principles of marketing chapter 8 quizlet

The trend today is toward disintermediation. More than one producer has ditched its intermediaries only to rehire them later because of the hassles involved. Maybe it’s storing the product or dealing with hundreds of retailers. Moreover, when you cut out the middlemen you work with, you have to perform the functions they once did. But if the distributor can help the producer sell greater quantities of a product, it can increase the producer’s profits. Likewise, hiring a distributor will cost a producer money. Walmart doesn’t need a wholesaler’s buying power but your local In ‘n Out convenience store does. A wholesaler with buying power and excellent warehousing capabilities might be able to purchase, store, and deliver a product to a seller more cheaply than its producer could acting alone. However, sometimes cutting out the middleman is desirable but not always. Walmart is increasingly doing so and even purchasing produce directly from farmers around the word (Birchall, 2010). Instead, they buy their products directly from manufacturers and then store and distribute them to their own retail outlets.

If you can cut them out of the deal-a process marketing professionals call disintermediation-products can be sold more cheaply, can’t they? Large retailers, including Target and Walmart, sometimes bypass middlemen.

You might be tempted to think middlemen, or intermediaries, are bad. However, the seller also has to focus its selling efforts on these intermediaries because the intermediary can help with the selling effort. The makers of food products run coupon ads. Levi’s runs ads on TV designed to appeal directly to consumers. That doesn’t mean the producer will do no marketing directly to consumers. In an indirect channel, the product passes through one or more intermediaries. By contrast, a channel that includes one or more intermediaries-say, a wholesaler, distributor, or broker or agent-is an indirect channel. A channel such as this is a direct channel.

As we explained, the shortest marketing channel consists of just two parties-a producer and a consumer.

List the channels firms can use to enter foreign markets.įigure 8.4 “Typical Channels in Business-to-Consumer (B2C) Markets” shows the typical channels in business-to-consumer (B2C) markets.

Explain the pros and cons of disintermediation.

Explain the advantages and challenges companies face when using multiple channels and alternate channels.

Describe the basic types of channels in business-to-consumer (B2C) and business-to-business (B2B) markets.

Principles of marketing chapter 8 quizlet