Chapter 12 Distribution
Number of Channel Levels (Tiers)
-Channel Level (Tier) -Direct Marketing Channel -Indirect Marketing Channel
A producer and intermediaries (Channel Partners)
-Price policies -Conditions of sale -territory rights -specific services/support
Marketing Channel (distribution channel)
-is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user -consists of companies that have "partnered" for their common good with each member playing a specialized role
In a corporate VMS, channel leadership is established through which of the following?
A corporate VMS is a vertical marketing system that combines successive stages of production and distribution under single ownership. Channel leadership is established through common ownership.
How many intermediary levels are there in a direct marketing channel?
A direct marketing channel has no intermediary levels—the company sells directly to consumers.
Which of the following is NOT a reason for the greater emphasis companies today are placing on marketing logistics?
Actually it is the explosion in product variety that has created a need for improved logistics management. For example, a Walmart Supercenter store carries 120,000 products. Amazon.com carries a bewildering 12 million products, or nearly 350 million products if Amazon Marketplace sellers are included. Ordering, shipping, stocking, and controlling such a variety of products present a sizable logistics challenge.
Large retailers like Walmart have enormous channel control due to their size and power. Which type of channel arrangement does this represent?
An administered vertical marketing system (VMS) is based on the size or power of a channel member.
Upstream Partners
Are suppliers that provide raw materials, components, parts, information, finance and/or expertise needed to create a product or service
Which of the following statements is correct regarding supply chains and the value delivery network?
A company's channel decisions directly affect every other marketing decision. Pricing depends on the type of channel members a firm uses. The firm's sales force and communications decisions depend on how much persuasion, training, motivation, and support its channel partners need. Whether a company develops or acquires certain new products may depend on how well those products fit the capabilities of its channel members.
Vertical Conflict
Between different levels-Corporation vs Franchisee(s); Direct vs Channel Sales
Horizontal Conflict
Between same level in the Channel-Franchisee vs Franchisee; Retailer vs Retailer; Reseller vs Reseller
Tesla sells its cars online and through a network of company-owned Tesla stores or "galleries." Which type of vertical marketing system (VMS) has Tesla established?
By owning its retail stores and selling direct through its website, Tesla has established a corporate vertical marketing system (VMS).
Which of the following is NOT one of the major channel design decisions?
Channel design involves analyzing customer needs, identifying channel objectives, identifying major channel alternatives, and evaluating the alternatives. Motivating channel members is part of channel management, not channel design.
When setting channel objectives, companies should state the objectives in terms of ________.
Companies should state their marketing channel objectives in terms of targeted levels of customer service.
Marketing Channel Design (Go-to-Market Strategy)
Designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives
________ is a strategy in which the seller requires that dealers not handle competitors' products.
Exclusive dealing is a strategy whereby a seller requires that dealers not handle competitors' products.
Which of the following statements is correct regarding channel management decisions?
For the most part, companies are legally free to develop whatever channel arrangements suit them. In fact, the laws affecting channels seek to prevent the exclusionary tactics of some companies that might keep another company from using a desired channel. Most channel law deals with the mutual rights and duties of channel members once they have formed a relationship.
Manufacturer-Sponsored Retailer Franchise System
Ford and its franchised dealer network
________ is a practice whereby a producer agrees to sell a brand to a dealer only if the dealer agrees to sell some or all of the rest of its line.
Full-line forcing is a practice whereby a producer agrees to sell a brand to a dealer only if the dealer agrees to sell some or all of the rest of its line.
Target partners with CVS Health, which operates CVS pharmacies and Minute Clinics in Target stores through a store-within-a-store format. Which type of channel arrangement does this represent?
In a horizontal marketing system, in which two or more companies at one level join together to follow a new marketing opportunity. This is what Target and CVS have done.
Companies today see channel members as first-line customers and practice strong ________.
Most companies see their intermediaries as first-line customers and partners. They practice strong partner relationship management, not business-to-business selling, to forge long-term partnerships with channel members.
Selective Distribution
Multiple intermediaries have access to sell/distribute the product Pros -good availability -some level of channel "ownership" Cons -potential for conflict
Which of the following is NOT one of the key functions performed by marketing channel members?
New product development, Channel members and intermediaries may be the source of ideas for new products, but otherwise are not involved in their development.
When a product or service producer cuts out intermediaries and goes directly to final buyers or when radically new types of channel intermediaries displace traditional ones this is called ________.
One major trend is toward disintermediation or channel disruption. Disintermediation and channel disruption occur when product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones.
Exclusive Distribution
Permitting only a limited number of outlets (dealers) the right to distribute a product Pros -Maximum channel ownership -Can elicit "seeking" behavior by consumers Cons -Minimal coverage/availability
Producers of a strong brand sometimes sell it to dealers only if the dealers will take some or all of the rest of its line. This is known as which of the following?
Producers of a strong brand sometimes sell it to dealers only if the dealers will take some or all of the rest of its line. This is called full-line forcing. Such tying agreements are not necessarily illegal, but they violate the Clayton Act if they tend to lessen competition substantially.
Producers of ________ typically use intensive distribution for their products.
Producers of convenience products and common raw materials typically seek intensive distribution—a strategy in which they stock their products in as many outlets as possible. Next question
Producers of convenience products and common raw materials typically seek which distribution arrangement?
Producers of convenience products and common raw materials typically seek intensive distribution—a strategy in which they stock their products in as many outlets as possible. These products must be available where and when consumers want them. Next question
Channel Management Decision
Selecting Channel Members->Managing Channel Members->Motivating Channel Members->Evaluating Channel members
After first analyzing consumer needs, what is the next step in marketing channel design?
Setting channel objectives is the second step in marketing channel design and occurs after consumer needs are analyzed.
Which of the following is NOT correct regarding the strong emphasis companies place on marketing logistics today?
Some companies state their logistics objective as providing maximum customer service at the least cost. Unfortunately, as nice as this sounds, no logistics system can both maximize customer service and minimize distribution costs. The goal of marketing logistics should be to provide a targeted level of customer service at the least cost.
Intensive Distribution
Stocking product in as many outlets as possible pros: -maximum availability cons: -minimal channel "ownership" -Substantial risk of conflict
Service Company-Sponsored Retailer Franchise System
Subway and its franchised restaurant network
What are the four major functions of logistics?
The four major functions of logistics are warehousing, inventory management, transportation, and logistics information management.
One key function performed by channel members is ________, which involves finding and engaging customers and prospective buyers.
The function of contact involves finding and engaging customers and prospective buyers.
What should be the goal of a company's logistics system?
The goal of marketing logistics should be to provide a targeted level of customer service at the least cost. A company must first research the importance of various distribution services to customers and then set desired service levels for each segment.
What are the four major functions of marketing logistics?
The major logistics functions are warehousing, inventory management, transportation, and logistics information management.
What has been the overall impact of DTC brands on marketing channels?
The recent decade has seen the rapid rise of a new type of channel disrupter: direct- to-consumer (DTC) brands. Rather than competing head-to-head with established competitors in retail stores, DTC brands sell and ship directly to consumers through online and mobile channels. DTC brands have found success in categories ranging from beauty and personal care, apparel, and food to pet care, home furnishings, and fitness.
Which of the following is a reason that producers use marketing channels and channel intermediaries?
The role of marketing intermediaries is to transform the assortments of products made by producers into the assortments wanted by consumers. Marketing channel members buy large quantities from many producers and break them down into the smaller quantities and broader assortments desired by consumers.
Which channel partners in a company's supply chain are upstream from a manufacturer or producer?
Upstream from the company is the set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service.
How Channel Members Add Value
What P(s) in the Marketing Mix can the Channel Represent? The Channel can bridge the major time, place, and possession gaps that seperate goods and services from users -scale -target markets(experience) -Financing -Holding Inventory -Combined Solutions
What are the three criteria by which channel design alternatives should be evaluated?
When a company has identified several channel alternatives and wants to select the one that will best satisfy its long-run objectives, each alternative should be evaluated against economic, control, and adaptability criteria.
Channel members should be selected on the basis of all of the following attributes EXCEPT __________.
When selecting intermediaries, the company should determine what characteristics distinguish the better ones, which does not include competitiveness.
Which of the following describes a just-in-time logistics system?
With just-in-time logistics systems, producers and retailers carry only small inventories of parts or merchandise, often enough for only a few days of operations. OK
Tying Agreement
are agreements where the dealer must take most or all of the line
Exclusive Territorial Agreements
are where producer or seller limit territory
Downstream Partners
include the marketing channels (distribution channels) that face towards the customer, including resellers, retailers, distributors and wholesalers
Horizontal Marketing System
is a channel arrangement in which two or more companies at one level join together to deliver a new marketing opportunity -(McDonalds in Walmart) -(Hulu with FX content)
Franchise Organization
is a contractual vertical marketing system in which a channel member, the franchisor, links several stages in the production-distribution process -Franchisor and Franchisees who buy rights
Channel Level (Tier)
is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyers
Indirect Marketing Channel
is a marketing channel containing one or more intermediary levels
Direct Marketing Channels
is a marketing channel that has no intermediary levels
Disintermediation
is the cutting out of marketing channel (distribution channel) intermediaries by producers or the displacement of traditional resellers by new intermediaries
Exclusive Dealing
is when the seller requires that the exclusive distribution sellers not handle competitor's products
Channel Conflict
refers to disagreement among channel memebers over goals, roles, and rewards (territory, sales, and money)
