Chapter 14 - Managing Marketing Channels and Supply Chains

Question 0

Define: Intermediary

Answer 0

any intermediary between manufacturer and end user markets.

Question 1

Define: Marketing Channel

Answer 1

Individuals and firms in the process of making a product or service available for use or consumption by consumers or industrial users.

Question 2

What do intermediaries do?

Answer 2

Perform a transactional function that involves buying, selling, and risk taking because they stock merchandise in anticipation of sales.

Question 3

Define: Direct Channel

Answer 3

A marketing channel where a producer and ultimate consumers deal directly with each other.

Question 4

Define: Indirect Channel

Answer 4

A marketing channel where intermediaries are inserted between the producer and consumers and perform numerous channel functions.

Question 5

Define: Business distributor

Answer 5

Performs a variety of marketing channel functions, including selling, stocking, delivering a full product assortment, and financing for business goods and services.

Question 6

Define: Electronic marketing channels

Answer 6

Employ the internet to make goods and services available for consumption or use by consumers or business buyers.

Question 7

Define: Direct marketing channels

Answer 7

Allow consumers to buy products by interacting with various advertising media without a face to face meeting with a salesperson.

Question 8

Define: Multichannel distribution

Answer 8

An arrangement whereby a firm reaches buyers by employing two or more different types of marketing channels.

Question 9

Define: Strategic Channel Alliances

Answer 9

A practice whereby one firms marketing channel is used to sell another firms products.

Question 10

Define: Merchant wholesalers

Answer 10

Independently owned firms that take title to the merchandise they handle.

Question 11

Define: Manufacturers Agents

Answer 11

Work for several producers and carry non-competitive, complementary merchandise in an exclusive territory; also called manufacturers representatives.

Question 12

Define: Selling Agents

Answer 12

Represent a single producer and are responsible for the entire marketing function of that producer.

Question 13

Define: Brokers

Answer 13

Independent firms or individuals whose principal function is to bring buyers and sellers together to make sales.

Question 14

Define: Vertical Marketing Systems (VMS)

Answer 14

Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.

Question 15

Define: Corporate Systems (Corporate Vertical Marketing Systems)

Answer 15

The combination of successive stages of production and distribution under a single ownership is a corporate verticle marketing system.

Question 16

Define: Contractual Systems (Contractual Vertical Marketing System)

Answer 16

Under a contractual vertical marketing system, independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone.

Question 17

Define: Franchising

Answer 17

Contractual arrangement between a parent company (a franchisor) and an individual or firm (a franchisee) that allows the franchise to operate a certain type of business under an established name and according to specific rules.

Question 18

Give 4 factors effecting channel choice with brief descriptions.

Answer 18

Environmental factors - factors such as technological advancements, society changes, and trends.
Consumer factors - Who are the customers? When, where, and how do they buy?
Product Factors - how sophisticated is the product? How easy to cut off unnecessary market channels with this product?
Company factors - a firms financial, human, or technological capabilities affect channel choice.

Question 19

Give three aspects of “Channel Design Considerations”

Answer 19

Target Market Coverage - Intensive distribution (many outlets), exclusive distribution (solo outlets), selective distribution (few outlets)
Satisfying Buyer Requirements - Information, convenience, variety, and attendant services.
Profitability - Margin minus cost

Question 20

Define: Channel Conflict

Answer 20

Arises when one channel member believes another channel member is engaging in behaviour that prevents it from achieving its goals.

Question 21

Define: Disintermediation

Answer 21

Channel conflict that arises when a channel member bypasses another member and sells or buys products direct.

Question 22

Define: Dual distribution

Answer 22

It’s a situation where a manufacturer distributes through its own vertically integrated channel in direct competition with wholesalers and retails that also sell its products. This may violate the competition act.

Question 23

Vertical integration: is it legal?

Answer 23

Like dual distribution, not illegal, but could be taken legal action if seen as a way to unduly eliminate competition.

Question 24

Exclusive dealing: is it legal?

Answer 24

Occurs when a supplier requires channel members to sell only its product or restricts distributors from selling directly competitive products. This action is prohibited under the competition act.

Question 25

Tied Selling: what is it, and is it legal?

Answer 25

occurs when a supplier requires a distributor purchasing some products to buy others from the supplier. This action is prohibited under the Competition Act.

Question 26

Resale of Market Restrictions: what is it and is it legal?

Answer 26

Refers to the suppliers attempt to stipulate to whom distributors may resell the suppliers products and in what specific geographical areas they may be sold. This practice is subject to review under the Competition Act if they are deemed to be restraining or lessening competition.

Question 27

Define: Logistics Management

Answer 27

The practice of organizing the cost effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements.

Question 28

Define: supply chain

Answer 28

a sequence of firms that perform activities required to create and deliver a good or service to consumers or industrial users.

Question 29

Define: supply chain management

Answer 29

the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to customers.

Question 30

Define: Total logistics cost

Answer 30

Expenses associated with transportation, materials handling and warehousing, inventory, stock outs, order processing, and return goods handling.

Question 31

Define: Customer service

Answer 31

The ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience.

Question 32

Transporting goods by rail: relate 3 advantages and 3 disadvantages

Answer 32

Advantages: full capability, extensive routes, low cost
Disadvantages: some reliability (damage problems), not always complete pickup and delivery, can be slow

Question 33

Transportation by truck: 3 advantages and 3 disadvantages

Answer 33

Advantages: complete pickup and delivery, extensive routes, fairly fast
Disadvantages: size and weight restrictions, higher cost, more weather sensitive

Question 34

Transportation by Air: 3 advantages and 2 disadvantages

Answer 34

Advantages: fast, low damage, frequent departures
Disadvantages: high cost, limited capability

Question 35

Transportation by Pipeline: 3 advantages and 2 disadvantages

Answer 35

Advantages: low cost, very reliable, frequent departures
Disadvantages: limited accessibility, slow

Question 36

Transportation by water: 2 advantages and 3 disadvantages

Answer 36

Advantages: low cost, huge capacities
Disadvantages: slow, limited routes and schedules, more weather sensitive.

Question 37

Define: Materials handling

Answer 37

moving goods over short distances into, within, and out of warehouses and manufacturing plants.

Question 38

Define: Just-in-time concept

Answer 38

an inventory supply system that operates with very low inventories and requires fast, on-time delivery.

Question 39

Define: Vendor-managed inventory

Answer 39

an inventory management system whereby the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items.

Question 40

Define: reverse logistics

Answer 40

a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistributing, or disposal.