...Vertical marketing system Contractual vertical marketing system (Contractual VMS) is one of Vertical marketing systems. In this system, independent firms at different levels of production and distribution work together to achieve greater economies or sales than they would on their own. These firms coordinate their strategies through contractual agreements in order to eliminate channel-conflict that may arise out of individual objectives. It is value-adding partnership (VAP). Contractual VMS come in three types: Wholesaler-sponsored voluntary chains, retailer cooperation, franchise organization. Vertical Marketing Systems (VMSs) include three types: corporate, administered, and contractual. In a corporate VMS, one member of the distribution channel owns the other members. Although they are owned jointly, each company in the chain continues to perform a separate task. In an administered VMS, one member of the channel is large and powerful enough to coordinate the activities of the other members without an ownership stake. Finally, a contractual VMS consists of independent firms joined together by contract for their mutual benefit. Contractual system is the most popular VMS, accounting for about 40% of all retail sales. Caterpillar focuses on developing powerful partnerships with its dealers, and its dealers would like to work together with Caterpillar. They both contribute to their mutual benefits. First, they “share the gain as well as the pain.” When times are good, Caterpillar...
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...through in moving from the producer to the consumer", (Meyer et al, 1988). With the help of distribution channels, companies are able to overcome the time, place and possession gaps that separate goods and services from the consumers. As said by Aaker (1984), access to an effective and efficient marketing channel is often a key success factor. However, in this competitive era, an understanding of the alternative distribution channels and the trends in their relative importance can be of strategic importance for any company. For example, the growth and importance can be of a self service retail gasoline stations and the comparison growth in the importance of convenience stores such as the 7/11 chain in gasoline retailing has strategic significance to petroleum companies and distributors as well as to firms in food retailing (example adapted from Aaker, 1984). Additionally, because of competition, gaining distribution in some industries can be extremely difficult and costly. Nowadays, even large, established firms have trouble obtaining space on the supermarkets shelves for products with substantial marketing budgets. As said by Kotler and Armstrong (2001), members of the marketing or distribution perform several functions such as providing information for the company, promotes their goods and services, have contacts with buyers, matching buyers needs, as well as negotiate prices so that goods can be transferred....
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...3. Which type of vertical marketing system does Zara employ? List all the benefits that Zara receives by having adopted this system. Zara employs a Corporate Vertical Marketing System. Zara has managed to build a system that is controlled from a single place and that it allows it for quick response, decision and problem solving. Because Zara’s parent company Inditex owns most of the resources needed for the process of clothing design, production and distribution it is able to “control most every aspect of the supply chain, from design and production to its own worldwide distribution network” (Armstrong & Kotler). Vertical Marketing System Introduction In an organization, effective marketing strategies play an important role in boosting the performance of the business. In the integration of the corporate leaders in pursuit of their financial objectives, the creation of marketing system has been established. The creation of vertical marketing system is introduced and defined as a distributing channel in which the manufacturer, wholesaler, and retailer act as a single system. An organization that can control the product and services until it reached to the end consumers is the plain example of vertical marketing system. Apparently only few of the businesses around the world successfully managed this type of system. It may define as a difficult approach to maintain the sales and effectiveness but it serves as the strongest point of the organization to boost the various...
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...the case in a short paragraph prior to answering each question. List the question you are answering prior to your answer. Vertical Supply Chain Zara uses a vertical supply chain, which is an uncommon strategy in the fashion industry. A company that operates in a vertically integrated strategy has total control of the various business activities, such as designing, manufacturing, sourcing, and to distribution to retail stores. This gives the company total business management. 1. As completely as possible, explain the supply chain for Zara from raw materials to consumer purchase. (5 points) Zara makes about 40% of their raw material (fabric) and produces more than half of its own clothes. (Kotler and Armstrong). The remaining 60% is outsourced from within Spain, mostly from the La Curuna. Designing of clothes at Zara is done by creative teams of over 300 professionals at the headquarters in La Curuna, Spain. (Supply Chain Brain). After the designers complete a design they are sent to Zara’s production system to cut the fabric. The design is then sent for sewing by one of several hundred local cooperatives. After sewing, the clothes are returned to Zara’s facilities for ironing by an assembly line of workers. After this, the items are wrapped and transported on conveyor belts to a group of giant warehouses. This just-in-time (JIT) system enabled the company to establish a business model that allows self-containment throughout the stages of materials, manufacture...
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...Ch10 Marketing Channels Supply Chinas and the Value Delivery Network Upstream: Supply raw materials, components, parts, information, finances, and expertise Downstream: Marketing channels towards customers, including wholesales and retailers, * Supply chain: make-and-sell view, which suggest productive inputs as starting point * Demand chain: Sense-and-respond view But sometimes it takes a step-by-step, linear view of purchase-production-consumption activities Value Delivery network: A network composed of company, suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system in delivering customer value The Nature and Importance of Marketing Channels Marketing Channel (Distribution channel): A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user * Affect every other marketing decision * Use imaginative distribution systems * Involve long-term commitment to other firms How Channel Members Add Value * Give up some control over how and to whom to sell products * But they create greater efficiency in making goods available to target markets by better contacts, experience, specialization and scale of operation * Intermediaries reduce the amount of work by both producers and consumers * Transform assortments of products made by producers...
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...[Type the company name] | Marketing channels | 81,105, 117, 93, 69 | | [Type the author name] | 9/21/2010 | Marketing channel: A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user Channel level: A layers of intermediaries that the perform some work in bringing the product and its ownership closer to the final buyer. Channel conflict: Disagreement among marketing channel members. Vertical marketing system :A distribution channel structure in which producer wholsers , and retailers act as a unified system one channel members owns the others ,has contracts with them or has so much power that they all cooperate Future vertical marketing system divided in to two .They are 1.conventional marketing system 2.vertical marketing system Vertical marketing system: A vertical marketing system comprises of the producer, wholesaler and retailer acting as a unified system. One channel member, the channel captain owns the members and has so much power that they all cooperate. It arose as a result of strong channel member’s attempts to control channel behaviour. There are three types of VMS: CORPORATE, ADMINISTERED AND CONTRACTUAL. CORPORATE VMS: A corporate VMS combines successive stages of production and distribution under single ownership. For example Sears obtains over 50% of the goods it sells from companies that it partly or wholly owns. ADMINISTERED VMS: ...
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...Understanding Vertical Marketing Systems Critical Analysis Paper Jane Q. Learner Business 101 Developing a Business Perspective June 22, 2007 Introduction The text of the paper starts here. Typically the writer provides an introduction sharing something of interest to capture the reader's attention and introduce the topic. Also, it helps to include a specific statement of purpose. For example, the writer might state "This paper will address the pros and cons of vertical marketing systems. Adding an introduction or statement of purpose not only helps the reader know what to expect, it forces the writer to focus and stay on task. Vertical Marketing Systems All material in the paper is double-spaced. Depending on your topic and the length of paper, it might help to use category headings like the one above. However, overuse of category headings can be very annoying and distracting. Headings and subheadings must be in bold type per APA 6th edition. First level headings must be centered on the page. Advantages of Vertical Marketing Systems Second level headings like the one above are left justified on the page in bold type. One way you can improve your work is to have a conclusion at the end of a paper with the heading “Conclusion” above it (centered). Summarizing your key points and arguments is a professional way to end a paper. Conclusion Each paper must include a separate references page (see the page below) with references listed in alphabetical order, with the...
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...(1992), Greece (1993), Belgium and Sweden (1994), etc. until the current presence in over 70 countries. Zara stores are company-owned, except where local legislation forbids foreigner-owned businesses. In those cases, Zara franchises the stores. III – Questions for Discussion 1. As completely as possible, sketch the supply chain for Zara from raw materials to consumer purchase. - Zara makes about 40% of their raw material (fabric). The remaining 60% is outsourced from within Spain, mostly from the La Curuna. Designing of clothes at Zara is done by creative teams of over 300 professionals at the headquarters in La Curuna, Spain. They act on the information fed to them from the stores managers. The first stage in Zara’s production system is cutting of fabric. The design is then sent for sewing by one of several hundred local cooperatives. After sewing, the clothes are returned to Zara’s...
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...MARKETING: PRINCIPLES AND PRACTICE SM1010 MARKS AND SPENCERS – PLACE MODULE TUTOR: JAYA AKUNURI SEMINAR TUTOR: RULA AL-ABDULRAZAK CONTENTS Page Introduction 4 Abstract 4 Distribution Channel 5-6 Distribution Strategies 7-8 Conclusion 9 Bibliography 10-11 INTRODUCTION Few producers sell their goods direct to the consumers, however most use third parties or intermediaries to bring their products to the market. They try to forge a distribution channel- a set of independent organisation involved in the process of making a product or service available for use or consumption by the consumer or business user. This report will examine the way Marks and Spencer’s sell their goods direct or indirect to the consumers. The following features...
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...John Day 10/28/15 Retail Marketing Professor: Scapparone Chapter 5 Discussion Questions. 1.) Why must a retailer view itself as a member of a larger marketing system? Can’t JCPenny’s Costco, or BestBuy be successful on its own? Being a member of a larger marketing system is a good idea. Being part of the system of say BestBuy lets customers know no matter where they are they can get the same products and services at any BestBuy anywhere in the world. I suppose they could stand alone, but being part of the larger marketing system brings great benefits. You get to use their models and their proved marketing platforms. 2.) Must a retailer be involved in performing all the marketing functions? If it can rely on other members of the channel, what functions can they perform and which members can perform them? Yes a retailer should be involved in every aspect of the company, do they have to di it themselves? No they can put these tasks in other people’s capable hands. The seven marketing functions are Pricing, Products/Service Management, Distribution, Financing, Marketing Information Management, Selling, and Promotion. 3.) Facilitating marketing institutions, since they don’t take title to the goods, add no value to a supply chain, Agree or disagree with this statement, and explain your reasoning. I disagree just because they don’t take title of the goods does not make them any less valuable in the supply chain. With agents, brokers, wholesalers, transporters...
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...certain product or service. | 2 | Lapsed Customer Rejuvenation | The process of re-contacting 'former' customers and following up on 'lost orders/old quotations' with the objective of generating new leads. | 3 | Market segmentation | Process of dividing the market into smaller groups that share one or more characteristics. | 4 | Marketing mix | Usually refers to McCarthy's '4 P's': Promotion, Place, Price and Product. Other words beginning with P (eg People and Process) are sometimes also included. | 5 | Positioning | Deciding where your product fits in, and how it should be perceived, in relation to its competitors. | 6 | Product differentiation | What makes your product different from those of your competitors (eg you supply better quality, or more timely, searches). | 7 | Target market | A group of people for whom you create and maintain a specific marketing mix (eg the product will be tailored to their needs, priced in a way that group finds attractive). | 8 | Advertising | The activity of attracting public attention to a product or business by paid announcements in print, | 9 | Below the Line | A term applied to marketing that carries a response mechanism. This includes coupons, DRTV and telemarketing (verbal responses). | 10 | Cold Call | The process of contacting a person (known as a prospect) that has no prior relationship with you, e.g. a telemarketing company calling from a previously uncontacted database. | 11 | Cross-selling | Using a customer´s...
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...MKT 315 WK 3 QUIZ 2 CHAPTERS 3 & 4 To purchase this visit here: http://www.activitymode.com/product/mkt-315-wk-3-quiz-2-chapters-3-4/ Contact us at: SUPPORT@ACTIVITYMODE.COM MKT 315 WK 3 QUIZ 2 CHAPTERS 3 & 4 MKT 315 WK 3 Quiz 2 Chapters 3,4 MULTIPLE CHOICE 1. For channel managers, which of the following is a variable in the external environment? a. Interest rates b. Emerging competitors c. Birth rates d. Inflation rates e. All of the above 2. For the channel manager, the external environments can be ranked, from most important to least important, as: a. Economic, competitive, sociocultural, technological, legal. b. Legal, competitive, technological, economic, sociocultural. c. Economic, legal, competitive, technological, sociocultural. d. There is no single sequence for all industries at all times. e. All are equally important. 3. The channel manager must analyze the external environment in terms of its impact on: a. Target markets. b. Facilitating agencies. c. Intermediaries. d. All channel participants. e. Retailers and brokers. 4. Adam Page, channel manager at Wood Products, Inc., read in this morning’s paper that two large Midwest furniture retailing chains had merged. Page needs to recognize the potential impact of this change in the external environment on all of the following except: a. Wood Products, Inc. b. Public warehouses, trucking firms, and other Midwest facilitating agencies. c. All Midwest furniture retailers. d. Consumers...
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...|[pic] | | | |Assignment on | |“Principle of Marketing” | | | |Department of Finance | |University of Dhaka | | | | | Submitted by: | | ▪ Muhammad...
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...Evaluate the Tesco marketing (distribution) channels Marketing-channel decisions are one of the most critical decisions that Tesco needs to make because the chosen channel could profoundly affect all other marketing decisions. Intensive market research would need to be performed by analysing customer needs, establishing channel objectives and identifying and evaluating the major alternatives to be able to decide which type of channel is suitable. Tesco uses their Club Card to retrieve customer buying habits to tailor their marketing channels more effectively. For example to get customers into the store, Tesco gives out vouchers to targeted individuals and their product interests. Three of the most important trends are the growth of vertical marketing systems, horizontal marketing systems and multichannel marketing systems. All marketing channels have the potential for conflict and competition resulting from such sources as goal incompatibility, poorly defined roles and rights, perceptual differences and interdependent relationships. Horizontal Conflict: Occurs among firms at the same level of the channel. For instance, some Toyota dealers might complain the other dealers in the same city steal sales from them by pricing too low or by selling outside their assigned territories. Or one hotel franchise might complain about other operators overcharging guests or giving poor service, hurting the overall franchise image. Vertical Conflict: Conflicts between different...
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...Builds Channel For Vertical Solutions By Christina Torode, CRN 9? 24, 2002 3:59 ?? ET Hewlett-Packard (NYSE:HPQ) is holding its Network and Service Provider Business unit up as a poster child for a new sales strategy. The strategy involves moving away from product line sales of printers and software, for example, to vertically focused solution sales in which partner services are integrated with HP's. For now, this effort is limited to the Network and Service Provider Business unit, which serves the telecommunications industry. The $6 billion business, post-merger with Compaq, is HP's largest industry unit. Over time, the vertical solutions strategy is expected to extend to financial services and manufacturing, HP's second- and third-largest vertical targets, said Joy King, director of worldwide marketing and communications for the unit. "With the traditional product line sales approach, customers felt like they were dealing with four or five different HPs," King said. "But customers would rather buy solutions delivered in a framework within their industry. Not just the solution,they want someone who knows the acronyms, the history and the problems in their industry." HP garners 19.6 percent of IT spending in the telecom space, not including peripherals sales, she said. King said channel partners,particularly solution providers with telecom expertise,will play a larger role in providing HP's vertical solutions. "Now with our industry vertical focus, smaller companies...
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