Session 18

Question 1

Marketing channels - creating customer access: what interest ourself to marketing channels? (3)

Answer 1

• Customer’s decision to buy often based on experience at point of purchase (offline or online)
• Businesses often spend much more $$$ on channels than advertising
• How we create customer access can be a major source of competitive advantage and marketplace disruption

Question 2

Factors included in place(3)

Answer 2

Is product available at:
1. the right time
2. the right place
3. in the right quantity?

Question 3

What is a marketing channel?

Answer 3

Path that enables goods/services to flow from producers to end users

Question 4

Who can be a channel member?

Answer 4

Everyone involved in the distribution channel

Question 5

Name 3 types of intermediaries

Answer 5

1. Retailers
2. Wholesalers
3. Agents/brokers

Question 6

2 types of distribution channels and definition

Answer 6

1. Direct Channel (does not have any intermediaries)
2. Indirect Chanel (involves intermediaries (retailers and wholesalers))

Question 7

What is an agent and brokers channel?

Answer 7

Channel involves agents or brokers who:

1. Have legal authority to represent producers, wholesalers or retailers
2. Do not take ownership in the product

(may involve or not retailers or wholesalers)

Question 8

What is C2C Channel

Answer 8

Consumer can become sellers/manufacturers

Question 9

How do intermediaries add value (3 ways)?

Answer 9

1. Transactional functions (buying, selling)
2. Logistical functions (transporting, storing, sorting, creating assortments)
3. Facilitating functions (payment processing, consumer financing, market research, promotion. product testing, data/analysis. platform maintenance)

Question 10

Negative effects of intermediaries? (3)

Answer 10

1. Increases price for end customer
2. May interfere with branding strategy
3. Channel conflicts may arise

Question 11

What are channel conflicts?

Answer 11

Occur when 2 channel members have goals that are at odds with each other

Question 12

What is an horizontal channel conflict?

Answer 12

• Occurs among channel members at the same level (e.g., aggressive geographic expansions, retailers are competing on price)

E.g.: Provigo selling Coke and Pepsi but profit is different on both products

Question 13

What is a vertical channel conflict?

Answer 13

Occurs among channel members at different levels (e.g., disintermediation, asymmetric bargaining power)

Question 14

How to avoid channel conflicts?

Answer 14

Vertical integration = control more of the channel

Question 15

What is a vertical marketing system?

Answer 15

Central coordination of the marketing channel

Question 16

Characteristics of independent marketing channel? (3)

Answer 16

1. Channel members are independent
2. Each seeks to maximize its own profit
3. Can result in poor performance/high prices

Question 17

Characteristics of vertical marketing system (2)

Answer 17

1. Channel members act as a unified system
2. Greater control, less conflict, economies of scale

Question 18

What are 3 different types of VMS?

Answer 18

1. Corporate
2. Contractual
3. Administrated

Question 19

What is corporate VMS?

Answer 19

Successive stages of production and distribution under one single ownership (ZARA)

Question 20

What is contractual VMS?

Answer 20

Successive stages of production and distribution based on contracts agreed by independent firms (McDonald’s)

Question 21

What is administered VMS?

Answer 21

Successive stages of production and distribution coordinated by one powerful channel member (Walmart)

Question 22

Characteristics of distribution intensity (2)

Answer 22

1. Not always “more = better”
2. Coverage of target market

Question 23

Distribution intensity types (3)

Answer 23

1. Intensive (high coverage, convenient for end customers, high conflict potential)
2. Selective (retailers compete to carry our product)
3. Exclusive (high margins throughout the channel, stable level of distribution)

Question 23

Types of target market coverage? (3)

Answer 23

1. Intensive distribution: as many outlets as possible (convenience g)
2. Exclusive distribution: as few outlets as possible (shopping goods)
3. Selective distribution: balances between intensive and exclusive (specialty goods)

*g = goods