CLEP Principles of Marketing Study Notes

Intensity of market coverage number and kinds of

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Intensity of market coverage - number and kinds of outlets in which a product is sold--in other words, the number of intermediaries involved at the wholesale and retail levels of the distribution channel. Intensity can range from: 1. Intensive Distribution Strategy - all outlets are used for distributing a product. Appropriate for convenience products-- consumers want maximum availability at a store located nearby with minimum time spent looking for the product. 2. Selective Distribution Strategy – only some available outlets in an area are chosen to distribute a product; it is usually appropriate for shopping goods. Often used for products when customer service or some other special (attention) service must be offered to the buyer. 3. Exclusive Distribution Strategy- only one or two intermediaries within each market are used. The least intensive of the distribution strategies is exclusive distribution, which involves using only one or two outlets in each market. Not appropriate for convenience products or most shopping products. It is usually used for products for which there is a very limited market. An example of a product distributed exclusively is the Bentley automobile. There are 2 parts to a brand: 1. Brand name - part of a brand that can be spoken. Brand Name is the name of the logo. 2. Brand Mark - part, such as the design, or symbol, which cannot be spoken . For example, the way the letters are written for a can of Sprite--the Sprite font with a lemon and a lime above it--is the brand mark. The name Sprite itself is the brand name . The Brand Mark is the style or design of the logo , whereas the Brand Name is the name of the logo. Vertical Integration – acquiring firms that operate at different channel levels. Can increase operational control & stability of the channel. Channel Integration (aka: Vertical Channel Integration) - two or more levels of a distribution channel are combined under one management or when one channel member coordinates channel activities for those levels. Marketing channels which incorporate vertical channel integration are called vertical marketing systems , and can be broken down into corporate, contractual, and administered depending on how the different levels are coordinated.
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3 types of vertical marketing systems: 1. Corporate Channel of Distribution - all stages of the marketing channel, from producers to consumers, are combined under a single ownership . An example would be a retailer purchasing a wholesaler and production facilities. 2. Contractual Arrangement - most popular type of VMS, in which interorganizational relationships are formalized through contracts. Involves specifying performance terms for each intermediary in legal contracts. 3. Administered Vertical Marketing System - the distribution channel members are independent, but channel operations are coordinated through a dominant channel member. Dominant member is one with significant market power such as the producer, or a large retailer.
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