Chapter 17 - Value Chain

Question 1

Channel of distribution

Answer 1

Series of firms or individuals that facilitates the movement of a product from the producer to the final customer.

Question 2

Channel Intermediaries

Answer 2

Firms or individuals such as wholesalers, agents, brokers, or retailers who help move a product from the producer to the consumer or business user.

Question 3

Producers

Answer 3

• Large quantity, small variety

Question 4

Consumers

Answer 4

• Small quantity, large variety

Question 5

Functions of Channel Partners

Answer 5

1. Break Bulk
2. Accumulate Bulk
3. Assemble & Sort
4. Create assortment
5. Reduce transactions
6. Transportation & Storage
7. Communication
8. Repair
9. Service
10. Credit/finance
11. Risk Taking

Question 6

Breaking Bulk

Answer 6

Dividing larger quantities of goods into smaller lots in order to meet the needs of buyers.

Question 7

Creating Assortments

Answer 7

Providing a variety of products in one location to meet the needs of buyers.

Question 8

Facilitating Functions

Answer 8

Functions of channel intermediaries that make the purchase process easier for customers and manufacturers.

Question 9

Direct Supply Chain

Answer 9

From producer to customers

Question 10

Indirect Supply Chain

Answer 10

Include partners to help perform functions

Question 11

Disintermediation of the Chain

Answer 11

Elimination of some layers of the channel of distribution in order to cut costs and improve the efficiency of the channel

Question 12

Wholesaling Intermediaries

Answer 12

Firms that handle the flow of products from the manufacturer to the retailer or business user.

Question 13

Independent Intermediaries

Answer 13

Not controlled by any manufacturer but do business with many different manufacturers and customers

Question 14

Merchant Wholesalers

Answer 14

Buy goods from manufacturers and sell to retailers and other customers

Question 15

Take Title

Answer 15

To accept legal ownership of a product and the accompanying rights and responsibilities of ownership.

Question 16

Push Strategy

Answer 16

Promote/communicate to partners and down the line. Information flows to each level.

Question 17

Pull Strategy

Answer 17

Promotion directly from producer to consumer.

- Pulls you into the store.

Question 18

Merchandise agents or brokers

Answer 18

Provide services in exchange for commissions but never take title to the product.

Question 19

Channel levels

Answer 19

The number of distinct categories of intermediaries that populate a channel of distribution.

Question 20

Hybrid Marketing Systems

Answer 20

Use a number of different channels and communication methods to serve a target market.

Question 21

Conventional Marketing System

Answer 21

Multiple-level distribution channel in which channel members work independently of one another.

Question 22

Vertical Marketing System

Answer 22

There is cooperation among members at the manufacturing, wholesaling, and retailing levels.

Question 23

Horizontal Marketing System

Answer 23

Arrangement within a channel of distribution in which two or more firms at the same channel level work together for a common purpose.

Question 24

Intensive distribution

Answer 24

Selling a product through all suitable wholesalers or retailers that are wiling to stock and sell the product.

Question 25

Exclusive Distribution

Answer 25

Selling a product only through a single outlet in a particular region.

Question 26

Selective Distribution

Answer 26

Distribution using fewer outlets than in intensive distribution but more than in exclusive distribution.

Question 27

Channel Leader

Answer 27

• Takes a leadership role
• Establishes norms and processes
• Economic power
• legitimate Power
• Reward or Coercive Power

Question 28

Logistics

Answer 28

The process of designing, managing, and improving the movement of products through the supply chain.

Question 29

Supply Chain

Answer 29

All firms that engage in activities necessary to turn raw materials into a final good or service.

Question 30

Value Chain

Answer 30

SC that looks at how each firm receives inputs, adds value to the inputs, and passes them along

Question 31

Physical Distribution

Answer 31

Activities used to move finished goods to final customers.

- Warehousing, materials handling, transportation, and inventory control.

Question 32

Warehousing

Answer 32

Storing goods in anticipation of sale.

Question 33

Materials Handling

Answer 33

Moving of products into and out of warehouses.

Question 34

Inventory Control

Answer 34

Activities to ensure that goods are always available to meet customer’s demands.

Question 35

Dual Partner Problem

Answer 35

It is acceptable for producers to sell to a variety of wholesalers but not to the wholesalers customers.
- Occurs because there are many retailers to sell to. When they start competing for the same customer, the dual partner problem takes place.

Question 36

Non-traditional partners

Answer 36

Thinking outside of the box.

- Ex. Cologne in departments stores sold at a record company.

Question 37

Gray Markets

Answer 37

Unauthorized use of channel partners

- Better exchange rate.

Question 38

Reverse Channels

Answer 38

Recycling

- Channels bring products from customer to marketer.

Question 39

Channel Selection Considerations

Answer 39

1. Market Mix
2. Company Resources
3. Customer
4. Availability

Question 40

Transportation

Answer 40

• Dependability
• Cost
• Speed
• Accessibility
• Capability
• Traceability

Question 41

Wheel of Retailing

Answer 41

• Companies come into the market a low prices.
• As they establish foolhold, they move up and add services to the product
• This increases cost, so they have to increase price
• New entrants cause competition with lower prices
• The wheel starts over again.