10. Place

Question 1

What is the route selected to move products to market through different intermediaries called?

Answer 1

Channel Structure

Question 2

Give the three types of channel structures for consumer goods, an example and an advantage of each

Answer 2

1. Direct Supply
   Producer - Consumer
   Manufacturer and consumer deal directly with each other e.g. factory shop, avon party
   + reduces intermediaries and cost
2. Short Channel
   Producer - Retailer - Consumer
   e.g. supermarket chains
   + Large quantities, very efficient
3. Long Channel
   Producer- Wholesaler- Retailer - Consumer
   + wholesaler can cater to small and large retailers

Question 3

Give the four types of channel structures for B2B markets

Answer 3

1. Manufacturer - User
   Small quantities, high unit costs and small geographic areas
2. Manufacturer - distributor - user
   e. g. building materials sold to builders merchants, then on to builders
3. Manufacturer - agent - user
   Used when there is a need for expertise selling. Agents facilitate exchange, usually for commission
   e.g. international companies may use agents to sell their products in different countries
4. Manufacturer - agent - distributor - user
   e. g. fast moving export markets

Question 4

What is the benefit of having multiple channels of distribution?

Answer 4

Enables more market segments to be reached
Can increase penetration levels
For multinationals, they can choose the best strategy for the locality

Question 5

Define Marketing Channel

Answer 5

A marketing channel is the structure linking a group of individuals or organisations through which a product or service is made available to the consumer or industrial user.

Question 6

What is the role of an intermediary

Answer 6

increase efficiency and reduce cost of individual transactions between buyers and sellers

Question 7

According to Webster (1979), what are the three value-added services provided by intermediaries

Answer 7

Facilitating Value

• Financing - manufacturer has to manage fewer accounts (with two or three wholesalers rather than 200 individual retailers) which improves cash flow
• Training
• Information
• After-sales

Transactional Value

• Risk moves to intermediary so they are responsible for resale
• Marketing- responsible for providing interface between manufacturer and consumer (retail environment)
• Administration

Logistical Value
- Assortment - compiling an assortment of products from different sources that suits the customers’ needs
Assortment strategy is a critical variable in a retailer’s marketing strategy. The key is to build an assortment that reflects the needs of the target market.

Question 8

Give examples of intermediaries

Answer 8

Wholesalers
Retailers
Agents and Brokers 
Franchisees 
Distributor and dealer

Question 9

define distributor/dealer

Answer 9

A distributor or dealer is an intermediary who adds value through special services associated with stocking or selling inventory, credit and after-sales service.

Question 10

define agent/broker

Answer 10

An agent or broker is an intermediary who has the legal authority to act on behalf of the manufacturer, although they do not take legal title to the goods or handle the product directly in any way.

Question 11

define retailer

Answer 11

A retailer sells direct to the consumer and may either purchase direct from the manufacturer or deal with a wholesaler, depending on purchasing power and volume.

Question 12

define wholesaler

Answer 12

A wholesaler is an intermediary which buys products in bulk, usually from manufacturers, and resells them to trade customers, usually small retailers.

Question 13

define franchisee

Answer 13

A franchisee holds a contract to supply and market a product or service to the design or blue-print of the franchisor (the owner or originator of the product or service).

Question 14

Retailers: forms of ownership

Answer 14

Independent
- most common (63% of retailers in UK) but low sales volume only 30% of total sales

Corporate Chain - multiple outlets under common ownership
centralised decisions, economies of scale
e.g. M&S

Contractual System - link members of distributional channels through contractual agreements rather than ownership
e.g. franchising

Question 15

Define market channel strategy

Answer 15

the approach taken about the allocation and performance of roles, the basis of remuneration within the system, and the effectiveness of alternative configurations in enabling market penetration to be achieved competitively and efficiently.