Chapter 10

Question 1

What does the supply chain consist of?

Define upstream

Define downstream

Give the name of each stage in the supply chain of a car manufacturer (4)

Answer 1

‘upstream’ and ‘downstream’ partners

The set of firms that supply the raw materials, components, parts, information, finances and expertise needed to create a product or service

The marketing (distribution) channels that look forward toward the customer

1. Supplier network
2. Auto manufacturer
3. Marketing channel
4. Consumer

Question 2

Name the 3 steps in the supplier network & 1 e.g

Name the 1 step in the auto manufacturer & 1 e.g

” marketing channel & 1 e.g

Answer 2

• Raw material (steel)
• Components (transmission)
• Subassembly (suspension)
• Assembly (General Motors)
• Dealer network (Cadillac)

Question 3

Define marketing (distribution) channel

What is the role of marketing intermediaries?

How many steps does having a distributor cut out?

Answer 3

A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user

To transform the assortments of products made by producers into the assortments wanted by consumers

3 (9 to 6) - all manufacturers contact one distributor instead of individual consumers. Consumers all contact one distributor instead of individual manufacturers

Question 4

Which key functions of marketing channel members help to complete transactions? (5)

Answer 4

• Information - Gathering and distributing marketing research and intelligence info about actors and forces in the marketing environment needed for planning and aiding exchange
• Promotion - Developing and spreading persuasive communications about an offer
• Contact - Finding and communicating with prospective buyers
• Matching - Shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing, grading, assembling and packaging
• Negotiation - Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred

Question 5

Which key functions of marketing channel members help to fulfil the completed transactions? (3)

Define channel level

Answer 5

• Physical Distribution - Transporting and storing goods
• Financing - Acquiring and using funds to cover the costs of the channel work
• Risk Taking - Assuming the risks of carrying out the channel work

Each layer of marketing intermediaries that performs some work in bringing the product and its ownership closer to the final buyer (end user)

Question 6

What does the number of intermediary levels indicate?

Define direct marketing channel

Define indirect marketing channel

Give a sentence about intermediary levels from a producer’s point of view

Answer 6

The length of a channel

Has no intermediary levels; the company sells directly to consumers

Contains one or more intermediaries

A greater number of levels means less control and greater channel complexity

Question 7

What does a marketing channel consist of?

What creates channel conflict?

Give and define the 2 types of channel conflict & 1 e.g

Answer 7

Firms that have partnered for their common good - each member depends on the others

Disagreements over goals, roles and rewards

• Horizontal Conflict - Occurs among firms at the same level of the channel (e.g. between 2 subway stores)
• Vertical Conflict - Occurs between different levels of the same channel (e.g. P&G and Walmart - producer and retailer)

Question 8

What does a conventional distribution channel consist of?

What does a vertical marketing system (VMS) consist of?

Answer 8

One or more independent producers, wholesalers and retailers, with each being a separate business seeking to maximize its own profits, perhaps even at the expense of the whole system

Producers, wholesalers and retailers acting as a unified system, with one member owning the others, having contracts with them or wields so much power that they must all cooperate

Question 9

Give and define the 3 types of VMS’s

Answer 9

• Corporate VMS - Integrates successive stages of production and distribution under single ownership
• Contractual VMS - Independent firms at different levels of production and distribution, who join together through contracts to obtain more economies or sales impact than each could achieve alone
• Franchise Organization - Most common type of contractual relationship - a channel member called a franchisor links several stages in the production-distribution process

Question 10

Give and define the 3 types of franchises

Answer 10

• Manufacturer-Sponsored Retailer Franchise System - E.g Ford and its network of independent franchised dealers
• Manufacturer-Sponsored Wholesaler Franchise System - E.g. Coca-Cola licenses bottlers (wholesalers) in various markets who buy Coca-Cola syrup concentrate and then bottle and sell finished product to retailers in local markets
• Service-Firm-Sponsored Retailer Franchise System - E.g. auto rental business (Avis), fast-food business (Burger King), Motel business (Holiday Inn)

Question 11

What happens in an administered VMS?

Define horizontal marketing system

Answer 11

Leadership is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members

Two or more companies at one level join together to follow a new marketing opportunity