A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value.
Marketing channel (or 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.
A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.
Disagreements among marketing channel members on goals, roles, and rewards-who should do what and for what rewards.
Conventional distribution channel
A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole.
Vertical marketing system (VMS)
A channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate.
A vertical marketing system that combines successive stages of production and distribution under single ownership-channel leadership is established through common ownership.
A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts.
A contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process.
A vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties.
Horizontal marketing system
A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
Multichannel distribution system
A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments.
The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries.
Marketing logistics (or physical distribution)
Planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit.
Supply chain management
Managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers.
Combining two or more modes of transportation.
Integrated logistics management
The logistics concept that emphasizes teamwork-both inside the company and among all the marketing channel organizations-to maximize the performance of the entire distribution system.
Third-party logistics (3PL) provider
An independent logistics provider that performs any or all of the functions required to get a client's product to a market.