Chapter 12 Distribution

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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)


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