Chapter 15 Learning Review

What are the three degrees of distribution density?

1) Intensive distribution: a firm tries to place its products and services in as many outlets as possible 2) Exclusive distribution: extreme opposite of intensive distribution because only one retailer in a specified geographical area carries the firm's products 3) Selective distribution: lies between these two extremes and means that a firm selects a few retailers in a specific geographical area to carry its products

What are the three basic functions performed by intermediaries?

1) Transactional: occurs when customers buy and sell products/services Intermediaries share the risk in the ownership of inventory in anticipation of sales 2) Logistical: involves gathering, storing, sorting, and transporting products for and to customers 3) Facilitating: makes transactions easier for buyers through financing, grading, and marketing information and research

The choice of a supply chain involves what three steps?

1) Understand the customer-identify its needs 2) Understand the supply chain-determine what it is designed to do well 3) Harmonize the supply chain with the marketing strategy-match supply chain capabilities with the targeted customers' needs and the firm's marketing strategy

What are the three questions marketing executives consider when choosing a marketing channel and intermediaries?

1) Which will provide the best coverage of the target market? 2) Which will best satisfy the buying requirements of the target market? 3) Which will be the most profitable?

What is the principal distinction between a corporate vertical marketing system and an administered vertical marketing system?

A corporate vertical marketing system combines successive stages of production and distribution under a single ownership. In forward integration, a producer owns an intermediary; in backward integration, an intermediary owns a producer. An administered vertical marketing system achieves coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.

What is the difference between a direct and an indirect channel?

A direct channel is one in which a producer of consumer or business products and services and ultimate consumers or industrial users deal directly with each other. In an indirect channel, intermediaries are inserted between the producer and ultimate consumers or industrial users and perform numerous channel functions.

What is the principal difference between a marketing channel and a supply chain?

A supply chain differs from a marketing channel in terms of membership. It includes suppliers who provide raw materials to a manufacturer as well as the wholesalers and retailers-the marketing channel- that deliver the finished goods to ultimate consumers.

What is a supply chain?

A supply chain refers to the various firms involved in performing the activities required to create and deliver a product or service to ultimate consumers or industrial users.

Why are channels for business products typically shorter than channels for consumer products?

Business channels are typically shorter than consumer channels because business users are fewer in number, tend to be more concentrated geographically, and buy in larger quantities.

What is meant by a marketing channel?

Consists of individuals and firms involved in the process of making a product or service available for use or consumption by ultimate consumers or industrial users.

What is meant by exclusive dealing?

Exists when a supplier requires channel members to sell only its products or restricts distributors from selling directly competitive products. It is specifically prohibited under the Clayton Act when it lessens competition or creates monopolies.

A manager's key task is to balance which four customer service factors against which six logistics cost factors?

The four supply chain customer service factors designed to satisfy users are: 1) Time: the time between the ordering of an item and when it is received and ready for use or sale 2) Dependability: the consistency of replenishment 3) Communication: the two-way link between the buyer and seller that helps in monitoring service and anticipating future needs 4) Convenience: there should be a minimum of effort on the part of the buyer in doing business with the seller. The six supply chain logistics cost factors are: 1) Transportation costs 2) Materials handling and warehousing costs 3) Inventory costs 4) Stockout costs (being out of inventory) 5) Order processing costs 6) Return products handling costs