitted, stored, or used in any form or by 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affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it To Pearl, Jack, Robyn, Staci, Jacob, and Anya Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Brief Contents Preface xviii About the Author PART xxiii Marketing Channel Systems CHAPTER Marketing Channel Concepts CHAPTER The Channel Participants CHAPTER The Environment of Marketing Channels CHAPTER Behavioral Processes in Marketing Channels PART 32 73 110 147 Developing the Marketing Channel CHAPTER Strategy in Marketing Channels CHAPTER Designing Marketing Channels 178 CHAPTER Selecting the Channel Members 213 CHAPTER Target Markets and Channel Design Strategy PART 149 234 255 Managing the Marketing Channel CHAPTER CHAPTER 10 Product Issues in Channel Management CHAPTER 11 Pricing Issues in Channel Management CHAPTER 12 Promotion through the Marketing Channel 340 CHAPTER 13 Logistics and Channel Management CHAPTER 14 Evaluating Channel Member Performance PART 257 Motivating the Channel Members 317 365 393 Additional Perspectives on Marketing Channels 415 CHAPTER 15 Electronic Marketing Channels 417 CHAPTER 16 Franchise Marketing Channels 445 CHAPTER 17 Marketing Channels for Services CHAPTER 18 International Channel Perspectives PART 290 Cases 484 500 523 Name Index 644 Subject Index 656 vii Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Contents Preface xviii About the Author xxiii PART Marketing Channel Systems CHAPTER Marketing Channel Concepts Learning Objectives Focus on Channels The Multi-Channel Challenge An Optimal Multi-Channel Mix Multi-Channel Synergies Avoiding Multi-Channel Conflict Sustainable Competitive Advantage and Multi-Channel Strategy The Marketing Channel Defined 10 Use of the Term Channel Manager 11 Marketing Channels and Marketing Management Strategy Channel Strategy versus Logistics Management 15 Flows in Marketing Channels 16 Distribution through Intermediaries 19 Specialization and Division of Labor 12 19 Contactual Efficiency 20 Channel Structure 22 Ancillary Structure 26 Summary 27 Review Questions 28 Channel Issues for Discussion References 29 30 CHAPTER The Channel Participants 32 Learning Objectives Focus on Channels 32 33 An Overview of the Channel Participants Producers and Manufacturers 34 34 Intermediaries 38 Wholesale Intermediaries 38 Retail Intermediaries 50 Retailers’ Growing Power in Marketing Channels Distribution Tasks Performed by Retailers 64 Facilitating Agencies Summary 62 66 67 viii Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Subject Index Note: t stands for tables and f stands for figures A abrasives specialist, 45 additional intermediaries, 22f adjustment, 197 administered marketing channel system, 84 advertising, 219, 226–227 Advertising Age, 344, 600 advertising agency, 67 advisory council, 122, 265–266 agent/agency, 38 advertising, 67 buying, 297 facilitating, 10, 66–67 financial, 67 foreign, 510 manufacturer, 48 order processing, 66–67 selling, 48 storage, 66 transportation, 66 wholesale intermediaries, 47–49 ALDI consumer electronics and, 590 limited assortment concept of, 587 operational efficiency at, 587–588 private-label advantage at, 588–589 relationship marketing at, 589–590 allocation decision, 23 alternative marketing channel by Commodity Chemical Company, 204f intensity of, 188–189 intermediaries, types of, 189 level of, 187–189 number of, 187–190 structure of, 186–190 Amazon Web Service (AWS), 94 ancillary structure, 26–28 appraising effect of conflict, 122 arbitration, 123 Asia, 620 assortment, 46, 296 attitude, 223 audit, marketing channel, 121–122, 263–265 audit of marketing channel, 264–265t automotive aftermarket industry current state of, 548–550 industry pricing in, 550 inventory investment in, 550–551 inventory practicing in, 550 traditional distribution channel of, 548 availability of product, 45 B Barnes & Noble College Bookstores, 561–564 behavior consumer, 246t dimensions of, 112 in international marketing channel, 505–506 marketing channel, 243–250 marketing channel communication, problems with, 136–139 of marketing channel member, 355f supermarket shopping, 575–576 Ben & Jerry’s background of, 594–595 distribution strategy for, 596–598 franchising, 597 international licensing for, 597–598 mail ordering of, 597 marketing strategy for, 595–596 online sale of, 597 products offered by, 595 supermarket distribution of, 596 Beverage World, 219 Bing, 436 Bloomberg BusinessWeek, 214 breaking bulk, 46 Bristol-Myers Squibb direct-to-consumer marketing by, 610–613 Glucophage, 610, 613–616 history of, 609 broker, 38, 48 Bulgaria, 636–641 bulky product, 192–193 business format franchise, 447–448, 448f, 450t, 494 Business Horizons, 274, 378 business-to-business (B2B), 6, 25f, 438 business-to-consumer (B2C), Business Week, 366, 485, 501 buyer, 249–250 Buying a Franchise A Consumer Guide (Federal Trade Commission), 463 buying agent, 297 buying center, 249 C Cadillac, 174, 501 call center marketing channel, 7, 632–633 Carrefour background of, 635–636 in Bulgaria, 636–641 competitive environment of, 639–640 economic environment of, 636–637 future of, 641 international strategy of, 636 legal environment of, 638–639 marketing channel strategy of, 640–641 political environment of, 638–639 socio-cultural environment of, 637 carrier, 509 casual exporting, 507–508 category killer, 63 category management, 308 Caterpillar, 163f 656 Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Subject Index Caterpillar Logistics Services, Inc (Cat Logistics) in Asia, 620 in China, 620 Lingang Logistics Center of, 620–622 Celler-Kefauver Act, 96 Census of Retail Trade, 51, 52t, 53, 54, 68–69, 189 Census of Wholesale Trade, 39–40, 42, 47–49, 69, 189 “Characteristics of Good and Parallel Systems” approach, 197–199, 198t Chevrolet, 361 China, 620 Clark’s Flower Shops, 537–539 Clayton Act, 95, 509 cloud computing, 94 Coalition of Americans to Save the Economy (CASE), 127–128 coercive power, 127, 128f college textbook industry, 562–564 commando shopping, 247 commerce electronic, 419, 440f, 582 Facebook, 419 Internet, 419 mobile, 419, 429f social, 419 Commercial Atlas and Market Guide, 239 commercial marketing channel, 34 commission merchant, 38, 49 Commodity Chemical Company, 204f communication in marketing channel, 241 behavioral problems in, 136–139 difficulties in, 116 in marketing channel, 261f company, marketing channel within corporate objectives and strategy of, 195 export management, 508–509 financial capacity of, 195 insurance, 67 managerial expertise of, 195 size of, 194–195 trading, 508 company-owned retail store marketing channel, company sales force marketing channel, compatible product, 222 competition See also competitive environment conflict vs., 113–114 global, 81 horizontal, 82 interbrand, 102 at Intermec Technologies, 581 intertype, 82–83 intrabrand, 101 marketing channel, 83, 581 types of, 82–84, 82f vertical, 83 competitive advantage, sustainable, 9–10, 162, 206 competitive environment in Carrefour, 639–640 competition in, types of, 82–84 competitive structure of, 84–85 international marketing channel and, 503–504 marketing channel management in, 84–85 competitive product, 222 competitive vulnerability, 160 complementary product, 222, 600–602 computer, handheld, 91–92 computerized inventory management, 91–92 computing, cloud, 94 Confession, The (Grisham), 301 conflict in marketing channel appraising effect of, 122 causes of, 114–120 competition vs., 113–114 detection of, 120–122 in Hassler & Howard Inc., 556–560 management of, 120–124 marketing channel efficiency and, 119–118 in multi-marketing channel, avoiding, resolving, 123–124 congruency of distribution objectives, 184–186 connectedness, 88 constant efficiency, 117 consumer behavior, 246t consumer electronics, 590 Consumer Price Index (CPI), 78, 78t, 80 consumer purchase, 575 Consumer Reports, 297–298, 303 consumer support, 529–530 consumer-to-consumer information, 438 consumption time, 197 contactual efficiency ancillary structure and, 26–27 for Granada Guitar Company, 21t in marketing channel, 20–27, 83, 116, 117–119f, 119–118 marketing channel structure and, 22–26 contactual organization, 10 contraction of product line, 308–309 contractual marketing channel, 83 control, marketing channel, 125–131 conventional marketing channel structure, 422–423f, 424–425 cooperative arrangement, 266–269, 509 cooperative program, 266 Coors Beer, 17f corporate marketing channel, 83 corporate objectives and strategy for Ben & Jerry’s, 596–598 congruency of, 184–186 distribution of, 11, 153–157, 183–186, 259 of electronic marketing channel, 437 explicit, 184, 188 familiarity of, 183 interrelationship and, 185f 657 of marketing channel design decision, 183–186 personal contact, 156f cost curves, 37f County and City Data Books, 239 credit condition, 222 customer marketing channel management and, 491–492 in marketing channels for services, 487 as member of marketing channel, 219 prospective, 219 support for, 45 customer relationship management (CRM), 195–196 customer service, 45–46, 376t Customer Service Index (CSI), 164 customized services, 495t Cyber middleman, 421f Cyberspace, 419 D data-based management, 433 dealer/dealing advisory council for, 265–266 exclusive, 97–98 fair, 229 network for, 163f partner with, 269 refuse to, 100–101 relationship with, 275 Dealer Rating Form, 623–625 decision domain disagreement, 115 decision maker, 11, 249 decisions for marketing channel design distribution objective and strategy of, 183–187 marketing channel structure for, 187–206 paradigm of, 181–182 recognition of, 182–183 decline stage of product life cycle, 303–304 deflation, 80 design of marketing channel channel member selection and, 215–216 decisions in distribution objective and strategy of, 183–187 flowchart of, 181f marketing channel structure for, 187–206 paradigm of, 181–182 recognition of, 182–183 defined, 180 differential advantage and, 162–164 electronic marketing channel and, 438 franchise marketing channel and, 456 international direct exporting and, 509–511 Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 658 Subject Index design of marketing channel (continued) indirect exporting and, 507–509 structure for, choosing, 511–512 marketing channel dimension and, 236f marketing channel member selection and, 215–216 marketing channel strategy and, 161–164 marketing channel analysis, 236 marketing channel behavior, 243–250 marketing channel density, 241–243 marketing channel geography, 237–239 marketing channel size, 240–241 persons engaged in, 180–181 differences/differentiation exceptional, 115 language, 137 perceptual, 114–115 in product, 305–306 in social network marketing channel, 528–529 differential advantage, 162–164, 206 digital revolution, 92–93 direct exporting, 509–511 direct marketing channel, 240f direct product profitability (DPP), 63 direct sales force marketing channel, 582 direct-to-consumer marketing channel, 610–613 Discount Store News, 125–126, 130 disintermediation, 19, 420–424 distribution marketing channel competitive vulnerability and, 160 in corporate objectives and strategy, 11, 153–157, 259 for Ben & Jerry’s, 596–598 congruency of, 184–186 explicit, 188 familiarity of, 183 of marketing channel design decision, 183–186 personal contact, 156f cost curve for, 37f costing approach to, 205 dual, 97 electronic, 419 executive, 123 intensity of, 167f, 168f, 188f for Intermec Technologies, 582–583 iPhone, 7f in Japan, 242f marketing channel and, 160–161 of marketing channel design decision, 186–187 of merchant wholesale intermediaries, 42–47 Monster Energy Drink, 8f multi-channel, 97 priority given to, 155–157 of retail intermediaries, 64–66 role of, 154f for Sony Music, 24f target marketing channel demand and, 158–159 distribution objectives and strategy congruency of, 184–186 of decisions for marketing channel design, 183–187 explicit, 184 distribution partnership, 161, 269 distribution portfolio analysis (DPA), 168–169 distribution programming, 266, 276–280, 277t distributor, foreign, 509 distributor advisory council, 122, 265–266 distributor partner, 269 Dr Scholl’s, 351 Dodge, 209 Drexel University, 557, 642–643 DSN Retailing Today, 225, 226 dual distribution, 97 Dunkin’ Donuts University (DDU), 467, 591–593 Duracell, 156 E e-alliance, 273, 274f e-mail, unsolicited, 433 economic environment of Carrefour, 636–637 deflation in, 80 inflation in, 78–80 other issues within, 80–81 recession and, 77–78 economic order quantity (EOQ), 373f economy of scale, 37 economy of scope, 37 Editor and Publisher Market Guide, 239 efficiency ancillary structure and, 26–27 constant, 117 contactual, 20–27 increased, 117–119 marketing channel, 118–119 marketing channel structure and, 22–26 operational, 587–588 reduced, 116–117 efficient congestion, 241 electronic commerce (e-commerce), 419, 440f, 582 Electronic Data Interchange (EDI), 90–91, 271, 276, 513 electronic distribution, 419 electronic marketing channels advantage of, 431–435 conventional marketing channel structure in, 424–425 corporate objective and strategy of, 437 defined, 419–420 development and trend in, 425–431 disadvantage of, 435–436 disintermediation in, 420–424 evaluation and, 439–441 information flow in, 424 marketing channel design and, 438 marketing channel management and, 439 marketing channel management of, 436–441 marketing channel member selection and, 438–439 in marketing channel mix, 437–438 marketing channel strategy of, 436–441 mobile, 428–430 product flow in, 424 reintermediation in, 420–424 on social network site, 430–431 structure of, 420–425 virtual marketing channel structure in, 424–425 Encyclopedia of Associations, 218 environment of marketing channel See also individual environments competitive, 81–85 economic, 77–81 legal, 94–103, 505 political, 94–103, 505 sociocultural, 85–90 technological, 90–94 variables of, 196 exceptional difference, 115 exclusive, defined, 166, 188 exclusive dealing, 97–98 executive of distribution, 123 expansion of product line, 308–309 expert power, 129–131, 131f explicit distribution objective, 184 export management company, 508–509 export marketing mix, 510t exporting casual, 507–508 direct, 509–511 indirect, 507–509 external marketing channel, 10 F Facebook commerce, 419 facilitating agency, 10, 66–67 fair dealing, 229 fair trade, 99–100 Federal Trade Commission Act, 95 fee for franchise, 449 field sales organization, 216–217 Fighter, The, 285 financial agency, 67 financial capacity of company, 195 financial condition, 222 flow of marketing channel information, 17–18, 26f, 424 in marketing channel, 16–19, 28 in marketing channel for service, 496 negotiation, 17, 26f ownership, 17 product, 16, 424 promotion, 18 for service, 496 Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Subject Index flower industry, 538–539 food broker, 48, 49f foreign agent, 510 foreign distributor, 509, 512t foreign marketing channel See international marketing channel franchise agreement, 454 franchise fee, 449 franchise marketing channel business format, 447–448, 494 channel member within, 602–603 concepts and terminology of, 447–450 defined, 447 downsides of, 453–455 expert power in, 131f fee for, 449 importance of, 450–451 marketing channel design and, 456 marketing channel management of, 455–461 marketing channel member in, 456–458 marketing channel mix in, 459–460 multi-unit, 448–449 product distribution in, 447 rationale for, 451–453 royalty fee for, 449–450 scope of, 450–451 for service, 494–495 single-unit, 448–449 structure of, 448–449 franchised distribution channel, 450t franchisee downside for, 454–455 motivation of, 458–459 performance of, 460–461 sub-, 449 franchisor continuing assistance offered by, 452f downsides to, 453–454 initial assistance offered by, 452f free rider, 100 friendly relationship, 229 full-line-forcing, 98 G gatekeeper, 64, 250 Gatorade, 208, 306 General Accounting Office (GAO), 348 general licensing, 632 general merchandise (GM), 572–573 consumer purchase of, 575 impulse buying of, 575 infant toys purchase and, 576–579 margin potential of, 574 size of, 575 stableness of, 575 supermarket shopping behavior and, 575–576 turnover of, 574–575 women shoppers and, 575 geographical census data, 238–239f Gillette Company, 225–226, 226f, 362, 383 global competition, 81 globalization, 87–88 Glucophage, 610 Glucophage XR, 613–616 goal differing, 136–137 goal incompatibility, 115–116 goal-setting, joint, 123 Going Rogue: An American Life (Palin), 313 gray market, 515 Great Recession of 2008, 460 Green Movement, 90 gross margin, 197 growth stage of product life cycle, 301–302 H Häagen-Dazs, 97, 594 handheld computer, 91–92 Hannan University, 642 Harvard Business Review, 159 Hassler & Howard Inc conflict in, 556–560 history of, 556 Health Magazine, 614 heuristics, 190 holding inventory, 44 Holy Family University, 642 Homestead-Miami Speedway, 554 horizontal competition, 82 house account, 101, 114 Hyde-Phillip Chemical Company information on, 544–545 initial analysis of, 546–547 sales territory data of, 545–546 I impulse buying, 575 in-store display, 350f incentive promotion, 353f Inconvenient Truth, An (Gore), 90 increased efficiency, 117–119 Indiana State University, 642 Indianapolis Motor Speedway (IMS), 553 indirect exporting, 507–509 indirect marketing channel, 582–583 Industrial Distribution Magazine, 120, 121t industry pricing, 550 infant toys, purchase of, 576–579 inflation, 78–80, 78t, 81t influencer, 249 information consumer-to-consumer, 438 flow of, 17–18, 26f, 424 market, 45 peer-to-peer, 438 processing of, 432–433 Innovative Toys Inc., 572–579 inquiry by reseller, 218–219 insurance company, 67 intensive, defined, 166, 188 interactive electronics, 420 659 interbrand competition, 102 interest rate, real, 80–81 Intermec Technologies (Intermec) direct sales force channel for, 582 distribution channels for, 582–583 electronic commerce for, 582 indirect marketing channel for, 582–583 marketing channel competition and, 581 marketing channel management challenge for, 584 overview of, 580 products and services of, 580–581 revenues and profits of, 581–582 intermediaries See also specific intermediaries additional, 22f agent wholesale, 47–49 alternative marketing channel structures, types of, 189 availability of, 195 cost of, 195 merchant wholesale, 42–47 retail, 50–66 services of, 195–196 trade, 508–509 wholesale, 38–49 international licensing, 597–598 international marketing channel alternative approaches for, 507f behavioral processes in, 505–506 competitive environment and, 503–504 design of, 506–512 direct exporting and, 509–511 indirect exporting and, 507–509 structure for, choosing, 511–512 economic factors and, 503 foreign marketing channel members in, 513–515 leading, 515–516 legal environment and, 505 management of environment for, 502–505 marketing channel members and, motivation of, 512–516 needs and problems of, 513–514 political environment and, 505 sociocultural environment and, 504 supporting, 514–515 technological environment and, 504–505 trade intermediaries in, 508t Internet commerce, 419 Internet marketing channel, 422–423f Internet shopping, 419 interorganizational management, 10 interorganizational social marketing channel, 112 interrelationship, 185f intertype competition, 82–83 intrabrand competition, 101 intraorganizational management, 10 introductory stage of product life cycle, 300–301 Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 660 Subject Index inventory holding, 44 investment in, 550–551 maintenance of, 441 practicing, 550 Iowa Speedway, 555 J Japan, 86f, 242f JCPenney Facebook marketing channel for, 526–527 social network marketing channel for, 527–530 Jeep, 209 JFK International Airport, 252 joint goal-setting, 123 Journal of Business Strategy, 273 Journal of Marketing, 119 Journal of Retailing, 218, 398, 405 Journal of the Academy of Marketing Science, 376 judgmental-heuristic approach distribution costing approach, 205 straight qualitative judgment approach, 203 use of, 206 weighted factor score approach, 203–205 just-in-time (JIT) merchandise, 513 K keiretsu, 85 Kenmore, 310 Kentucky Speedway, 554–555 kind-of-business classification, 52t Kindle, 6, 420 Koehring Company Dealer Rating Form of, 623–625 performance report of, 626–628 rating and potential of, 626 L language difference, 137 law on fair trade, 100 leadership for motivating marketing channel member, 281–282 legitimate power, 127–129 Lexus, 163–164, 164f, 166, 174, 312, 405 limited assortment concept, 587 limited function wholesaler, 47 Lincoln, 174, 405 Lingang Logistics Center of Caterpillar Logistics Services, Inc., 620–622 logistics service customer service and, inventory of, 376t management of, 15–16, 368t, 370f, 379f marketing channel management and, 379f quality of, 381–382f standards of, 377t loss-leader, 247 Lowe’s, 14f Loyola University Maryland, 604, 643 M mail order marketing channel, mail ordering, 597 management in marketing channel, 259 ability of, 223 assistance from, 227–229 category, 308 closeness in, 166–167 computerized inventory and, 91–92 customer involvement and, 491–492 customer relationship, 195–196 data-based, 433 of electronic marketing channel, 436–441 of franchise marketing channel, 455–461 inseparability and, 490–491 intangibility and, 488–490 Intermec Technologies, challenge for, 584 international, 502–505 interorganizational, 10 intraorganizational, 10 job titles for, 12f logistics, 15–16, 379f marketing channel member and, 167–171 marketing channel mix in, 171–172 marketing channel relationship and, 166–167 marketing channel strategy and, 12–16, 165–172 motivation for, 167–171, 260 perishability of, 492–493 product life cycle and, 299–304 product planning and, 294–299 for service, 488–493 standardization and, 491 strategic product management and, 304–309 succession of, 223 supply chain, 15, 195–196 trading down and, 310–312 trading up and, 310–312 managerial expertise, 195 manufacturer, 34–38 agent of, 48 distributor vs., 121t representative for, 48 sales branch/office for, 38 selection criteria of, 222t manufacturing pricing, 321f market-driven strategy, 236 marketer, 11 marketing channel See also specific marketing channels administered, 84 analysis of, 236 audit of, 121–122, 263–265, 264–265t behavior of, 192, 243–250 call center, for college textbook industry, 563–564 commercial, 34 communication in, 136–139, 261f company-owned retail store, company sales force, competition in, 83, 581 conflict in, 112–124 for Consumer Electronics Products, 25f contactual efficiency in, 20–27, 83, 116, 117–119f, 119–118 control in, 125–131 for Coors Beer, 17f corporate, 83 coverage in, 43, 223 defined, 10–19 density of, 191–192, 241–243 design of, 180, 206 disintermediation in, 19 distribution for, 160–161 electronic, 420 environment of (See environments of marketing channels) external, 10 for flowers, 537 flows in, 16–19, 28 foreign (See international marketing channel) franchise, 447 geography of, 191, 237–239 information on, 45 legal issues in, 96–103 mail order, marketing channel management and, 12–16, 259 marketing channel manager in, 11–12 marketing channel member committee in, 122–123, 265–269 mobile electronic, 428–430 multi, challenge of, 6–10 one-to-one, 433 partner in, 269 portfolio for, position/positioning in, 162–163 power in, 125–134 product standardization and length of, 194f, 198f relationship in, 166–167 retail intermediaries in, 62–64 retail store, role in, 134–135 sales representative, segment coverage of, 221 size of, 191, 240–241 as social marketing channel, 112 social referral in, 419 specialization and division of labor principle in, 19–20 strategy in, 13, 151 structure of, 23, 28 synergy for, 160–161 target, 34, 158–159 variable of, 190–192 vending machine, vertical, 83 wholesale distributor, Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Subject Index marketing channel mix, 13f, 16f, 171f marketing channel policy, 278t marketing channel strategic alliance, 272f Marketing News, 279 marketing research firm, 67 maturity stage of product life cycle, 302–303 McDonald’s advertising for, 600 competitive environment for, 599–600 complementary product offered by, 600–602 franchise channel member of, 602–603 premium coffee at, 600 promotion for, 600 member of marketing channel advertising, 219 approach to, 261–266 behavior of, 355f Black & Decker Corporations Statement of Policy towards, 270f cooperative arrangement for, 266–269 cooperative program provided to, 267t customers as, 219 distribution programming for, 276–280 distributor advisory council for, 265–266 economic vs social satisfaction of, 405t field sales organization, 216–217 foreign, 513–515 growth prospect of, 404t international marketing channel and, 512–516 inventory performance of, 401t manufacturer and, closeness of, 167f manufacturer-initiated price cut, reaction by, 322t marketing channel audit of, 263–265 marketing channel management and, 167–171 motivation of, 167–171, 169t, 281–282, 512–516 needs of, 260–266 participant as classification of, 35f facilitating agency, 66–67 intermediaries, 38–66 manufacturer, 34–38 overview of, 34 producer, 34–38 partnership with, 269–276 performance of, 172, 398f, 398t, 406t, 407f, 408–409t problems of, 260–266 product planning with acceptance of, 294–296 assortment of, 296–297 education on, 297–298 input for, 293–294 prospective advertising, 219 customer, 219 field sale organization, 216–217 reseller inquiry, 218–219 search for, 216–220 trade source, 217–218 research study of, 262 reseller inquiry to, 218–219 sales by, 400f, 401f search for, 216–220 securing, 224–229 selection of criteria for, 220–224, 224f electronic marketing channel and, 438–439 in franchise marketing channel, 456–458 marketing channel design and, 215–216 marketing channel strategy and, 164–165 process for, 216 strategic alliance with, 269–276 support for, 266–280 trade sources, 217–218 merchandise/merchandising, 84, 513 merchant, commission, 38, 49 merchant wholesale intermediaries, 42–47 merchant wholesaler, 38 Metropolitan Map Series, 239 metropolitan statistical area (MSA), 237 Michigan International Speedway, 554 Microsoft changes in, need for, 532–534 future of, 536 history of, 532 retail stores for, 532–536 middleman marketing channel, 240f minor civil division (MCD), 238–240 mix in marketing channel See also distribution marketing channel electronic marketing channel in, 437–438 in franchise marketing channel, 459–460 in marketing channel management, 171–172 marketing channel strategy and, 157–161 product, 296 variable in, competitive parity in, 159–160 mobile commerce (m-commerce), 419, 429f mobile e-commerce, 419 mobile electronic marketing channel, 428–430 mobility, 88 Monster Energy Drink, 8f motivation, 259–260 motorsports industry background on, 552–553 Swader’s research on, 553–555 MSN Money, 599 MSNBC, 532 multi-marketing channel challenge of, 6–10 conflict in, distribution in, 97 optimal, 7–8 661 strategy for, 23 sustainable competitive advantage and, 9–10 synergy of, 8–9 multi-tenancy, 94 multi-unit franchise, 448–449 N Nasdaq Stock Exchange, 553 NBC, 251, 532 negotiation, 17, 241 negotiation flows, 26f Nespresso competitive challenge of, 608 distribution strategy of, 607–608 history of, 605–606 Netscape Communicator, 102–103 network, 161 New York Times, 600, 614 newness of product, 194 Nicole Miller Ltd., 331 nontechnical product, 194 North American Industry Classification System (NAICS), 51 novel product, 353f NYSE, 580 O one-to-one marketing, 433 online sale, 61–62, 597 online shopping, 419, 427t, 429t online tools, 432t open system, 502 operational efficiency, 587–588 opportunity cost, 199 optimal multi-marketing channel, 7–8 order processing, 44–45 order processing agency, 66–67 organizational development (OD), 123 ownership flow, 17 P Pace University, 557 partner/partnership, 163, 166, 266, 269–276, 513 distribution, 161, 269 distributor, 269 marketing channel, 269 successful, 273f peer-to-peer information, 438 perception, 114 perceptual difference, 114–115 performance of sales, 223 performing rights organization, 629–630 perishability of product, 193 personal contact, 156f Philadelphia Inquirer, 291 Phoenix International Raceway (PIR), 554 piggybacking, 509 Pikes Peak International Speedway (PPIR), 554 Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 662 Subject Index Pillsbury, 184, 594 Plattsburgh Motor Service (PMS), 548–551 political environment, 505, 638–639 position/positioning marketing channel, 162, 163 product, 306–308 power availability of, 131–132 coercive, 127, 128f expert, 129–131, 131f legitimate, 127–129 in marketing channel, 125–134 of product line, 227f referent, 129, 130f reward for, 125–126, 126f selection of, 132–134 use of, 131–134 power retailer, 63 Precision Electronics Corporation (PEC) background on, 540 distribution goal of, 540 establishment of, 540 marketing channel decision in, 541–543 prestigious product, 196 Prevention magazine, 613 price/pricing discrimination on, 98–99 maintenance of, 99–100 strategy for, 151 Pricing Strategies, 322 private-label advantage, 588–589 processing information, 432–433 order, 44–45, 66–67 transaction, 432 producer, 34–38 product availability of, 45 Ben & Jerry’s, 595 brand strategy for, 310–311 bulky, 192–193 compatible, 222 competitive, 222 complementary, 222, 600–602 differentiation in, 305–306 flow of, 16, 424 newness of, 194 nontechnical, 194 novel, 353f perishability of, 193 portfolio for, 168 positioning of, 306–308 prestigious, 194, 196 purchase of, 248 standardization of, degree of, 193 strategy for, 151 technical, 194 trouble-free new, 298–299 unit value of, 193 usage of, 248 weight of, 192–193 product distribution franchise, 447 product life cycle (PLC), 299f decline stage of, 303–304 growth stage of, 301–302 introductory stage of, 300–301 marketing channel management and, 300f maturity stage of, 302–303 stages of, 300f product line, 223, 225–226 contraction of, 308–309 expansion of, 308–309 power of, 227f quality of, 222 product mix, 296 product planning by marketing channel member, 293–298 for trouble-free new product, 298–299 product service strategy, 311–312 programmed merchandising agreement, 279t Progressive Grocer, 572 promotion, 226–227 promotion flow, 18 promotional strategy, 151, 343f pruning strategy, 308 purchase of product, 248 Q quality of product line, 222 R racetrack layout, 247 radio frequency identification (RFID), 93–94 rate interest, 80–81 replacement, 197 Shopping Cart/Checkout Abandonment, 441 real interest rate, 80–81 recession, 77–78 reduced efficiency, 116–117 referent power, 129, 130f refuse to deal, 100–101 reintermediation, 420–424 relationships in marketing channel, 589–590 with dealer, 275 friendly, 229 marketing channel management and closeness of, 166–167 replacement rate, 197 representative for manufacturer, 48 reputation, 223 resale restriction, 101 research studies, 262–263 reseller, 218–219, 281 Residence Inn by Marriott, 488, 490 resolving conflict, 123–124 resource scarcity, 114 Restaurants and Institutions, 599 restriction on resale, 101 retail intermediaries, 53t, 188f concentration of sales among, 51–61, 54f distribution tasks performed by, 64–66 in marketing channel, growth of, 62–64 online sale in, 61–62, 62t percentage distribution of, 53t structure trend in, 51 total sale of, 54f, 62t, 425–426t types of, 50–51 in United States, largest, 55–61t retail store marketing channel, retail trade association, 218t retailer, 50 classification of, 50t margin of, 324t operating data of, 324t power, 63 Retailing Today, 227 reward power, 125–126, 126f rider, 509 Robinson-Patman Act, 95–96 royalty fee for franchise, 449–450 rule of reason, 101 Rutgers University, 557 S sales contact for, 44 online, 61–62 performance of, 223 strength of, 222 sales force marketing channel, 633–634 sales representative marketing channel, saturation, 188 scanner, 91–92 scrambled merchandising, 84 search engine optimization, 436 searching time, 197 selection of marketing channel member, 166, 188 criteria for, 220–224 electronic marketing channel and, 438–439 in franchise marketing channel, 456–458 marketing channel design and, 215–216 marketing channel strategy and, 164–165 process for, 216 selling agent, 48 service retailing, 489t services, marketing channel for, 26f channel structure length for, 494f customer involvement in, 487 customization of, 495–496 franchise, 494–495 inseparability of, 487 intangibility of, 486–487 marketing channel flows in, 496 for marketing channel management, implications of, 488–493 perishability of, 488 perspectives on, 493–496 Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Subject Index shorter, 493–494 special characteristics of, 486–488 standardization of, difficulty of, 487 value added, 45 SESAC call center marketing channel of, 632–633 general licensing of, 632 marketing channel structure of, 632–634 overview of, 630–632 performing rights organization and, 629–630 sales force marketing channel of, 633–634 7-Up, 306 Sherman Antitrust Act, 95, 509 shopping commando, 247 Internet, 419 online, 419, 427t, 429t virtual, 419 Web, 419 Shopping Cart/Checkout Abandonment Rate, 441 shorter marketing channel for service, 493–494 single-unit franchise, 448–449 slotting allowance, 168 smartphone, 92–93 Snap-on Tools Corporation history of, 565–567 marketing channel strategy for, 567–569 marketing channel structure for, 567–569 social commerce, 419 social network marketing channel, 112 consumers support for, 529–530 differences in, 528–529 social network user, 430t, 431t social networking, 88–89, 430–431 social referral marketing channel, 419 sociocultural environment, 85–90, 637 international marketing channel and, 504 other forces within, 87–90 Sony Music, 24f Sourcebook of ZIP Codes, The, 239 spam, 433 specialization and division of labor principle, 19–20, 20f Star Chemical Company, 570–571 Starbucks, 307f State University of New York at Pittsburgh, 642 stockout, 385f storage, 241 storage agency, 66 straight qualitative judgment approach, 203 strategic alliance, 161, 163, 166, 266, 269, 513 strategic planning process, 154f strategic product management product differentiation, 305–306 product line expansion/contraction, 308– 309 product positioning, 306–308 strategy for marketing channel, 13 for Ben & Jerry’s, 595–596 of Carrefour, 640–641 corporate, 153–157 defined, 151–153 for design, 161–164 marketing channel analysis, 236 marketing channel behavior, 243–250 marketing channel density, 241–243 marketing channel geography, 237–239 marketing channel size, 240–241 distribution and, 152f, 153–157, 183 of electronic marketing channel, 436–441 market-driven, 236 marketing channel management and, 165–172 marketing channel member and, 164–165, 172 marketing channel mix and, 157–161 multi-channel, 23 overview of, 152f price, 151 product, 151, 310–312 promotional, 151 pruning, 308 for Snap-on Tools Corporation, 567–569 strength of sales, 222 structure of marketing channel, 23 alternative, 186–190 ancillary, 26–28 “Characteristics of Good and Parallel Systems” approach to, 197–199 company variable of, 194–195 for consumer goods, 23f contactual efficiency and, 22–26 conventional, 422–423f, 424–425 in developing countries, 86f for eBay, 26f environmental variable of, 196 financial approach to, 199–200 horizontal profile of, 171f intermediaries variable of, 195–196 in Japan, 86f judgmental-heuristic approach to, 203–206 management science approach to, 201–203 market buying habits and, 192t for Polo by Ralph Lauren Apparel, 24f of pricing, 320f product variable of, 192–194 selection of, 196–206 of SESAC, 632–634 for Snap-on Tools Corporation, 567–569 transaction cost analysis approach to, 200–201 variable affecting, 190–196 vertical profile of, 170–171f virtual marketing channel, 424–425 663 sub-franchisee, 449 supermarket distribution, 596 supermarket shopping behavior, 575–576 supply chain, 378t supply chain management (SCM), 15, 195–196 sustainable competitive advantage, 9–10, 162, 206 T target marketing channel, 34, 158–159 technical product, 194 technological environment cloud computing, 94 computerized inventory management, 91–92 digital revolution, 92–93 electronic data interchange, 90–91 handheld computers, 91–92 international marketing channel and, 504–505 radio frequency identification, 93–94 scanner, 91–92 smartphone, 92–93 Temple University, 557 Texas Motor Speedway, 554 third party logistics provider (TPL or 3PL), 67, 369f 3M Company, 228f threetailing, 63, 247 Total Quality Management (TQM), 161 toys See general merchandise (GM) trade fair, 99–100 intermediaries, 508–509, 508t product brand strategy, 310–311 product service strategy, 311–312 sources for, 217–218 trade loading, 355f Trade Magazine, 126f, 219f, 227f, 272f, 385f trading up, 309–312 traditional distribution channel, 548 transaction cost analysis (TCA), 200–201 transaction processing, 432 transaction-specific asset, 200 transportation, 241 transportation agency, 66 trouble-free new product, 298–299 tying agreement, 102–103 U Uniform Franchise Offering Circular (UFOC), 454 unit value of product, 193 University of Chicago, 330 University of St Gallen, 642 unsolicited e-mail, 433 usage of product, 248 user, 249 Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 664 Subject Index V value-add marketing channel reseller, 281 value added service, 45 variables, 194–196 vending machine marketing channel, vertical competition, 83 vertical integration, 103 vertical marketing channel, 83, 424–425 Villanova University, 557 virtual shopping, 419 Vita-Stat Machine, 491–492, 492f vulnerability, 160 W Wall Street Journal, 4, 13, 33, 74, 105, 111, 130–131, 179, 235, 258, 317, 339, 394, 446, 614 Wealth of Nations, The (Smith), 19 Web clutter, 436 Web shopping, 419 Webb-Pomerene Export Trade Act, 509 weight of product, 192–193 weighted factor score, 203–205 wholesale distributor marketing channel, wholesale intermediaries agent, distribution task performed by, 47–49 concentration in, 41–42 employees in, number of, 42t merchant, distribution task performed by, 42–47 sales volume of, 42t size of, 41–42 structure trends in, 40–41 types of, 38–40 wholesale trade association, 217t wholesaler flower industry, role in, 539 kind-of-business grouping for, 39t limited function, 47 margins of, 324t merchant, 38, 43t, 47f operating data of, 324t sales by, 40–41f, 43f types of, 39f women shoppers, 575 World Wide Web, 419 Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Copyright 2011 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it ... Rubbermaid Channel Marketing Manager Sallie Mae Partner Channel Program Manager Seagate Technology Channel Programs Manager SunGard Channel Sales Manager Symantec Program Manager, Channel Readiness... in that activity, a channel manager Marketing Channels and Marketing Management Strategy As alluded to in our discussion of gaining a sustainable competitive advantage earlier in this chapter,... Industrial Marketing Management, Journal of Consumer Marketing, Journal of Personal Selling and Sales Management, Management Review, Long Range Planning, Psychology of Marketing, European Journal