Chapter 14: Marketing Channels and Supply Chain Management

Question 1

Define Marketing Channel

Answer 1

The people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption.

Question 2

What are Several Trends of Competitive Advantage

Answer 2

• If it is done right = efficient
• growth for company
• increased power of retailers
• greater role of info technology

Question 3

Who are Channel Members

Answer 3

All parties in the marketing channel that negotiate with one another to buy and sell products. They facilitate the change of ownership between buyers and sellers and they move products from the manufacturer into the hands of the customers

Question 4

Define the Supply Chain

Answer 4

A connected chain of all the business entities; internal and external to the company; in which they perform or support the marketing channel functions

Question 5

Define Quantity as Overcome Discrepancies

Answer 5

The difference between the amount of products produced and the amount an end user (customer) wants to buy

Question 6

Define Assortment as Overcome Discrepancies

Answer 6

When the consumer does not have all the items needed to receive full satisfaction; marketing channels assemble all products in one location

Question 7

Define Temporal as Overcome Discrepancies

Answer 7

When the product is produced but consumers are not ready to buy; inventories are maintained in anticipation of demand

Question 8

Define Spatial as Overcome Discrepancies

Answer 8

Buyers are all over buy producers are concentrated; making products available in convenient locations

Question 9

Who are Channel Intermediaries and what are their functions?

Answer 9

Taking title, and owning the merchandise and control the terms of sale (Retailers and Merchant Wholesalers take this title)

Question 10

Define Product Characteristic as a Factor in Deciding what Type of Channel to use

Answer 10

Whether the product is standardized or customized, the complexity of the product, and the gross margin of the product

Question 11

Define Buyer Considerations as a Factor in Deciding what Type of Channel to use

Answer 11

How often the product is purchased and how long the buyer is willing to wait to receive the product. Affects the channel members used and the length of channel

Question 12

How many channel functions are performed

Answer 12

Three basic functions, although, channel members may come and go, the channel is quite fluid, but these 3 must be performed

Question 13

Define Contacting and Promoting as a Transitional Function

Answer 13

Contacting potential customers, promoting products, and soliciting orders

Question 14

Define Negotiating as a Transitional Function

Answer 14

Determining how many goods or services to buy and sell, the type of transportation to use, when to deliver, and method and timing of payment

Question 15

Define Risk Taking as a Transitional Function

Answer 15

Assuming the risk of owning inventory

Question 16

Define Physically Distributing as a Transitional Function

Answer 16

Transporting and sorting goods to overcome temporal and spatial discrepancies

Question 17

Define Storing as a Transitional Function

Answer 17

Maintaining inventories and protecting goods

Question 18

Define Sorting as a Transitional Function

Answer 18

Overcoming discrepancies of quantity and assortment

Question 19

Define Sorting Out as a Transitional Function

Answer 19

Breaking down a heterogeneous supply into separate homogeneous stocks

Question 20

Define Accumulating as a Transitional Function

Answer 20

Combining similar stocks into la larger homogeneous supply

Question 21

Define Allocating as a Transitional Function

Answer 21

Breaking a homogeneous supply into smaller and smaller lots (breaking bulk)

Question 22

Define Assorting as a Transitional Function

Answer 22

Combining products into collections or assortments that buyers want available at one place

Question 23

Define Researching as a Facilitating Function

Answer 23

Gathering information about other channel members and customers

Question 24

Define Financing as a Facilitating Function

Answer 24

Extending credit and other financial services to facilitate the flow of goods through the channel to final consumers

Question 25

What are the Three Types of Marketing Channels

Answer 25

1. Consumer Product Channel
2. Business and Industrial Product Channel
3. Alternative Channel Arrangements

Question 26

Define Direct Marketing Channels as a way to reach consumers (In Consumer Product Channel)

Answer 26

• No intermediaries

- Ex. Producer-Owned Stores

Question 27

Define Indirect Marketing Channels as a way to reach consumers (In Consumer Product Channel)

Answer 27

• Can vary in number of intermediaries

- Agents and Brokers do not take this title

Question 28

Define Retail Channel as a way to reach consumers (In Consumer Product Channel)

Answer 28

Very common; as retail is large and can buy in large quantities direct from the manufacturer

Question 29

Define Wholesale Channel as a way to reach consumers (In Consumer Product Channel)

Answer 29

Used for low-cost items that are frequently purchased

Question 30

Define Direct Channels that is common in business and industrial markets

Answer 30

Typically in these markets

• Ex. Manufacturers that buy large quantities of raw material, equipment, etc. directly from other manufacturers

Question 31

Define Indirect Channels that is common in business and industrial markets

Answer 31

Industrial Distributor: Companies that sell standardized items of moderate or low value, often use an industrial distributors. Or companies that cannot afford their own sales force will rely on manufacturer’s representatives or selling agents to sell to industrial distributors

Question 32

Define Multiple Channels as an Alternative Channel Arrangement

Answer 32

Dual Distributor; more than one channel used

Question 33

Define Non Traditional Channels as an Alternative Channel Arrangement

Answer 33

Help to differentiate a product such as the internet, mail orders, infomercials, vending machines

Question 34

Define Strategic Channel Alliances

Answer 34

Cooperative agreements between firms to use one of the manufacturer’s already established channels, particularly useful in global markets

Question 35

What are some factors affecting channel choice

Answer 35

Supply chain managers use answer many questions before choosing a marketing channel. The final choice depends on their desired distribution channel objectives in terms of coverage, costs, and control of their products. To determine the final choice, means, first analyzing several factors that often interact with each other. These factors can be grouped as

Question 36

Define Market Factors as a Factor affecting Channel Choice

Answer 36

• Who (consumer or industrial buyer)
• What (product quantity)
• Where (geographic location, size of market)
• When (seasonal or not)
• How (large or small quantities)

Question 37

Define Product Factors as a Factor affecting Channel Choice

Answer 37

• Complexity (complex, customized and expensive use more of a direct channel)
• Product Life Cycle (can change over the life cycle as the product gains acceptance)
• Delicacy of the product (perishables require shorter channels - quicker)

Question 38

Define Producer Factors as a Factor affecting Channel Choice

Answer 38

Direct Channel (more resources, financial, managerial, marketing, more control, more control desired with pricing, positioning, image, customer support with manufacturer, wishes to provide more)

Question 39

Define the Levels of Distribution Intensity

Answer 39

1. Intensive
2. Selective
3. Exclusive

Question 40

Define Intensive Level of Distribution

Answer 40

• Product availability in every outlet, where potential customers will want to buy
• Very easily accessible
• Manufacturers sell to a large percentage of wholesalers willing to stock their products

Question 41

Define Selective Level of Distribution

Answer 41

• Few chosen, so customers must see out the product

- Manufacturer’s desire to maintain a superior product image to be able to charge a premium price

Question 42

Define Exclusive Level of Distribution

Answer 42

Buyers must search, so generally, these are speciality goods; exclusive image is reinforced

Question 43

Define Channel Power

Answer 43

Channel members’ capacity to control or influence the behaviour of other channel members

Question 44

Define Channel Control

Answer 44

When one channel member intentionally affects another member’s behaviour; control is achieved when one member assumes leadership

Question 45

Define Channel Leadership

Answer 45

Channel captain (which channel member it is, depends on the channel); varies by channel.

Question 46

Define Channel Conflict

Answer 46

Inequitable channel relationships can lead to channel conflict; clash of goals and methods amongst distribution members (not always a bad thing)

Question 47

Define Horizontal (Type of Conflict)

Answer 47

Among channel members at the same level; when manufacturers practise dual distribution

Question 48

Define Vertical (Type of Conflict)

Answer 48

This is more serious; between different levels in a marketing channel; most typically between manufacturer and wholesaler or manufacturer and retailer

Question 49

Define Channel Partnering or Cooperation

Answer 49

Joint effort of channel members to create a supply chain that serves customers and creates a competitive advantage

• Because everyone wins; channel alliances and partnerships help supply chain managers to create channels that work

Question 50

Define Supply Chain Management

Answer 50

The broad range of activities required to plan, control and execute a product’s flow, from acquiring raw materials and production through distribution to the final customer, in the most streamlined and cost-effective way possible.

Question 51

Define Customer Driven Focus as to Supply Chain Management

Answer 51

Focuses on pulling products into the marketplace and partnering with supply chain members to increase customer value.

Question 52

What is the Supply Chain Management Goal?

Answer 52

Being to coordinate and integrate all the activities performed by supply chain members into a seamless process from the source to point of consumption

Question 53

What are the benefits of Supply Chain Management

Answer 53

Lowers the cost, Greater flexibility, improved customer service, higher revenues. (Lower costs in inventory, transportation, warehousing, and packaging)

Question 54

Define Managing Logistics

Answer 54

Logistics is the process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption. The link connecting the logistical components is the logistical information system (Inventory Control, Order Processing, Production Scheduling, and Sourcing and Procurement)

Question 55

Define the Logistics Information System

Answer 55

The Logistics Information System is the link connecting all the logistic components of the supply chain. Working together, the components of the logistics information system are the fundamental enablers of successful supply chain management.

Question 56

Define the Supply Chain Team

Answer 56

Together, with the logistics information system, orchestrates the movement of goods, services, and information from source to consumer. Should include the external participants in the chain too

Question 57

Define Sourcing and Procurement

Answer 57

Purchasing professionals are on the front lines of supply chain management. Biggest Contribution are the vendor relationships

• Plan strategies
• Develop Specifications
• Select Suppliers
• Negotiate Price and Service Levels

Question 58

Define Production Scheduling

Answer 58

As more companies move toward mass customization, and away from mass marketing of goods, the need to stay on top of consumer demand is forcing manufacturers to make their supply chains more flexible. Flexibility is critical to a manufacturer’s success when responding to dramatic swings in demand. To meet consumers’ demand for customized products, companies must adapt their manufacturing approach or even create a completely new process.

• Order is placed by consumer, then production scheduled (mass customization, build to order, pulling product through)

Question 59

Define Order Processing

Answer 59

Becoming more automated through the use of computer technology known as Electronic Data Interchange (EDI). The basic idea of EDI is to replace the paper documents that usually accompanies the business transactions, such as purchase orders and invoices, with electronic transmissions of the needed information
- Proper order processing is critical for good service

Question 60

Define Inventory Control

Answer 60

Inventory Control System develops and maintains an adequate assortment of materials or products to meet a manufacturer’s or a customer’s demand.
- Goal: To keep inventory as low as possible while maintaining an adequate supply