Distribution Channel Strategy

Question 1

What is the importance of distribution strategy as a marketing tool?

Answer 1

Strong distribution channels help assist competitive advantage as channel decision involve long term commitments

Question 2

Where does the distribution sit in the supply chain?

Answer 2

1. Manufacture service
2. Distribution channel
3. Consumers

Question 3

What is the role of a distribution channel?

Answer 3

To bridge time, place, and possession gaps that separate products from users. With this it also reduces the number of transactions and costs.

Question 4

What do the marketing activities with distribution involve?

Answer 4

Contact with customers, promoting the product, storage, and financing.

Question 5

What is the channel decision process?

Answer 5

marketing and consumer analysis to channel design to channel and member selection.

Question 6

What is channel level in channel design?

Answer 6

Direct Channel: Selling products directly to consumers without intermediaries (e.g., online stores, company outlets).

Indirect Channel: Selling products through intermediaries like wholesalers, retailers, or agents.

Question 7

What is channel ownership in channel design there are two parts?

Answer 7

Conventional Channel: Independent businesses work separately to move products to consumers.

Vertical Marketing System (VMS): Businesses work together in a unified system to streamline product flow.

Question 8

What are the three parts of channel coverage?

Answer 8

Intensive Coverage: Product is available in as many outlets as possible for maximum exposure.

Selective Coverage: Product is sold through a limited number of carefully chosen retailers.

Exclusive Coverage: Product is sold through a single or very few authorized retailers.

Question 9

What are the consumer characteristics for distribution channel strategy?

Answer 9

The number of consumers, shopping frequency, order size, and geographic decision are all important to analyze.

Question 10

What are the product characteristics of distribution channel strategy?

Answer 10

Customized vs standardized, Price, Product life cycle, Technical complexity

Question 11

What are the producer factors for distribution channel?

Answer 11

Desired channel control, financial resources.

Question 12

What are direct channels?

Answer 12

Where manufactures sell straight to consumers.

Question 13

What are indirect channels?

Answer 13

When manufacturers move their products to retailers or wholesalers first before going to consumers.

Question 14

Why are indirect channels preferred?

Answer 14

Because they make goods more convenient, lower level of service is required, and it has access to a larger market of consumers.

Question 15

What are conventional channels and their issues?

Answer 15

Where there are one or more independent channel members. This causes goal conflicts or lack in leadership and power which leads to poor performance.

Question 16

What are vertical marketing systems?

Answer 16

They consist of members acting as a unified system which use contracts, ownership, or power.

Question 17

What is corporate VMS?

Answer 17

Where VMS is owned by either manufacturers or intermediaries(Starbucks).

Question 18

What is contractual VMS?

Answer 18

VMS by contract between channel members. This can be seen with franchise systems.

Question 19

What is administered VMS?

Answer 19

Where channel coordination is achieved by the influence of one channel member rather than ownership(Walmart leveraging substantial market power)

Question 20

What are the three types of channel coverage as well as the goods they serve?

Answer 20

1. Intensive which serve convenience goods(Convenience stores)
2. Selective which serve shopping goods(Apple selling goods through selective retailers)
3. Exclusive: Specialty goods like BMW

Question 21

What are the factors to consider with channel coverage decision?

Answer 21

Type of product, degree of control desired, image issue.

Question 22

What are the 4 different stores in channel member selection?

Answer 22

Specialty stores, department stores, convenience stores, supermarkets.

Question 23

What is channel conflict with channel conflict management?

Answer 23

Disagreement among marketing channel members on goals and roles.

Question 24

What are horizontal conflicts with channel conflict management?

Answer 24

Conflicts among firms on the same level of distribution.(Disputes between businesses at the same level of the channel (e.g., two retailers competing for the same market).)

Question 25

Vertical conflicts

Answer 25

Conflicts among firms at different levels.

Question 26

How can conflicts be handled?

Answer 26

Channel coordination partnerships and VMS

Question 27

What is a multichannel distribution system?

Answer 27

It is where a company combines indirect and direct channels where channels serve different customer segments(Can increase market share).