chapter 14

Question 1

economic utility

Answer 1

form
time
place
possession

Question 2

horizontal integration

Answer 2

the process of a company increasing production of goods or services at the same part of the supply chain. A company may do this via internal expansion, acquisition or merger.

Question 3

vertical integration

Answer 3

degree of ownership a firm has of its marketing channel. The firm may own distributors and orgs that provide ancillary services

example, might hold a farm, a produce distribution business and a green grocery.

Question 4

marketing channel

Answer 4

is the people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption.

Question 5

primary channel partipants

Answer 5

intermediaries such as wholesalers, distributors, retailers, agents and brokers who are part of the proactive marketing design for the channel

Question 6

ancillary channel members

Answer 6

businesses and services whose efforts have been generic but would not work without them.

ex: transportation (trucking)

Question 7

direct channel

Answer 7

formed when the supplier markets and sells directly to the buying organization or end user. No additional primary intermediates are involved.

Question 8

channel pattern

Answer 8

particular design or arrangement of various intermediates that perform channel functions.

ex: instead of going right to end user it would go through sales and marketing flow for large accounts

Question 9

trade credit

Answer 9

payment term provided to end users by distributors and other channel intermediary to finance purchases

Question 10

functional spin off

Answer 10

alternative to vertical integration

ancillary services are provided most efficiently by experets in each service.

Question 11

logistics

Answer 11

the management of the movement, sorting, and storage of goods in the marketing channel

Question 12

supply chain management goal

Answer 12

create value for customers through effective and efficient flow of materials, components, finished goods, and services.

Question 13

physical distribution center

Answer 13

system designed aimed at minimizing costs while maintaining a given level of customer service through the simultaneous management of three elements

• inventory
• transportation
• warehousing

Question 14

distribution center

Answer 14

channel designs that focus on rapid movement of goods rather than on storage of large quantities of goods

Question 15

warehouses

Answer 15

slow movement of goods and focus on storage

Question 16

materials requirements planning

Answer 16

knows the storage, movement, and assortment of goods in business logistics system

Question 17

inventory management

Answer 17

largest cost is often associated with logistic system

Question 18

intensity of distribution

Answer 18

how many distributors in a territory

Question 19

competitive edge in supply chain

Answer 19

design it “the way a customer buys” in that the marketing channel is deferentially invisible to the customer

Question 20

Dual distribution

Answer 20

channel pattern that uses more than one channel design, each intended to reach a different tarket market.

ex: Goodyear tire can go to a logistics provider which then goes to integrated retailers such as franchised dealers, or to a multi-brand distributor that goes to independent retailers such as sears, or a large customer direct channel such as honda

Question 21

multi-distrubtion

Answer 21

multiple channels of the same design in a given territory—customers within a segment with similar needs will expect locational convenience

Question 22

when to NOT use distributor

Answer 22

product is highly customized

• new or innovative
• technically sophisticated
• missionary selling is required
• large buyers are geographically concentrated

Question 23

soft bases of power

Answer 23

qualitative
expert power: expertise, information
referent power: identification

Question 24

hard bases of power

Answer 24

quantitative and specific
reward power: margins, incentives, monetary promotions
coercive power: only effective in asymmetric relationships
legitimate power: contractual obligation

Question 25

horizontal competitors

Answer 25

intermediaries at the same level in a channel, usually existing in multi distribution

Question 26

contractual channels

Answer 26

aim to control through biding agreements with otherwise independent intermediaries

Question 27

affiliate network

Answer 27

sales channel more than it is a distribution channel

ex: link on a website that refers to a product or service supplier site

Question 28

hubs

Answer 28

are a generic class of web sites that make markets—bring buyers and sellers together to facilitate transactions