of products; and (3) a facilitating function, which involves financing, grading, and marketing information and research. See Figure 15-2 in the textbook. 329.(p. 379) Marketing intermediaries help create four utilities: (1) time utility, which involves having a product or service when consumers want it; (2) place utility, which involves having a product available where consumers want it; (3) form utility, which enhances a product to make it more appealing to buyers; and (4) possession utility, which entails efforts by intermediaries to help buyers take possession of a product or service. 330.(p. 380) A direct channel exists where a producer and ultimate consumers deal directly with each other. Because there are no intermediaries, the producer must perform all channel functions. Indirect channels, in which intermediaries such as agents, wholesalers, and retailers are inserted between the producer and consumers, perform numerous channel functions. For business products, these functions include selling, stocking, delivering a full product assortment, and financing.
331.(p. 383-384) Dual distribution occurs when a firm employs two or more different types of channels for the same product (e.g., GE sells its large appliances directly to home and apartment builders but uses retailers to sell them to consumers). Dual distribution is used for a multibrand strategy. A strategic channel alliance is when one firm's marketing channel is used to sell another firm's products (e.g., Lipton iced tea distributed by Pepsi bottlers). A similarity between the two terms is that firms use both to reach different market segments in a more cost-effective manner. A difference between the two is that for dual distribution, a single producer selects the intermediaries to reach its target market segments whereas in a strategic channel alliance, one producer uses the marketing channel developed by another firm (sometimes a competitor in a product class) to reach its target market segments. Strategic alliances are popular in global marketing, where the creation of marketing channel relationships is expensive and time consuming. 332.(p. 384) CPW is a strategic alliance designed from the start to be a global business. It joined the cereal manufacturing and marketing capability of U.S.-based General Mills with the worldwide distribution clout of Swiss-based Nestlé. Today, CPW competes in more than 130 countries that span the globe. The General Mills-Nestlé strategic channel alliance also increased the global ready-to-eat cereal market share of these companies. CPW currently accounts for over 25 percent of global cereal sales with about $2 billion. 333.(p. 384-386) A vertical marketing system is a professionally managed and centrally coordinated marketing channel designed to achieve channel economies and maximum marketing impact. There are three major types of vertical marketing systems: corporate, contractual, and administered. Corporate vertical marketing systems combine successive stages of production and distribution under a single ownership. Contractual vertical marketing systems consist of independent production and distribution firms that integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone. Administered vertical marketing systems achieve coordination at
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- Spring '08
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