Place(Distribution)

Question 1

What two things does the distribution channel encompass?

Answer 1

1) Channel design
-How do we bring the products to market (the end users)
2) Channel Management
-If there are multiple channel members, how do we coordinate with each of them to produce the desired services for the end users.

Question 2

What is a marketing distribution channel?

Answer 2

-A marketing distribution channel is an independent organization that helps make a product or service available for use or consumption by the end user.
-The marketing distribution channel can also be known as “place” which is the most strategic of the 4Ps.
-The choice of a company’s distribution channel is highly critical given that the choice is often costly, and involves long-term contracts with other firms that can’t be changed.
-Amazon Canada spends almost 30% of revenue on fulfillment costs, and it can even be as costly as 50% for other companies.

Question 3

Why are channel members used?
How do channel members create value?

Answer 3

They create efficiency for manufacturers and consumers, so manufacturers don’t deal with a bunch of customers, they only deal with the one distributor. And it helps the manufacturer because they don’t have to ship to so many customers.

They create value by:
1) Helping to complete transactions matching supply and demand, connecting sellers and buyers. E.g. working with real estate agent is similar
2) Helping to fulfill completed transactions
-E.g. when you make an online purchase, Paypal helps to fulfill the payment, and then Fedex helps to ship the product.

Question 4

What are four types of channel members?

Answer 4

1) Agent/broker: They facilitate sales between buyers and sellers without owning the goods, negotiating deals and earning commissions based on transactions. Examples include real estate agents, stockbrokers, and import/export brokers. Businesses use them to expand market reach without taking the risk of paying costs if things don’t work out.
2) Wholesaler: They buy products in bulk from manufacturers and resell them to retailers or businesses. They store goods, manage distribution, and ensure a steady supply. Examples include Costco.
3) Retailer: Retailers sell products directly to consumers, either through physical stores or online platforms. They provide access, customer service, and influence purchasing decisions. Examples include Walmart, Amazon, Apple Stores, and local supermarkets.
4) Facilitating Agency: They support the supply chain by transporting, storing, or processing payments but they do not own or sell products. Examples include FedEx (shipping), Amazon fulfillment centers (warehousing), and PayPal (payment processing).

Question 5

What are the three customer marketing channels?

Answer 5

Channel 1: Producer to consumer.
Channel 2: Producer to retailer. Retailer to consumer.
Channel 3: Producer to wholesaler. Wholesaler to retailer. Retailer to consumer.

Question 6

What are the three business marketing channels?

Answer 6

Channel 1: Producer to business customer.
Channel 2: Producer to business distributor. Business distributor to business customer.
Channel 3: Producer to manufacturer’s representatives or sales branch. They go to the business distributor. Business distributor to customer.

Question 7

What is a channel level?

Answer 7

A channel level refers to each layer of intermediaries involved in moving a product from the producer to the final buyer. These intermediaries perform tasks such as distribution, storage, and sales facilitation. The more levels in a channel, the more complex the distribution process becomes.

Question 8

What is channel length?

Answer 8

Channel length refers to the number of intermediary levels in a distribution channel. A longer channel means more intermediaries, which can reduce the producer’s control over pricing, branding, and customer relationships while increasing complexity. Shorter channels offer more control but may require more resources for direct distribution.

Question 9

What is a direct marketing channel? What are it’s five benefits?

Answer 9

A direct marketing channel is a marketing channel that has no intermediary levels.
Five benefits:
1) Greater control: It enables companies to have full control over pricing, branding, customer experience, and product distribution.
2) Ideal for complex products(B2B sales): A direct marketing channel is best for complex products that require expert consultation(B2B sales).
3) Direct customer interaction: Businesses can engage directly with customers to offer consultative sales and provide product customization, thus improving customer satisfaction.
4) Faster Market Response: Companies can quickly adapt their marketing strategies, pricing, and product offerings based on direct customer feedback, without needing intermediaries to provide the information.
5) Internet Facilitates Direct Distribution: E-commerce and digital platforms make it easier for brands to reach customers directly, reducing reliance on physical stores.

Question 10

What is an indirect marketing channel?

Answer 10

An indirect marketing channel involves one or more intermediaries—such as wholesalers, distributors, and retailers—that help move products from the manufacturer to the final customer. Common examples include consumer goods sold in supermarkets, electronics in retail stores, and clothing in department stores.
Advantages include:
1) Wider market reach
2) Lower distribution costs
3) Expertise of intermediaries
4) Stronger brand presence
5) Focus on core business

Question 11

Explain the concept of channel behaviour to me?

Answer 11

-Each member in a distribution channel. Manufacturers, wholesalers, retailers, and agents each perform a unique role. Success depends on smooth collaboration and coordination between these members.
-Somtimes channel members prioritize their own short-term gains rather than the overall success of the distribution channel. This can lead to inefficiencies or competitive tensions.

Question 12

What is channel conflict?

Answer 12

Channel conflict arises from conflicting goals between channel members, where one or both members pursue their personal interests at the expense of the other. Channel conflict arises when members disagree on roles, responsibilities, or profit distribution. This can occur when a manufacturer starts selling directly to consumers, bypassing retailers, or when a retailer demands higher margins, affecting the wholesalers profitability.

Question 13

What are the two types of channel conflicts? Which is more common? Is channel conflict always a bad thing?

Answer 13

1) Vertical conflict: Occurs between different levels of the same distribution channel, such as between a manufacturer and a retailer. Vertical conflict can be caused by pricing disagreements, direct-to-consumer strategies by manufacturers, or disputes over promotional responsibilities.
2) Horizontal conflict: This happens between business at the same level of the channel, such as competing retailers or wholesalers. An example is one Ford dealership undercutting another in the same region to steal customers.
-Vertical channel conflict is more common.
-When managed well, channel conflict can produce healthy competition, drive innovation, efficiency, and competitive pricing, ultimately benefiting consumers and improving overall market performance.

Question 14

What is disintermediation?

Answer 14

Disintermediation involves cutting out intermediaries, displacing resellers by new types of intermediaries. E.g. Warby Parker going direct to consumer to bypass Luxxotica’s monopoly as they sell to the top designers.

Question 15

What is a vertical marketing system?

Answer 15

A vertical marketing system (VMS) is a distribution model where producers, wholesalers, and retailers work together as a unified system to improve efficiency and control. One channel members owns the others, has contracts with them, or has so much power that they are forced to cooperate. Key characteristics include:
1) Unified structure
2) Centralized control(via one entity)
3) Efficiency and cost reduction

Question 16

What are the three types of vertical marketing systems?

Answer 16

1) Corporate VMS: A single company owns and controls multiple stages of production and distribution. This ensures efficiency, cost control, and streamlined operations. E.g. Zara, Luxxotica.
2) Contractual VMS: Independent firms collaborate through contracts to improve efficiency. This is common in franchise and dealership models. E.g. McDonald’s (franchise), car dealerships.
3) Administered VMS: One dominant channel leader (usually a large retailer or manufacturer) influences other channel members without ownership. Relies on bargaining power rather than contracts. E.g. Walmart

Question 17

What are horizontal marketing systems?

Answer 17

-A Horizontal Marketing System is when two or more companies at the same channel level collaborate to achieve a common goal.
-These partnerships can be between competitors or non-competitors.
-Key Features: Companies share resources, expertise, and distribution networks. Helps businesses expand market reach and improve efficiency. Common in industries like airlines, telecom, retail, and food services.
-Examples include…
-Airline Alliances: Virgin Airlines partnering with Delta and Singapore Airlines.
-Telecom Partnerships: Bell Canada and AT&T USA.
-Retail & Food Collaborations: Walmart and McDonald’s, Indigo and Starbucks.

Question 18

What are multichannel (hybrid) distirbution systems?

Answer 18

-A Multichannel Distribution System (also called a Hybrid Distribution System) occurs when a single company uses multiple distribution channels to reach different customer segments.
-The producer distributes products via multiple pathways:
1) Consumer segment 1: Direct to consumers (e.g., online, telephone, catalogs).
2) Consumer Segment 2: Through retailers.
3) Business segment 1: Via distributors and dealers for business clients.
4) Business segment 2: Using a sales force for business customers.

Question 19

What are the pros and cons of multichannel (hybrid) distribution systems?

Answer 19

1) Pros
-Increased sales and market coverage: By utilizing multiple channels, businesses can expand their reach.
-Customization for different segments: Different distribution channels allow companies to meet the unique needs of various customer groups.
2) Cons
-Difficult to manage: Multiple channels create complexity in coordination.
-Channel conflict: Competition between distribution channels (e.g., online vs retail stores) can create friction.

Question 20

What are the four quadrants of marketing channel design?

Answer 20

1) Analyzing consumer needs
2) Setting channel objectives
3) Identifying major channel alternatives
4) Evaluation

Question 21

What does analyzing consumer needs involve?

Answer 21

-Analyzing consumer needs involves asking the following questions:
1) Where and how do consumers want to purchase?
2) Will they travel?
3) Would they prefer to buy in person or online?
4) Do they want a breadth of options?

Question 22

What does setting channel objectives involve?

Answer 22

-Setting channel objectives involves asking the following questions:
1) Which segments should we serve?
2) How do we best reach those segments?
3) What level of customer service should we provide?

Question 23

What does identifying the channel alternatives your company uses involve?

Answer 23

-You want to choose the ideal coverage density for your company. There’s a spectrum from greater coverage density to less coverage density. It goes in this order:
1) Intensive Distribution: Products are placed in as many outlets as possible for maximum availability. This ensures high coverage and convenience for customers but may lead to reseller conflicts.

2) Selective Distribution: Products are available in multiple, but not all, outlets. Resellers compete to carry the product, providing good market coverage with more control and lower costs than intensive distribution.

3) Exclusive Distribution: A single reseller per geographic market ensures high influence over marketing, higher margins, strong reseller support, and less competition at the point of sale.

Question 24

What are the three evaluation criteria we use to choose if a marketing channel is right for us? What corresponding questions must be asked?

Answer 24

1) Economic criteria: How much will that channel cost? How much will we sell from that channel?
2) Control criteria: How much control over marketing and intermediaries does that channel allow?
3) Adaptability criteria: How flexible is it to changes? How long-term is the commitment?

Question 25

What are marketing channel logistics?

Answer 25

-Marketing channel logistics is the planning, implementation, and controlling of physical distribution and flow of goods. -It includes the downstream flow from the supplier, to the company, to the reseller, to the customer. -It also includes the upstream flow which includes the reverse logistics of the customer returning the product.

Question 26

What are the three forms of supply chain management?

Answer 26

1) Inbound distribution: Moving prodcuts and materials from supplier to factory. 2) Outbound distribution: Moving products from factory to resellers and customer. 3) Reverse distribution: Moving broken, unwanted, or excess products returned by resellers or customers. Do these products go to an outlet store, or are these products burned(which luxury brands do).

Question 27

What are the four major logistics functions?

Answer 27

1) Warehousing 2) Inventory Management 3) Transportation 4) Information Management

Question 28

When determining our warehousing, what questions must we ask ourselves?

Answer 28

-How many warehouses do we need? -What type of warehouses do we need?

Question 29

What questions must organizations ask themselves about inventory management?

Answer 29

-Organizations must ask themselves how much inventory they must carry. -In restaurants, managing inventory is especially relevant where there is so much perishable goods. -Too little could lead to stock-outs, dissatisfied consumers, or costly emergency shipments or production. - Too much results in high inventory carrying costs and stock obsolescence.

Question 30

What questions must organizations ask themselves about transportation?

Answer 30

-What mode of transportation (truck, rail, sea, pipeline, internet) is most cost effective? -How can transportation routes be optimized to reduce costs and delivery times?

Question 31

What questions must organizations ask themselves about information management?

Answer 31

-Channel partners may share information for better joint logistics. What information should be shared among supply chain partners? -E.g. suppliers can know the wholesalers inventory levels so they know when to sell a good, and when to make it out of stock.

Question 32

What are the six forms of transportation?

Answer 32

1) Trucks -Move 90% of goods within Canada -Flexible and fast -Efficient for short hauls of high-value -It gets the product directly to the end customer. 2) Rail -Cost-effective for shipping large amounts of bulk product (e.g. coal, minerals, wood) 3) Water -Very low cost, but very slow -Good for bulky, low-cost non-perishables (e.g., oil, grain). 4) Pipeline -speacialized, e.g. petroleum, natural gas -Typically used to ship their own product. Typically oil. 5) Air -Expensive but fast -Good for isolated communities which would otherwise be hard to reach. -It's also good for perishable goods, and high-value(low quantity) items. 6) Internet -For digital products -Lowest cost because shipping fees are non existent.

Question 33

What does last mile delivery refer to? What is unique about last minute delivery?

Answer 33

-The last mile delivery refers to the last leg of the journey to deliver a product to the consumer's home(it's not actually the last mile). -It's one of the most costly and complex parts of the delivery process. -Companies are increasingly relying on third party couriers to fulfill this part of the process. -Consumer expectations are rising as they now expect fast delivery at a low cost-and possibly even free.

Question 34

What are some recent retail trends?

Answer 34

1) There are fewer retail stores as each year goes by. In 2017, 8,600 in person stores closed, and that number rose dramatically with the covid-19 pandemic. 2) There are more digital native brands, which have only ever existed in the digital world. Examples include Warby Parker, Casper, and Endy Mattresses. 3) "Frictionless" shopping whereby making the final purchase is even easier online. Amazon utilized this with their one click buy option, as well as "Amazon Go."

Question 35

What is retailing? What is a retailer?

Answer 35

-Retailing includes all the activities in selling goods or services directly to final consumers for personal, nonbusiness use. -A retailer or retail store is any business whose sales volume primarily stems from retailing.

Question 36

What are the four types of retailers?

Answer 36

1) Self-service: Customers are completely on their own locating, comparing, and selecting their items 2) Self selection: Customers find their own goods, though they can ask for assistance 3) Limited service: Retailers carry more shopping goods and services, including credit and merchandise return privileges 4) Full service Salespeople are ready to assist in every phase of the process. The high staffing costs are passed on to consumers.

Question 37

What four major categories does nonstore retailing fall under?

Answer 37

1) Direct marketing 2) Direct selling 3) Automatic vending 4) Buying service

Question 38

What is shopper marketing?

Answer 38

Shopper marketing is the way manufacturers and retailers use stocking, displays, and promotions to influence consumers actively shopping for a product.

Question 39

What are central business districts?

Answer 39

The oldest and most heavily trafficked city areas, often known as “downtown.”

Question 40

What are regional shopping centers?

Answer 40

Large suburban malls containing 40 to 200 stores, typically featuring one or two nationally known anchor stores or a combination of big-box stores and smaller stores.

Question 41

What are community shopping centers?

Answer 41

Smaller malls with one anchor store and 20 to 40 smaller stores.

Question 42

What are shopping strips?

Answer 42

A cluster of stores, usually in one long building, serving a neighborhood’s needs for groceries, hardware, laundry, and more.

Question 43

What is a location within a larger store?

Answer 43

Concession spaces taken by well-known retailers like Starbucks inside larger stores, airports, or schools; or “store-within-a-store” specialty retailers located within a department store.

Question 44

What are stand alone stores?

Answer 44

Freestanding storefronts not connected directly to other retail stores.

Question 45

What is a marketing channel system?

Answer 45

The choice of marketing channels a firm uses.

Question 46

How does a push strategy work?

Answer 46

A push strategy relies on the manufacturer's sales team, trade promotions, and other incentives to encourage intermediaries to carry, promote, and sell the product to consumers.

Question 47

How does a pull strategy work?

Answer 47

A pull strategy involves the manufacturer using advertising, promotions, and other communication methods to create consumer demand, prompting intermediaries to stock and sell the product.

Question 48

Why would marketers want to get multichannel customers?

Answer 48

Research shows that multichannel customers are often more valuable to marketers. For example, Nordstrom discovered that customers who shop across multiple channels spend four times more than those who use only one.

Question 49

What is omnichannel marketing?

Answer 49

Omnichannel marketing ensures that multiple channels work seamlessly together, aligning with each customer's preferred shopping experience. It delivers consistent product information and customer service, whether the customer is online, in-store, or on the phone.

Question 50

What is an integrated marketing channel system? What are the three benefits of adding more channels?

Answer 50

In an integrated marketing channel system, the strategies and tactics used in one channel align with those in others. Expanding to multiple channels offers three key benefits: (1) increased market coverage, (2) lower channel costs, and (3) more opportunities for customized selling.

Question 51

What are some risks of adding new marketing channels?

Answer 51

Adding new channels can create challenges, such as conflicts, control issues, and cooperation difficulties.

Question 52

What is demand chain planning?

Answer 52

Demand chain planning occurs when the company thinks of the market market first, and then reverse engineers the supply chain to best target that market. Demand chain planning helps a company estimate whether more money is made upstream or downstream, and gives them insight into disturbances in the supply chain that may change costs, prices, or supplies.

Question 53

What is a value network?

Answer 53

A value network is a system of partnerships and alliances that help source, enhance, and deliver its offerings. This network includes the firm's suppliers, their suppliers, direct customers, and end consumers. It also extends to key relationships with entities like university researchers and government regulatory agencies.

Question 54

What is a zero-level channel or direct marketing channel?

Answer 54

A zero-level channel or direct marketing channel consists of a manufacturer selling directly to the final customer. Examples include mail order, online selling, TV selling, telemarketing, door-to-door sales, home parties, and manufacturer owned stores.

Question 55

What is showrooming?

Answer 55

Showrooming allows buyers to physically inspect a product and gather information in a store but ultimately purchase it online—either from the same retailer or a competitor—often to find a lower price.

Question 56

What are the five service outputs?

Answer 56

1) Desired Lot Size 2) Waiting and delivery time 3) Spatial convenience 4) Product variety 5) Service backup

Question 57

What is desired lot size?

Answer 57

The number of units a channel allows a customer to buy at one time. For example, Hertz prefers a channel that offers large fleet purchases, while households typically need a single unit.

Question 58

What is waiting and delivery time?

Answer 58

The average time customers wait to receive their goods. Faster delivery is increasingly preferred.

Question 59

What is spatial convenience?

Answer 59

How easily customers can access and purchase a product through a marketing channel.

Question 60

What is product variety?

Answer 60

The range of products available through a channel. While more choices help customers find what they need, an overwhelming selection can sometimes be counterproductive.

Question 61

What is service backup?

Answer 61

Additional services like credit, delivery, installation, and repairs that enhance the customer experience.

Question 62

What is exclusive distribution?

Answer 62

Exclusive distribution restricts the number of intermediaries, making it ideal for producers seeking knowledgeable and committed resellers. This approach often involves exclusive dealing agreements, particularly in price-sensitive markets.

Question 63

What is selective distribution?

Answer 63

Selective distribution uses a limited number of intermediaries to carry a product. This approach provides sufficient market coverage while offering greater control and lower costs compared to intensive distribution.

Question 64

What is intensive distribution?

Answer 64

Intensive distribution maximizes product availability by placing goods in as many outlets as possible. This strategy is ideal for frequently purchased items like snacks, soft drinks, newspapers, and gum.

Question 65

What is channel power?

Answer 65

Channel power is the ability to influence channel members' behavior, guiding them to take actions they wouldn’t have otherwise.

Question 66

What is channel coordination?

Answer 66

Channel coordination happens when channel members work together to achieve the overall channel’s goals rather than focusing solely on their own individual interests.

Question 67

What is direct product profitability?

Answer 67

Direct Product Profitability (DPP) measures a store's handling costs for a product—from receiving and storage to paperwork, selection, checkout, and shelf space—until it is purchased by a customer.

Question 68

What is a private label brand?

Answer 68

A private-label brand, also known as a reseller, store, house, or distributor brand, is created and marketed by retailers or wholesalers rather than manufacturers.

Question 69

What are generics?

Answer 69

They are unbranded, plainly packaged, less expensive versions of products.