Chapter 10: Distribution Strategy

Question 1

Administered System

Answer 1

A vertical marketing system with a higher degree of interorganizational planning than a conventional channel often brought about by having a strong channel leader.

Question 2

Backward Integration

Answer 2

The purchase by wholesalers or retailers of channel members above them.

Question 3

Channel of Distribution

Answer 3

The combination of institutions through which a seller markets products to organizational buyers or ultimate consumers.

Question 4

Contractual System

Answer 4

A vertical marketing system that involves independent production and distribution companies entering into formal contracts to perform designated marketing functions.

Question 5

Convenience Stores

Answer 5

Retailers whose primary advantages to consumers are location convenience, close-in parking, and easy entry and exit. They typically stock a limited number of items that consumers want to buy in a hurry, such as milk or soft drinks and include stores like 7-Eleven and PDQ.

Question 6

Corporate System

Answer 6

A vertical marketing system involving single ownership of two or more levels of a channel such as a manufacturer owning a wholesale operation.

Question 7

Direct Channels

Answer 7

Channels in which the manufacturer sells directly to a market without the use of intermediaries.

Question 8

Direct Marketing

Answer 8

A direct channel in which the seller uses direct mail, telemarketing, direct-action advertising, catalog selling, cable selling, online selling, or direct selling through demonstrations at home or place of work to reach buyers.

Question 9

Exclusive Distribution

Answer 9

An approach to distribution that involves the manufacturer providing exclusive rights to intermediaries in particular territories.

Question 10

Forward Integration

Answer 10

A manufacturer’s purchase of wholesalers or retailers who distribute its products.

Question 11

Indirect Channels

Answer 11

Distribution channels with one or more intermediaries.

Question 12

Intensive Distribution

Answer 12

An approach to distribution that involves using as many wholesalers and retailers as possible to get broad distribution. It is commonly used with convenience goods.

Question 13

Mass Merchandisers

Answer 13

Large retailers that carry broad product assortments and compete on the basis of a good selection in a number of different categories (e.g., Macy’s, Kroeger) or on the basis of lower prices on products in their large assortment (e.g., Walmart, Costco).

Question 14

Multichannel Marketing

Answer 14

The use of traditional channels, such as stores and catalogs, along with electronic exchanges to better serve customers and build relationships with them.

Question 15

Relationship Marketing

Answer 15

Marketing with the conscious aim to develop and manage long-term and/or trusting relationships with customers, distributors, suppliers, or other parties in the marketing environment.

Question 16

Selective Distribution

Answer 16

An approach to distribution in which the manufacturer limits the use of intermediaries to the best available in a geographic area.The intermediaries are commonly selected on the basis of the service or sales organization available or reputation.

Question 17

Specialty Stores

Answer 17

Stores that handle deep assortments in a limited number of product categories, such as The Gap, Batteries Plus, or Best Buy.

Question 18

Total Distribution Costs

Answer 18

Concept that suggests that a channel of distribution should be viewed as a total system composed of interdependent subsystems and that objective of the system (channel) manager should be to optimize total system performance. This typically means the total system should minimize costs for a given level of service.

Question 19

Vertical Marketing Systems

Answer 19

Channels in which members are more dependent on one another and develop long-term working relationships in order to improve the efficiency and effectiveness of the system.

Question 20

Middleman (Marketing Intermediary)

Answer 20

An independent business concern that operates as a link between producers and ultimate consumers or organizational buyers.

Question 21

Merchant Middleman (Marketing Intermediary)

Answer 21

A middleman who buys the goods outright and takes title to them.

Question 22

Agent (Marketing Intermediary)

Answer 22

A business unit that negotiates purchases, sales, or both but does not take title to the goods in which it deals.

Question 23

Wholesaler (Marketing Intermediary)

Answer 23

A merchant establishment operated by a concern that is primarily engaged in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods (usually in smaller quantities) to retailers or to organizational buyers.

Question 24

Retailer (Marketing Intermediary)

Answer 24

A merchant middleman who is engaged primarily in selling to ultimate consumers.

Question 25

Broker (Marketing Intermediary)

Answer 25

A middleman who serves as a go-between for the buyer or seller. The broker assumes no title risks, does not usually have physical custody of products, and is not looked upon as a permanent representative of either the buyer or the seller.

Question 26

Manufacturers’ Agent (Marketing Intermediary)

Answer 26

An agent who generally operates on an extended contractual basis, often sells within an exclusive territory, handles noncompeting but related lines of goods, and possesses limited authority with regard to prices and terms of sale.

Question 27

Distributor (Marketing Intermediary)

Answer 27

A wholesale middleman especially in lines where selective or exclusive distribution is common at the wholesaler level in which the manufacturer expects strong promotional support; often a synonym for wholesaler.

Question 28

Jobber (Marketing Intermediary)

Answer 28

A middleman who buys from manufacturers and sells to retailers; a wholesaler.

Question 29

Facilitating Agent (Marketing Intermediary)

Answer 29

A business firm that assists in the performance of distribution tasks other than buying, selling, and transferring title (i.e., transportation companies, warehouses, etc).

Question 30

Buying (Transaction Function)

Answer 30

Purchasing products for resale or as an agent for supply of a product.

Question 31

Selling (Transaction Function)

Answer 31

Contacting potential customers, promoting products, and soliciting orders.

Question 32

Risk Taking (Transaction Function)

Answer 32

Assuming business risks in the ownership of inventory that can become obsolete or deteriorate.

Question 33

Assorting (Logistical Function)

Answer 33

Creating product assortments from several sources to serve customers.

Question 34

Storing (Logistical Function)

Answer 34

Assembling and protecting products at a convenient location to offer better customer service.

Question 35

Sorting (Logistical Function)

Answer 35

Purchasing in large quantities and breaking into smaller amounts desired by customers.

Question 36

Transporting (Logistical Function)

Answer 36

Physically moving products to customers.

Question 37

Financing (Facilitating Function)

Answer 37

Extending credit to customers.

Question 38

Grading (Facilitating Function)

Answer 38

Inspecting, testing, or judging products, and assigning them quality grades.

Question 39

Marketing Information and Research (Facilitating Function)

Answer 39

Providing information to customers and suppliers, including competitive conditions and trends.