Chapter 10 Questions - Marketing management PDF

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Marketing management...

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Chapter 10 Questions When does it make sense to use direct distribution? When does it make sense to use indirect distribution? How do product classes affect “place”? Direct Distribution: ● Service firms ● If suitable intermediaries are not available or willing to cooperate Indirect Distribution: ● Most firms that produce consumer products rely heavily on indirect channels. ● A company that has limited financial resources or wants to retain flexibility will work with intermediaries. ○ Intermediaries help producers serve customers better at a lower cost. Product classes help decide how much market exposure well need in each geographic area Provide an example of a discrepancy of quantity and a discrepancy of assortment. Describe the four activities that wholesalers and retailers can do to resolve these discrepancies. Discrepancy of Quantity: The difference between quantity of products it is economical for a producer to make and the quantity final uses of consumers normally want. ● ex) golf manufacturers produce 500,000 balls at a give time, however the average golfer only wants a few balls at a time. Discrepancy of Assortment: The difference between the lines a typical producer makes and the assortment final consumers or users want. ● (ex. Golfers want all gear from one shop and buy from different brands if necessary). Regrouping Activities: Adjust the discrepancies quantities or assortments of products handled at each level in a channel of distribution, (Accumulating, Bulk-breaking, Sorting, Assorting). ● Accumulating: Collecting products from many small producers. This will allow for low transportation rates and is good for developing countries. ● Bulk-Breaking: Dividing larger quantities into smaller quantities, as products get closer to the final market. May involve several levels in the channel. ● Sorting: Separating products into grades and qualities desired by different target markets. ● Assorting: Putting together a variety of products to give a target market what it wants. Give an example of a horizontal and a vertical conflict. How might the channel captain resolve them? Give an example of a horizontal and a vertical distribution arrangement. What are the legal implications for each arrangement? Vertical Conflicts: may occur if a producer and a retailer disagree about how much promotion

effort the retailer should give the producers product. ● Conflicts that occur at different levels of the channel: between the producer, wholesaler and retailer. ● Only illegal if it harms the consumer Horizontal Conflicts: occur between firms at the same level in a distribution channel. ● (between different retailers) ● Horizontal arrangements are illegal: price fixing, unfair competition. What determines the ideal market exposure and what are the three major market exposure strategies? How does market exposure typically change over time? Ideal Market Exposure: Makes a product available widely enough to satisfy target consumers needs, but not exceed them Ideal market exposure strategies are... ● Intensive distribution: Selling the product through all responsible and suitable wholesalers or retailers who will stock or sell the product. ○ Commonly needed for convenience products and business supplies used by all offices because consumer what these products nearby ● Selective distribution: Selling through those intermediaries who will give the product special attention ○ Broad area between intensive and exclusive distribution ○ It may be used to avoid selling to wholesalers or retailers that ■ 1. Place orders that are too small to justify making calls ■ 2. Make too many returns or request too much service ■ 3. Have poor credit rating ■ 4. Are not in a position to do a satisfactory job. ● Exclusive distribution: Selling through only one intermediary in a particular geographic area ○ Just an extreme case of selective distribution- the firm selects only one wholesaler or retailer in each geographic area. Market exposure changes over time: selective often moves to intensive as market grows Why do firms use multiple channels even though they are more difficult to manage? Provide three examples of situations when reverse channels are needed? Multi Channel Distribution: Occurs when producer uses several competing channels to reach the same target market, perhaps using several different intermediaries and advertisers. ● It reflects how customers want to shop. They may find that different channels are more effective at different stages in the purchase process. ● More choices= more conflict. Reverse Channels: Channels used to retrieve products that a customer no longer wants

NEW LAWS: Require reverse channels in some industries, (Batteries, TV). ● Examples of situations: ○ Recall of unsafe products ○ Return of products from incorrectly filled order ○ Return of products under warranty ○ Return of products customer orders in error ○ Return of products customer orders online ○ Return of products to be recycled (bottles, etc)...