Chapter 12 Distribution Channels

Chapter 12 - Distribution Channels Chapter 12 Distribution Channels Multiple Choice Questions Distribution channels add value for customers because they: A are the most important component of product promotions B conduct multiple quality reviews for a product C not include external entities or vendors D get products to buyers quickly and at low cost E are crucial only for technical offerings of products Students of marketing often overlook or underestimate the importance of place in the marketing mix simply because it happens behind the scenes Yet distribution channels, or place, add value for customers because they get products to customers efficiently: quickly and at low cost Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-01 The Importance of Distribution Which one of the following statements is NOT true about distribution channels: A Distribution channel is part of the overall supply chain B Wholesalers and retailers are potential intermediaries in distribution channels C Ownership transfer of goods are required in a distribution channel D Distribution channels add value for customers E Distribution strategy is independent of other marketing elements Distribution strategy is integrated with other marketing mix elements Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Difficult Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-01 The Importance of Distribution 12-1 Chapter 12 - Distribution Channels Most U.S companies pay listing fees to get shelf space in retail outlets Which of the following factors has contributed the most to the advent of listing fees? A Retail business is negatively influenced by the economic slowdown B The Internet has emerged as a strong distribution channel C The number of retail chains have increased drastically D Many new products are being introduced each day E The importance given to product quality has strengthened With dozens of new products being introduced each day, the fight for shelf space is fierce For many companies, distribution is not only difficult, but also expensive and involves paying listing fees to get shelf space Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-01 The Importance of Distribution The set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption is called the: A distribution channel B operational structure C production structure D marketing channel E procurement channel A distribution channel is the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption; as such, it consists of all the institutions and marketing activities in the marketing process Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-2 Chapter 12 - Distribution Channels Firms that buy products from manufacturers and resell them to firms that sell products directly to consumers are called: A producers B promoters C manufacturers D retailers E wholesalers Wholesalers are firms that buy products from manufacturers and resell them to retailers, and retailers sell products directly to consumers A simplified supply chain would be one in which manufacturers make products and sell them to intermediaries such as retailers or wholesalers Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics AK Associates is a firm that buys products from various manufacturing companies and resells the goods to other businesses AK Associates is an example of a: A wholesaler B promoter C manufacturer D retailer E producer AK Associates is an example of a wholesaler Wholesalers are firms that buy products from manufacturers and resell them to retailers, and retailers sell products directly to consumers Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-3 Chapter 12 - Distribution Channels Furntech Inc sells office furniture The firm procures merchandise from different manufacturers in Canada and sells it to smaller sellers in Lethbridge Furntech is an example of a: A producer B promoter C manufacturer D retailer E wholesaler Furntech is an example of a wholesaler Wholesalers are firms that buy products from manufacturers and resell them to retailers, and retailers sell products directly to consumers Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics Firms that sell products directly to consumers are called: A promoters B retailers C wholesalers D producers E suppliers Retailers are firms that sell products directly to consumers A simplified supply chain would be one in which manufacturers make products and sell them to intermediaries such as retailers or wholesalers Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-4 Chapter 12 - Distribution Channels Novelty Stores is a small firm that sells its products directly to consumers The company stores many brands of consumer goods and other low-value items Novelty Stores is a(n): A organizer B retailer C producer D supplier E wholesaler Novelty Stores is a retailer Retailers sell products directly to consumers Manufacturers ship to a wholesaler, or, in the case of many multistore retailers, to the retailer's distribution centre or directly to stores Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 10 Prime Stores is located in Prince Albert, Saskatchewan The store displays different types of home furniture, and most of the store's business comes from individual consumers The firm displays products of many manufacturers Prime Stores is a(n): A organizer B producer C retailer D supplier E wholesaler Prime Stores is a retailer Retailers sell products directly to consumers Manufacturers ship to a wholesaler, or, in the case of many multistore retailers, to the retailer's distribution centre or directly to stores Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-5 Chapter 12 - Distribution Channels 11 Wills Cycles is the largest seller of Rober Bicycles in Manitoba The firm ships products directly from Rober's manufacturing plant and sells the products to smaller firms across Manitoba Wills Cycles is a: A promoter B supplier C retailer D manufacturer E wholesaler Wills Cycles is a wholesaler Wholesalers are firms that buy products from manufacturers and resell them to retailers, and retailers sell products directly to consumers Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12 Costco purchase products from suppliers from all over the world in bulk and sell them to consumers Costco is a: A Wholesaler B Supplier C Producer D Retailer E Warehouse Costco is a retailer as it buys product from suppliers and resell them to end consumers (as it's said in the question) Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-6 Chapter 12 - Distribution Channels 13 The integration of two or more activities to plan, implement, and control the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption is called: A marketing management B resource management C logistics management D total quality management E production management Logistics management describes the integration of two or more activities to plan, implement, and control the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption These activities may include, but are not limited to, customer service, demand forecasting, distribution communications, inventory control, materials handling, order processing, parts and service support, plant and warehouse site selection, procurement, packaging, return goods handling, salvage and scrap disposal, traffic and transportation, and warehousing and storage Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 14 Logistics was traditionally the responsibility of: A procurements B suppliers C operations D marketing departments E administrations Distribution channel management, supply chain management, and logistics management are related but have been handled differently in the past Logistics was traditionally the responsibility of operations, under a vice-president of operations Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-7 Chapter 12 - Distribution Channels 15 A retail store that sells multiple brands helps brands obtain competitive intelligence about the customers Which of the following intermediary functions does this relate to? A Physical distribution B Financing C Promotion D Risk taking E Gathering information Gathering information is a facilitating function performed by intermediaries by sharing competitive intelligence about customers or other channel members Distribution channels perform a variety of transactional, logistical, and facilitating functions Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-03 Distribution Channels Add Value 16 Which of the following is NOT an example of a transactional function that intermediaries perform? A Promote products to attract consumers B Purchasing goods for resale C Transact with potential customers D Own inventory that can become outdated E Sharing competitive intelligence about customers Sharing competitive intelligence about customers is an example of facilitating function (Exhibit 12.3) Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-03 Distribution Channels Add Value 12-8 Chapter 12 - Distribution Channels 17 Which of the following is an example of a logistical function that intermediaries perform? A Promoting products to attract consumers B Purchasing goods for resale C Maintaining inventory D Extending credit to customers E Sharing competitive intelligence about customers The function of risk taking, which includes maintaining inventory and protecting goods, is a logistical function performed by intermediaries Physical distribution is another logistical function performed by intermediaries Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-03 Distribution Channels Add Value 18 Which of the following is an example of a facilitating function that intermediaries perform? A Transporting goods to customers B Purchasing goods for resale C Maintaining inventory D Extending credit to customers E Transacting with potential customers Extending credit and other financial services to consumers, or financing, is a facilitating function performed by intermediaries Gathering information is another facilitating function performed Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-03 Distribution Channels Add Value 12-9 Chapter 12 - Distribution Channels 19 A retailer displays a huge billboard of the products of a manufacturer to attract consumers This is an example of the retailer's: A facilitating function B logistical function C transactional function D informational function E distributive function A retailer displaying a huge billboard of the products of a manufacturer to attract consumers is performing a transactional function Purchasing goods for resale to other intermediaries or consumers, promotion, and selling are the transactional functions performed by intermediaries Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-03 Distribution Channels Add Value 20 Value Inc is a manufacturer of high-definition televisions The firm sells its products through external resellers The resellers transport the products to the buyers' location and take care of the installation The functions performed by the reseller exemplify which function performed by intermediaries? A Facilitating B Logistical C Transactional D Financing E Promotional The functions performed by the reseller exemplify the logistical function performed by intermediaries Maintaining inventory, protecting goods, and physical distribution are the logistical functions performed by intermediaries Distribution channels perform a variety of transactional, logistical, and facilitating functions Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-03 Distribution Channels Add Value 12-10 Chapter 12 - Distribution Channels 96 Drobex Manufacturing does not maintain stock in its warehouse and instead keeps stock in its retail outlets Which of the following intermediary functions does Drobex Manufacturing expects its intermediaries to perform? A Financing B Risk taking C Buying D Promotion E Distribution Drobex Manufacturing expects its intermediaries to perform the logistical function of risk taking Maintaining inventory and protecting goods of the manufacturers is a logistical function of risk taking that the intermediaries perform Distribution channels perform a variety of transactional, logistical, and facilitating functions Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-04 Managing Distribution Channels True / False Questions 97 A distribution channel is the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption TRUE A distribution channel is the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption; as such, it consists of all the institutions and marketing activities in the marketing process The terms "distribution channel" and "supply chain" are virtually the same and are often used interchangeably Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-49 Chapter 12 - Distribution Channels 98 Wholesalers not take title to the products that they sell FALSE Wholesalers are those firms engaged in buying, taking title to, often storing, and physically handling goods in large quantities, and then reselling the goods (usually in smaller quantities) to retailers or industrial or business users Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 99 Intensive distribution is the best strategy for shopping products FALSE Selective distribution fits better for shopping products Customers will search for the location and will make extra effort to find the outlet to buy the product Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-09 Distribution Intensity 100 Retailers sell products directly to consumers TRUE Retailers sell products directly to consumers Manufacturers ship to a wholesaler, or, in the case of many multistore retailers, to the retailer's distribution centre or directly to stores Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-50 Chapter 12 - Distribution Channels 101 Shell gas station is an example of a retailer TRUE Retailers sell products directly to consumers Manufacturers ship to a wholesaler, or, in the case of many multistore retailers, to the retailer's distribution centre or directly to stores Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 102 Maintaining inventory on behalf of a manufacturer is an example of a facilitating function of intermediaries FALSE Maintaining inventory on behalf of a manufacturer is an example of a logistical function of intermediaries Distribution channels perform a variety of transactional, logistical, and facilitating functions Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-03 Distribution Channels Add Value 103 One or more intermediaries work with manufacturers to provide goods and services to consumers with indirect distribution channels TRUE With indirect distribution channels, one or more intermediaries work with manufacturers to provide goods and services to consumers In some cases, there may be only one intermediary involved Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers Topic: 12-07 Channel Structure 12-51 Chapter 12 - Distribution Channels 104 Distribution intensity refers to the number of channel members used at each level of the supply chain TRUE Distribution intensity refers to the number of channel members used at each level of the supply chain Distribution intensity commonly is divided into three levels: intensive, exclusive, and selective Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers Topic: 12-09 Distribution Intensity 105 An exclusive distribution strategy is designed to get products into as many outlets as possible FALSE An intensive distribution strategy is designed to get products into as many outlets as possible The more exposure these products get, the more they sell Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers Topic: 12-09 Distribution Intensity 106 Exclusive distribution strategy refers to granting special rights to sell to one or very few retail customers so no other customers can sell a particular brand TRUE Manufacturers might use an exclusive distribution policy by granting exclusive geographic territories to one or very few retail customers so no other customers in the territory can sell a particular brand Exclusive distribution can benefit manufacturers by assuring them that the most appropriate customers represent their products Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers Topic: 12-09 Distribution Intensity 12-52 Chapter 12 - Distribution Channels 107 A firm that adopts selective distribution will have only one retailer in a geographic area FALSE Between the intensive and exclusive distribution strategies lies selective distribution, which uses a few selected customers in a territory Similar to exclusive distribution, selective distribution helps a seller maintain a particular image and control the flow of merchandise into an area, so many shopping goods manufacturers use it Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers Topic: 12-09 Distribution Intensity 108 Channel conflict results when supply chain members have similar goals, roles, or rewards FALSE When channel members are not in agreement about their goals, roles, or rewards, channel conflict results Avoiding vertical channel conflicts demands open, honest communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-04 Managing Distribution Channels 109 A contractual vertical marketing system is characterized by firms that are highly interdependent FALSE In contractual vertical marketing systems, independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and co-ordination and to reduce conflict Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-04 Managing Distribution Channels 12-53 Chapter 12 - Distribution Channels 110 A contractual agreement is formed between a franchisor and a franchisee in the franchising system TRUE Franchising is a contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet, using a name and format developed and supported by the franchisor Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-04 Managing Distribution Channels 111 An advanced shipping notice is an electronic purchase order that retailers send to suppliers FALSE An advanced shipping notice is an electronic document that a supplier sends to a retailer in advance of a shipment to tell the retailer exactly what to expect in a shipment Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy Topic: 12-12 Electronic Data Interchange 112 In a strategic relationship, members are committed to maintaining a long-term relationship TRUE More often than not, firms seek a strategic relationship, also called a partnering relationship, in which the supply chain members are committed to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-05 Managing Supply Chains Through Strategic Relationships 12-54 Chapter 12 - Distribution Channels 113 A dispatcher is a person who procures raw materials for a manufacturer FALSE A dispatcher is the person who co-ordinates deliveries to distribution centres Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy Topic: 12-17 Inbound Transportation Short Answer Questions 114 Explain a distribution channel A distribution channel is the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption; as such, it consists of all the institutions and marketing activities in the marketing process In some cases, companies use direct market channels to deliver their goods to consumers; in other instances, distribution is accomplished indirectly through the use of intermediaries Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-55 Chapter 12 - Distribution Channels 115 Explain logistics management Logistics management describes the integration of two or more activities to plan, implement, and control the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption These activities may include, but are not limited to, customer service, demand forecasting, distribution communications, inventory control, materials handling, order processing, parts and service support, plant and warehouse site selection, procurement, packaging, return goods handling, salvage and scrap disposal, traffic and transportation, and warehousing and storage Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 116 What are direct distribution channels? Give an example of a company that uses direct distribution Direct distribution channels allow manufacturers to deal directly with consumers Many products and services are distributed this way For example, Dell sells products to end consumers through its website Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers Topic: 12-07 Channel Structure 117 What are the main members of a distribution channel? Explain each member role and provide an example for each Manufacturer, wholesalers, and retailers are common members of a distribution channel Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-56 Chapter 12 - Distribution Channels 118 Briefly explain indirect distribution and provide an example of a company that uses it With indirect distribution channels, one or more intermediaries work with manufacturers to provide goods and services to consumers In some cases, there may be only one intermediary involved Many automotive manufacturers, such as Ford, use indirect distribution with dealers acting as the retailer Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers Topic: 12-07 Channel Structure 119 Explain the three functions performed by intermediaries in a distribution channel Provide examples to support your answer Transactional function (buying, risk taking, promotion, & selling) Logistical function (physical distribution & risk taking) Facilitating function (gathering information & financing) Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-03 Distribution Channels Add Value 120 Briefly explain an exclusive distribution strategy Provide an example of a company that uses this strategy Manufacturers might use an exclusive distribution policy by granting exclusive geographic territories to one or very few retail customers so no other customers in the territory can sell a particular brand Exclusive distribution can benefit manufacturers by assuring them that the most appropriate customers represent their products Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers Topic: 12-09 Distribution Intensity 12-57 Chapter 12 - Distribution Channels 121 Describe the common logistical functions that intermediaries perform Provide examples to support your answer The following are the common logistical functions that intermediaries perform: physical distribution, which involves transportation of goods to point of purchase; and storing, which includes maintaining inventory and protecting goods Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-03 Distribution Channels Add Value 122 Explain push and pull distribution strategies Provide one example for each Push marketing strategy: designed to increase demand by focusing on wholesalers, distributors, or salespeople, who push the product to consumers via distribution channels Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers Topic: 12-08 Push Versus Pull Distribution Strategies 123 Describe a contractual vertical marketing system A contractual vertical marketing system is a system in which independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and coordination and to reduce conflict Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-04 Managing Distribution Channels 12-58 Chapter 12 - Distribution Channels 124 What is franchising? Franchising is a contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet, using a name and format developed and supported by the franchisor In a franchise contract, the franchisee pays a lump sum plus a royalty on all sales in return for the right to operate a business in a specific location The franchisee also agrees to operate the outlet in accordance with the procedures prescribed by the franchisor Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-04 Managing Distribution Channels 125 What is electronic data interchange? Electronic data interchange (EDI) is the computer-to-computer exchange of business documents from a retailer to a vendor and back Sales data, purchase orders, invoices, and data about returned merchandise can be transmitted back and forth Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy Topic: 12-12 Electronic Data Interchange 126 Explain the three types of distribution centres There are three types of distribution centres: traditional, cross-docking, and combinations A traditional distribution centre is a warehouse in which merchandise is unloaded from trucks and placed on racks or shelves for storage The second type, called a cross-docking distribution centre, is one to which vendors ship merchandise prepackaged in the quantity required for each store Most modern distribution centres combine the two previous approaches to form a third type of distribution centre Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-04 Explain how logistics management affects distribution strategy Topic: 12-16 The Distribution (or Fulfillment) Centre 12-59 Chapter 12 - Distribution Channels 127 Compare and contrast distribution channel, supply chain, and logistics management A distribution channel is the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption; as such, it consists of all the institutions and marketing activities in the marketing process The terms "distribution channel" and "supply chain" are virtually the same and are often used interchangeably In some cases, companies use direct market channels to deliver their goods to consumers; in other instances, distribution is accomplished indirectly through the use of intermediaries Supply chain management refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize system-wide costs while satisfying the service levels their customers require Logistics management describes the integration of two or more activities to plan, implement, and control the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption These activities may include, but are not limited to, customer service, demand forecasting, distribution communications, inventory control, materials handling, order processing, parts and service support, plant and warehouse site selection, procurement, packaging, return goods handling, salvage and scrap disposal, traffic and transportation, and warehousing and storage Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-60 Chapter 12 - Distribution Channels 128 Explain different channel structure options Provide one example for each structure Direct distribution channels allow manufacturers to deal directly with consumers Direct distribution plays a significant role in business-to-business dealings with companies that sell directly to their largest customers in the public and private sectors Some companies may be forced to distribute their goods directly because they are unable to secure shelf space in retail outlets or are unable to pay the high listing fees demanded by retailers for the shelf space With indirect distribution channels, one or more intermediaries work with manufacturers to provide goods and services to consumers In some cases, there may be only one intermediary involved Today, many companies are embracing a multichannel, or hybrid, approach to distribution Such companies use direct and indirect marketing channels When choosing which channels and retailers through which to sell, the manufacturer should consider where the end customer expects to find the product, as well as some important retailer characteristics Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers Topic: 12-07 Channel Structure 12-61 Chapter 12 - Distribution Channels 129 Explain how distribution styles are classified based on their intensity Provide one example for each Distribution intensity commonly is divided into three levels: intensive, exclusive, and selective An intensive distribution strategy is designed to get products into as many outlets as possible Most consumer packaged goods companies, such as PepsiCo, P&G, Kraft, and most other nationally branded products found in grocery and discount stores, strive for and often achieve intensive distribution Manufacturers also might use an exclusive distribution policy by granting exclusive geographic territories to one or very few retail customers so no other customers in the territory can sell a particular brand Exclusive distribution can benefit manufacturers by assuring them that the most appropriate customers represent their products Between the intensive and exclusive distribution strategies lies selective distribution, which uses a few selected customers in a territory Similar to exclusive distribution, selective distribution helps a seller maintain a particular image and control the flow of merchandise into an area, so many shopping goods manufacturers use it Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers Topic: 12-09 Distribution Intensity 130 Explain how supply chain management affects marketing Every marketing decision is affected by and has an effect on the supply chain When products are designed and manufactured, how and when the critical components reach the factory must be co-ordinated with production The sales department must co-ordinate its delivery promises with the factory or distribution centres A distribution centre—a facility for the receipt, storage, and redistribution of goods to company stores or customers—may be operated by retailers, manufacturers, or distribution specialists Furthermore, advertising and promotion must be co-ordinated with those departments that control inventory and transportation There is no faster way to lose credibility with customers than to promise deliveries or run a promotion and then not have the merchandise when the customer expects it Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management Topic: 12-02 Distribution Channels, Supply Chain, and Logistics 12-62 Chapter 12 - Distribution Channels 131 Explain how distribution channels add value Distribution channels are composed of various entities that are buying, such as retailers or wholesalers; selling, such as manufacturers or wholesalers; or helping facilitate the exchange, such as transportation companies Like interactions between people, these relationships can range from close working partnerships to one-time arrangements In almost all cases though, they occur because the parties want something from one another Distribution channels perform a variety of transactional, logistical, and facilitating functions One important role played by intermediaries is to reduce the number of marketplace contacts, resulting in more efficient systems Intermediaries also match the requirements of individual consumers to the goods that manufacturers produce; handle physical distribution and storage of goods, making them available for customers to purchase; facilitate searches by both buyers and sellers; and standardize exchange transactions While channel functions may shift from one intermediary or channel member to another, it's important to recognize that they cannot be eliminated Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies Topic: 12-03 Distribution Channels Add Value 12-63 ... Objective: 12- 03 Identify how distribution channels add value to businesses and customers Topic: 12- 07 Channel Structure 12- 11 Chapter 12 - Distribution Channels 23 Direct distribution channels. .. Objective: 12- 03 Identify how distribution channels add value to businesses and customers Topic: 12- 09 Distribution Intensity 12- 19 Chapter 12 - Distribution Channels 39 Which of the following distribution. .. Objective: 12- 03 Identify how distribution channels add value to businesses and customers Topic: 12- 09 Distribution Intensity 12- 20 Chapter 12 - Distribution Channels 41 Conflicts in a distribution