Chapter 13

Question 1

Channel of distribution (marketing channel)

Answer 1

A sequence of marketing organizations that directs a product from the producer to the ultimate user.

Question 2

Middleman (marketing intermediary)

Answer 2

A marketing organization that links a producer and user within a marketing channel:
> Merchant middleman—takes title to products by buying them.
> Functional middleman—helps in the transfer of ownership of products but does not take title to the products.
>
Retailer—buys from producers or other middlemen and sells to consumers
Wholesaler middleman—sells products to other firms.

Question 3

Producer to consumer (direct channel)

Answer 3

• No intermediaries.
• Used by all services and by a few consumer goods
• Producers can control quality and price, do not have to pay for intermediaries, and can be close to their customers.

Question 4

Producer to retailer to consumer

Answer 4

• Producers sell directly to retailers when retailers (Walmart) can buy in large quantities.
• Most often used for bulky products for which additional handling would increase selling costs, and for perishable or high-fashion products that must reach consumers quickly.

Question 5

Producer to wholesaler to retailer to consumer

Answer 5

• The traditional channel.
• Used when a producer’s products are carried by so many retailers that the producer cannot deal with them all.

Question 6

Producer to agent to wholesaler to retailer to consumer

Answer 6

• Agent—functional middlemen that do not take title to products and are compensated by commissions paid to the producers.
• Often used for inexpensive, frequently purchased items, for seasonal products, and by producers that do not have their own sales forces.

Question 7

A manufacturer may use multiple channels

Answer 7

• To reach different market segments.
  > When the same product is sold to consumers and businesses.
• To increase sales or capture a larger market share

Question 8

Producer to business user

Answer 8

• Usually used for heavy machinery, airplanes, major equipment.
• Allows the producer to provide expert and timely services to customers.

Question 9

Market coverage

Answer 9

=> Intensive
The use of all available outlets for a product to saturate the market.
- Convenience products - coke, Pringles
- Available in many retail outlets

=> Selective
The use of only a portion of the available outlets for a product in each geographic area.
- Shopping products such as DVD, shoes
- available in some retail outlets

=> Exclusive
The use of only a single retail outlet for a product in a larger geographic area.
- Specialty products - BMW, Fendi
- available in few outlets

Question 10

Wholesalers

Answer 10

=> Justifications for marketing intermediaries
- Intermediaries perform essential marketing services.
- Manufacturers would be burdened with additional record keeping and maintaining contact with numerous retailers.
- Costs for distribution would not decrease and could possibly increase due to the marketing inefficiencies of producers.

Question 11

Independent retailer

Answer 11

A firm that operates only one retail outlet.

Question 12

Chain retailer

Answer 12

A company that operates more than one retail outlet.

Question 13

Department store

Answer 13

A retail store that:
- Different sections under one roof
- Sells at least home furnishing, appliances, family apparel, and household linens and dry goods, each in a different part of the store

Question 14

Discount store

Answer 14

A self-service, general-merchandise outlet that sells products at lower-than-usual prices.

Question 15

Warehouse showroom

Answer 15

A retail facility in a large, low-cost building with large on-premises inventories and minimal service.

Question 16

Convenience store

Answer 16

A small food store that sells a limited variety of products but remains open well beyond normal business hours.

Question 17

Supermarket

Answer 17

A large self-service store that sells primarily food and household products.

Question 18

Superstore

Answer 18

A large retail store that carries not only food and nonfood products ordinarily found in supermarkets but also additional product lines.

Question 19

Traditional specialty store

Answer 19

A store that carries a narrow product mix with deep product lines.

Question 20

Category killer

Answer 20

A very large specialty store that concentrates on a single product line and competes on the basis of low prices and product availability.

Question 21

Types of non-store retailing

Answer 21

A type of retailing whereby consumers purchase products without visiting a store

=> Direct selling
The marketing of products to consumers through face-to-face sales presentations at home or in the workplace.

=> Direct marketing
The use of the telephone, Internet, and non-personal media to introduce products to customers, who can then purchase them via mail, telephone, or the Internet.

=> Catalog marketing
An organization provides a catalog from which customers make selections and place orders by mail, telephone, or the Internet.

=> Direct-response marketing
A seller advertises a product and makes it available, usually for a short time period, through mail, telephone, or online orders.

=> Telemarketing
The performance of marketing-related activities by telephone

=> Television home shopping
Products are presented to television viewers, who can buy them by calling a toll-free number and paying by credit card.

=> Online retailing
Makes products available to buyers through computer connections.

=> Automatic vending
The use of machines to dispense products.

Question 22

Integrated Marketing Communications

Answer 22

Coordination of promotion efforts to ensure maximal informational and persuasive impact on customers

Results in a consistent message to customers, long-term customer relationships, and the efficient use of promotional resources
- Mass media advertising has given way to targeted promotional tools (e.g., cable TV, direct mail, and the Internet)
- The overall cost of marketing communications has risen significantly, pressuring managers to make the most efficient use of marketing resources

Question 23

Promotion

Answer 23

Commonly the object of two misconceptions
- Promotional activities make up the entire field of marketing
- Promotional activities are unnecessary and cause higher prices

=> Role of promotion
To facilitate exchanges directly or indirectly by informing individuals, groups, or organizations and influencing them to accept a firm’s products or to have more positive feelings about the firm
> Convey product and service information directly to target market segments
> Provide information to interest groups, regulatory agencies, investors, and the general public

• To maintain positive relationships between a company and various groups in the marketing environment

Question 24

Promotion Mix

Answer 24

The particular combination of promotion methods a firm uses to reach a target market

=> Advertising
A paid non-personal message communicated to a select audience through a mass medium

=> Personal selling
Personal communication aimed at informing customers and persuading them to buy a firm’s products

=> Sales promotion
The use of activities or materials as direct inducements to customers or salespersons

=> Public relations
Communication activities used to create and maintain favorable relations between an organization and various public groups, both internal and external

Question 25

Advertising

Answer 25

=> Primary-demand advertising
Used to increase demand for all brands of a product in a specific industry

=> Institutional advertising
Designed to enhance a firm’s image or build its reputation

Question 26

Advertising Media

Answer 26

The forms of communication through which advertising reaches its audience

• Newspapers
  Relatively inexpensive and timely; short life span
• Magazines
  Reach a specific market segment; more prestigious than newspapers; high cost; lack of timeliness
• Direct mail
  Most selective; effectiveness can be measured; email
• Yellow pages advertising
  Print and online; local; purchased for one year
• Out-of-home advertising
  Short promotional messages on billboards, posters, signs, and transportation vehicles; focuses on geographic area; fairly inexpensive
• Television
  The primary medium for larger firms trying to reach national or regional markets
  Network time; local time; sponsoring a show; spot time; product placement; infomercials
• Radio
  Offers selectivity; most accessible medium; can be less expensive than other media
• Internet
  Increasingly popular
  Banner and button ads; sponsorship ads; keyword ads; interstitials
• Social media
  Increasingly popular, more personal connection
  Only reaches person at the computer
  So new, uncertainty of best way to use it
  Large time commitment to monitor activity

Question 27

Personal selling

Answer 27

• most adaptable promotion method
• most expensive promotion method

Question 28

Sales promotion

Answer 28

Activities or materials that are direct inducements to customers or salespersons

=> Sales Promotion objectives
- To attract new customers
- To encourage trial of a new product
- To invigorate the sales of a mature brand
- To boost sales to current customers
- To reinforce advertising
- To increase traffic in retail stores
- To steady irregular sales patterns
- To build up reseller inventories
- To neutralize competitive promotional efforts
- To improve shelf space and displays

=> Methods
- Rebate
A return of part of the purchase price of a product
- Coupon
Reduces the retail price of a particular item by a stated amount at the time of purchase
- Sample
A free product given to customers to encourage trial and purchase
- Premium
A gift a producer offers to a customer in return for buying its product
- Frequent-user incentives
A program that rewards customers who engage in repeat (frequent) purchases
- Point-of-purchase displays
Promotional material in the retail store designed to inform customers and encourage purchases
- Trade shows
Industry-wide exhibits at which many sellers display their products
- Buying allowance
A temporary price reduction to resellers for purchasing specified quantities of a product
- Cooperative advertising
A manufacturer agrees to pay a certain amount of the retailer’s media cost for advertising the manufacturer’s product

Question 29

Public relations

Answer 29

A broad set of communication activities used to create and maintain favorable relationships between an organization and various public groups, both internal and external
- Customers, employees, stockholders, suppliers, educators, the media, government officials, society in general

=> Types of public relations tools
- Written and spoken communications
Brochures, newsletters, company magazines, annual reports, news releases, corporate-identity materials, speeches
- Event sponsorship
Special events such as concerts and charity functions that the firm underwrites wholly or partially

=> Publicity
Communication in news-story form about an organisation, its products, or both
> News release
> Feature article
> Captioned photograph
> Press conference