Marketing Chapter 15

Which of the following factors is most likely to be associated with a short marketing channel?

The products are perishable

You work for a food-processing plant that manufactures corn tortillas. You have been asked to review the activities of upstream management to determine if costs can be cut in that area. Which activities listed below will be your concern? Select all that apply.

Contacting the farming cooperative to negotiate the price of corn for your upcoming contract.

_____ is the process of combining several unitized loads into a single well-protected load for shipment.

Containerization

Controlling part of the supply chain that involves finished product storage, outbound logistics, marketing and sales, and customer service constitutes _____.

Downstream management

You are one member of the marketing team for a wine distributor who sells exclusively through your own chain of high-volume shops. Your team wants to explore other available marketing channels, including sales over the Internet and product placement in specialty retailers. In order to come to a consensus, you want to outline some basic questions regarding distribution channels and present them to the team for discussion. The discussion should include all of the following questions except which one?

How will exploring new distribution channels affect relationships with current intermediaries?

Which of the following is NOT typically moved through a short distribution channel?

Imported Women's shoes

Marketers are concerned with distribution intensity, which is how many intermediaries will distribute the goods in a particular market. Select the description of the general categories of market coverage that is incorrect.

In controlled distribution, the manufacturer is forced by law to sell its own products.

Which of the following is NOT a common function of an intermediary in a distribution channel?

Increasing return on investment and profit margins

Frito Lay is owned by Pepsi and has a variety of billion dollar brands such as Doritos, Cheetos, Lays, and Ruffles. These famous snack brands are available in a wide variety of sizes at almost every store location and vending center - from gas stations, to dollar stores, grocery stores, drug stores and super centers. Which level of distribution intensity does Frito Lay utilize?

Intensive

You are contemplating adding direct selling activities to your existing bricks-and-mortar retail business to increase sales. You are concerned, however, that the negative aspects of direct selling outweigh the positive. Which of the following is a negative aspect of direct selling that you must mitigate in some way to be successful?

It may be more expensive and time-consuming than using an intermediary.

As the production manager for Toyota's Georgetown, Kentucky, manufacturing plant, you're responsible for managing the inventory of all of the parts and components that go into every vehicle made there. It's a tough balancing act because you have to make sure your workers have what they need but you also have to minimize the costs associated with storing all of these unassembled components. Which of the following methods of inventory control do you think will work best for your needs?

Keep as many components on hand as you expect to use in the immediate future to ensure workers have just as much as they need, and closely monitor the flow of incoming materials to replace what's used before you run out of anything

At Microsoft, you're responsible for marketing the world-famous Microsoft Office software products. You want to make sure you're using the best distribution channel strategy for reaching both business and home users. In evaluating Microsoft's needs, which factors do you believe have the biggest influence on your choice of the best distribution approach?

Market factors, especially the fact that you're marketing to both the B2B and B2C markets, suggest that dual distribution is the best strategy.

You've just landed a new job as the chief marketing officer for John Deere, manufacturer of agricultural, construction, and gardening equipment. You want to make sure you're using the best distribution channel strategy for reaching both B2B and B2C sales. In evaluating your company's needs, what do you decide is the best approach?

Market factors, especially the fact that you're marketing to two very different groups, suggest that dual distribution is the best strategy.

Miniboss is considering the launch of two new product lines. Option #1: The first is called Get Dressed Together, clothing that teaches toddlers how to dress themselves. Miniboss has recently noticed that a number of its customers comment on social media about the difficulties in dressing their toddlers. Due to the nature of the product, Miniboss believes that it will need to demonstrate the product line to its customers before they will be interested in purchasing. Option #2: The second option is a line of designer hats called Toddler-in-the-Park. These hats will be made from similar materials as the TopToddler line of products. Though Miniboss has focused on the domestic market to date, it plans to sell the Toddler-in-the-Park hats to customers in Europe, and does not foresee needing to demonstrate product to potential customers. Miniboss would like to utilize direct distribution-along with direct selling-for one of the lines, while using intermediaries for the other. Which line should use a direct distribution channel?

Option #1: Get Dressed Together

Miniboss plans to enter the Chinese consumer market with its line of TopToddler custom clothing products. None of its employees, however, have experience marketing and selling in China. To assure quality door-to-door, Miniboss plans to ship directly to customers and retain title to its products along the entire distribution channel. However, they might need to utilize some kind of intermediary along the way. They found two options. Option #1: One is a large wholesaler who carries many lines of clothing products in China already. Option #2: Another is a sales agency that specializes in clothing. Understanding Miniboss's priorities, which of the following intermediaries should they utilize when entering the Chinese market?

Option #2: Agent

Miniboss's direct distribution channel has traditionally consisted of selling its products directly to consumers via its website. Miniboss utilizes supply chain partners like FedEx to deliver the goods, but doesn't utilize any marketing intermediaries. Now, however, Miniboss would like to expand distribution to reach more customers. While the company is growing, it has somewhat limited resources. It wants to avoid any vertical channel conflicts with existing retail partners. Finally, Miniboss wants to pursue selective distribution, eventually moving toward intensive distribution. Miniboss is considering two options. Option #1: The first option is opening 110 of its own retail stores in major markets where it currently sells through other retailers. Option #2: The second option is partnering with a medium-sized retail chain with 100 stores, some in markets where Miniboss already has distribution and some in new markets. Which distribution option should Miniboss choose?

Option #2: Medium-sized retail chain

Miniboss is considering partnering with Nordstrom to retail one of its product lines. As a retailer, Nordstrom will purchase and take title to Miniboss's products, and Miniboss must deliver product to Nordstrom on unitized pallets. Nordstrom does not provide sales forecasts to supply chain partners like Miniboss. Before its pitch to Nordstrom, Miniboss is considering which product line to pitch. Option #1: The first is a 100% custom order, JIT-manufactured line of shoes called CustomKid. Option #2: The second is a generic line of multi-color socks called SportyStripe for which Miniboss usually keeps a large inventory. Understanding the retail requirements at Nordstrom, and the supply chain considerations at Miniboss, which product line should Miniboss choose?

Option #2: SportyStripe

Paul Lindsay is a logistics manager for a farm equipment manufacturer; he needs to move several tractor-trailers of farm equipment from the Midwest manufacturing plant to the East Coast distribution centers. This heavy equipment must travel a long distance—across country—and then over land to the various wholesalers that distribute them. What intermodal operation will allow Paul to combine long-hauling capacity with overland flexibility?

Piggyback

Which of the following distribution strategies seeks to distribute a product through a limited number of retailers?

Selective distribution

As a member of the marketing team for a manufacturing company, you need to be familiar with methods that are available to your company to facilitate communication about and movement of your products and goods. Your company is facing some logistics and supply chain challenges and you have been asked to help find solutions for them. Choose the statement that does not accurately identify the best management approach to deal with each management challenge.

The manufacturing company for which you work wants to consolidate the data from among all the firm's business units. RFID is the best approach.

Peach, a cosmetic company, sells its products only through some independent representatives. To buy a Peach product, customers will have to contact a representative and place an order for the products they need. This information indicates that Peach:

Uses a direct selling strategy

KitchenAid has established an electronic storefront so that its customers can purchase mixers and accessories from its website. This establishment of electronic storefront is likely to result in a _____ conflict between KitchenAid and its retailers.

Vertical

Read the following excerpt from the article, "Lines separating sales channels blur: Manufacturers, direct sellers, retailers, invade each other's turf" by Tom Collinger in Ad Age (March 30, 1998) and then choose the best answer to the question posed below. Conflict in the channels has produced a total blurring of the lines that once separated them. First, there's the blur between manufacturers and retailers. Then, there's the explosion of discount outlet malls, which proudly expose the highest image-oriented brand names to the consumer—direct from the manufacturers.... In addition, because of the proliferation of these malls as legitimate channels, sales for the brands in this channel are in the multimillion-dollar range. Finally, there is the manufacturer and direct-seller blur caused by those manufacturers that recognize the need to gain back some of the control they have lost to retailers.... Some manufacturers have mined niches in the market where they believe direct selling is somehow less objectionable to their retail partners.... Access to the consumer through the Internet will only continue to blur the manufacturer/direct-seller lines, altering the fundamental selling proposition for manufacturers forever (retrieved from http://adage.com/article/news/lines-separating-sales-channels-blur-manufacturers-direct-sellers-retailers-invade-s-turf/66410/?token=56A73BF5A6C2B9B654EC20720143A931AD9C2834E6BA479291D43B7BA2FC933CC6F1207749195851C372CE97A415352673175814DD3C210318452E3D24980737784B96A80C7E3E74). What type of marketing channel conflict is being discussed in the above excerpt?

Vertical Conflict

You'd like to own your own business, and you love to work with your hands, preferably outdoors. That's why a lawn and garden maintenance business is the perfect match for your abilities and interests, and you're ready to start! Which type of distribution channel will work best for launching your new service business, and why?

You'd like to establish and maintain personal relationships with your clients, so you should set up a short distribution channel without intermediaries.

You're the marketing director for a new wrinkle-reducing skincare product manufacturer. Your moderately priced skincare products are quite different from others on the market, and you'd like to make personal contact with your target market - women over 40 - so you can demonstrate the use and benefits of your product. Which distribution channel makes the most sense for your objectives?

A direct channel involving in-home, informercial, and online sales demonstrations and order-taking

Which of the following modes of transportation is the costliest?

Air freight

Which of the following offers the fastest mode of transportation?

Air freight

You're finding your new job as the marketing manager for highly specialized medical equipment to be very challenging. Relatively few medical practices and hospitals across the country need your product, and it's tough to determine who the decision makers are. Which type of distribution channel will work best for your objectives, and why?

Because you are selling in the B2B environment with relatively few business purchasers, a short distribution channel works best for your needs.

Your family owns a commercial bakery that has always partnered with large food distributors that sell and deliver to supermarkets around the United States. You and your sister have recently taken over from the older generation and may consider other distribution options. Your sister is especially interested in shortening the distribution channel. Having more channel strategy experience than her, you explain that moving in this direction could involve all of the following actions except:

Choosing a logistics company experienced in cross-country shipping

The number of intermediaries through which a manufacturer distributes its goods in a particular market is referred to as _____.

Distribution intensity

The director of marketing at your company has asked you to evaluate the cost-cutting potential of using marketing intermediaries. You point out to his or her that intermediaries will save money in some, but not all, of your marketing activities. In which of the following activities would marketing intermediaries be ineffective in saving money?

Manufacturing product

Miniboss wants to incorporate an intermodal strategy for its domestic product delivery, looking to save as much money as possible while keeping delivery times reasonable. It understands that water carriers alone would be an inefficient choice because it's one of the slowest transportation modes. Given these priorities, which of the following choices would provide the most cost savings for Miniboss?

Piggyback

According to the Ad Age article "PennWell acquires Oil & Gas Pipeline Conference" (March 21, 2013), "The pipeline and transportation sectors of the industry are experiencing phenomenal growth due to the resurgence of exploration and drilling in North America" (retrieved from http://adage.com/article/btob/pennwell-acquires-oil-gas-pipeline-conference/288678/?token=56A73BF5A6C2B9B654EC20720143A931AD9C2834E6BA479291D43B7BA2FC933CC6F1207749195851C372CE97A415352673175814DD3C210318452E3D24980737784B96A80C7E3E74). Pipelines rank third after railroads and motor carriers in ton-miles transported, but most people do not recognize pipelines as a major mode of transportation. Nevertheless, pipelines are the preferred method used for transporting crude oil, diesel fuel, kerosene, and gasoline in the United States. Why are pipelines an advantageous method of transport?

Pipelines offer low maintenance and dependable transportation for a narrow but important range of products.

Pipelines rank third after railroads and motor carriers in ton-miles transported, but most people do not recognize pipelines as a major mode of transportation. Nevertheless, pipelines are the preferred method used for transporting crude oil, diesel fuel, kerosene, and gasoline in the United States. What are some drawbacks to transporting via pipeline?

Pipleines can only carry liquids

Using _______ is a component of handling materials appropriately in the factory, in the warehouse, and in the transport terminals.

Protective packaging

Channels designed to return goods to their producers are called _____ channels.

Reverse

_____________ involves combining as many packages as possible into each load moved within a facility.

Unitizing

Which of the following components in the supply chain of a manufacturing company are most concerned with safety?

Warehousing and storage, production, finished product storage

Which mode of transportation is very slow in speed, is low cost and offers very high levels of flexibility in handling?

Water

A(n) _____ is an intermediary that takes title to the goods it handles and then distributes these goods to retailers, other distributors, or sometimes end consumers.

Wholesaler

Now that you've started your new pet grooming business, you've been studying lots of books on marketing so that you can more effectively attract new clients who own pets. You're currently reading about long and short distribution channels. Based on what you've just read, which type of distribution channel will work best for your objectives, and why?

You'd like to establish and maintain personal relationships with your clients, so you should set up a short distribution channel without intermediaries.

On your first day as the new operations manager for a major toy manufacturer, you take a look at how raw materials are handled. The manufacturing plant keeps close to 500,000 types of tiny parts on hand, ready for assembly. To ensure that workers are able to easily locate, inventory, and retrieve these parts, as well as finished goods, you've decided the company needs ______ to keep production at its peak.

an automated warehouse

Many online retailers, such as Amazon, use _________ distribution centers that accept large, consolidated shipments to be divided into smaller ones.

break-bulk

A marketing channel, also called a "______ channel," is one critical component of a distribution strategy.

distribution

Smartwatches seem mainstream to you since you've been marketing them for three years now, but you're aware that some consumers still need a lot of help and information before making a decision whether to buy a smartwatch and, if so, which model to buy. With this in mind, you can see that ____ makes the most sense for promoting your company's smartwatches.

dual distribution, involving direct online sales and intermediary sales through retailers, including electronics and department stores

Logistics managers must control the movement of goods _____ plants, warehouses, and transportation terminals.

inside

Most marketing channels involve at least one __________ or middleman, but the simplest marketing channel is a direct channel.

intermediary

Activities for moving products within plants, warehouses, and transportation terminals comprise the ________ system

materials handling

Marketing channels provide the means by which goods and services flow from the ______ to the consumer or business user.

producer

Reverse channels involve the return of goods to their producers, for example, by _______ or recall

recycling

Warehousing is the location of stock and the number of warehouses the firm maintains, while inventory control is the quantity of stock the firm maintains at each

site

You're the marketing director for a company that manufactures customized mining equipment used to extract fairly rare precious metals like iridium, palladium, and rhodium from the earth. You have chosen to create a fairly short distribution channel because:

there are so few customers for your product that you can manage your own sales efforts within the company.