Distribution

Question 1

Porter’s Model: understanding competitiveness: 5 forces

Answer 1

1) Rivalry Among Firms
2) Potential Entrants
3) Substitutes
4) Bargaining power: Suppliers (Most marketing relevant)
5) Bargaining power: Buyers (Most marketing relevant)

Question 2

Break-even point formula and describe graph

Answer 2

BE = Fixed cost / (Prices - Variable Cost)
Graph as vertical line at VC, price plotted to the right, steep near VC line, drops off and flats as price increases

Question 3

4 Determinants of Buyer vs Seller Power

Answer 3

1) Economic Leverage (walmart)
2) Product Differentiation, commoditization (credit cards)
MARKETING DETERMINANTS BELOW
3) Brand Name (Nike)
4) Influence on Consumer Decisions (credence goods, you might trust a sales person at Best Buy)

Question 4

Vertical Integration

Answer 4

Firm owns its supplier and distributors.
Can be ineffective since supplier/distributors aren’t forced to compete for sales. (Outsourcing)

Question 5

5 Benefits of outsourcing

Answer 5

1) Lower Cost
2) Flexibility (hiring/firing)
3) Legal Protection
4) Higher competence & innovation
5) Doesn’t distract from your Strategic Focus (core competence)

Question 6

3 Disadvantages of Outsourcing

Answer 6

1) True cost of savings (incompetence)
2) Less control (salesforce)
3) Switching costs