Distribution

Question 1

What is a distribution channel?

Answer 1

A set of independent organizations that help make a product or service available for use or consumtion by consumer or business user

Question 2

What is order processing?

Answer 2

The physical moving and distribution of goods

Question 3

What are intermediaries

Answer 3

Certain channels that you distribute through

Question 4

What percentage of retail price does distribution channels account for?

Answer 4

15-40%

Question 5

What are the four external determinants of channel decisions?

Answer 5

• customer characteristics
• nature of the product
• nature of demand/location
• competition
• legal regulations
• local business practices

Question 6

Why is distribution different for low-priced and high-priced goods?

Answer 6

Low-priced high turnover convenience products need intensive distribution
High value/priced products are adapted to a shorter narrower channel

Question 7

What are the three types of market coverage?

Answer 7

intensive, selective, and exclusive

Question 8

What is involved in controlling a channel?

Answer 8

When one member in the vertical distribution channel has its ability to control and influence the decisions and actions of other channel members

Question 9

What is channel integration?

Answer 9

• vertical: controlling members at different levels of the channel, aka a distributor
• horizontal: controlling members at the same level of the channel, aka a competitor

Question 10

What are the market and product factors of short channels?

Answer 10

• market: business users, geographically concentrated, large orders
• product: perishable, complex, expensive

Question 11

What are market and product factors of long channels?

Answer 11

• market: consumers, geographically diverse, small orders

- product: durable, standardized, rather inexpensive

Question 12

What are producer and competitive factors of short channels?

Answer 12

• producer: manufacturer has adequate resources to perform channel functions, broad product line, channel control is important
• competitive: manufacturer is satisfied with intermediaries’ performance in promotion

Question 13

What are producer and competitive factors of a long channel?

Answer 13

• producer: manufacturer lacks adequate resources to perform channel functions, limited product line, channel control isn’t important
• competitive: manufacturer dissatisfied with intermediaries’ performance in promotion

Question 14

What must a distribution contract consist of?

Answer 14

• contract duration
• geographical boundaries
• payment methods
• product and conditions of sale
• means of communication

Question 15

How do you control a distribution channel?

Answer 15

• define performance objectives (ie sales turnover, market share growth rate, etc)
• evaluate continuously
• terminate contracts if they are not performing well

Question 16

What is important in managing logistics?

Answer 16

• order handling
• export documents (transportation, banking, commercial, governmental)
• transportation
• freight forwards (DHL, FedX, etc)
• inventory at factory base
• storage/warehousing
• packaging
• third party logistics

Question 17

What is the fastest growing market sector in Europe?

Answer 17

online retail, about 8-9% of total retail in Europe, US and China

Question 18

What is the main reason for lack of growth in large scale retailing?

Answer 18

Legislation, in Europe and Japan retailing is subject to drastic legislation

Question 19

What are some special issues in international retailing?

Answer 19

• legislation
• internationalization of retailing
• trade marketing
• cross-border alliances in retailing

Question 20

How do channel members add value?

Answer 20

They add value by bridging major time, place, and possession gaps that separate the products from the people who want them

Question 21

What is a vertical marketing system?

Answer 21

It provides channel leadership and consists of producers, wholesalers, and retailers acting as a unified system. It consists of:

• corporate marketing systems
• contractual marketing systems
• administered marketing systems

Question 22

What is a corporate marketing system?

Answer 22

It integrates successive stages of production and distribution under single ownership

Question 23

What is a contractual marketing system?

Answer 23

It consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies of scale impact that each could not obtain alone.
The most common type is the franchise organization, where a channel member called a franchiser links several stages in the process

Question 24

What is an administered marketing system?

Answer 24

Where leadership is not assumed through common ownership or contractual ties but through the size and power of one or a few of the dominant channel members

Question 25

What is a horizontal marketing system?

Answer 25

When two or more companies at one level join together to follow a new marketing opportunity
By working together they can combine financial, marketing, or production resources to accomplish more together than once could do alone

Question 26

What is a multi-channel distribution system?

Answer 26

This occurs when a single firm sets up two or more marketing channels to reach one or more customer segments