Distribution Decision (21)

Question 1

Intensive vs. Selective Distribution

Answer 1

Intensive (soft drinks)

Selective (Kronuts)

Question 2

Importance (functions) of Distribution (3 functions)

Answer 2

3 functions tell us why we need distributions channels: TLF

1. Transactional Function
   - buying, selling, negotiating, risk taking
2. Logistical Function
   - assorting, storing, sorting, transportation
3. Facilitating Function
   - financing, grading, providing information

Question 3

Types of Distribution Systems

Answer 3

Indirect distribution Systems vs direct
Direct:
a. producer to consumers (Schwan's)
Indirect:
b. producer-> retailer-> consumer GM
c. producer-> wholesale-> retail-> consumer
d. producer-> agend-> wholesale-> retail-> consumer
OR COSTCO= producer-wholesaler-consumer

Question 4

why are channel decisions important?

Answer 4

• affects every other element of marketing mix

- relatively long-term and complex relationships

Question 5

length of the channel system

Answer 5

Direct sales force- (in- house sales force)

Indirect - through intermediaries

Question 6

Advantages of Direct Channel

Answer 6

• control over distribution functions
• better satisfy customer needs
• cost effective if large enough volume base
• know more about your product
• Your employees livelihood relies on companies success
• main goal is to create demand for your product to end-users

Question 7

Disadvantages of Direct Channel System

Answer 7

• slower process
• limited coverage
• higher risk
• higher fixed cost
• no brand identity

Question 8

Different ways of going indirect (3 Ways)

Answer 8

3 C's 
All vertical market system and are an alternative to traditional marketing channels
1. Corporate Systems
2. Contractual Systems
3. Conventional System

Question 9

Corporate Vertical Systems- indirect channel

Answer 9

owns/ opperates a vertically integrated “captive”
pro- control, customer service
cons investments
Polo, Kroger

Question 10

Contractual Vertical Systems- indirect channel

Answer 10

signs contracts with independent intermediaries
- franchising
pros-
- franchisee - no experience needed, easy to get business help
cons-
- control

cons-

• franchisee may over change
• franchiser quick buck

Question 11

Conventional Vertical System

Answer 11

utilizes independent intermediaries 
pros- 
- risk reduc
- efficiency
cons-
instability

Question 12

Channel Conflict

Answer 12

Veritical conflict:
occurs between different levels in a marketing channel (ie. between wholesaler and manufacturer)

Horizontal conflict:
occurs between intermediaries at the same level in the marketing channel are handling the same brand ie. two retailers: kmart+walmart

Question 13

Vertical Marketing System

Answer 13

professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.
Corporate Contractual and Conventional (administered)

Question 14

Breadth/ Density of the Channel System

Answer 14

achieving the best coverage of the target market requires attention to the density
There are 2 Degrees of distribution density

Question 15

3 Degrees of distribution density (Types in a given market area)

Answer 15

Intensive distribution: place products and services in as many outlets as possible! “convenience” items
(soft drinks, starbucks)

Exclusive distribution: opposite of intensive- for “specialty” items

Selective distribution: Limited number of outlets (dell has its direct channel and then selective distribution for where dell products are sold)

Question 16

Why make channel modifications

Answer 16

competitive; new customer segement; new region

Question 17

Retailing

Answer 17

all activities involved in selling renting and providing goods and services to ultimate consumers

Question 18

Retail outlets

Answer 18

ownership: independent; corporate chain; contractual

service levels: full service–> limited service

Merchandise (specialty/category killers (ebay), scrambled merchandise)

Question 19

Retail Positioning Matrix (Picture end of session 21)

Answer 19

Breadth of product line (y) (broadness of product line- how many different things the company sells in a story)
Value added (x) (quality level, prestige, location)

Wal mart Bloomies

Payless Tiffancy

Question 20

Retailing Trends Graph: Size & Profit

Answer 20

A fewer amount of stores can account for a majority of revenue/profit (ie. 1 sbucks in ny vs 8 in Oklahoma)

Question 21

Distribution Decisions

Answer 21

1. Importance (functions of Distribution
2. Types of Distribution Systems
   a. indirect (agents- intermediaries)
   - types
   - channel decisions
   - channel conflict
   - retailing
   b. direct distribution (own sales force)