exam 04 Flashcards
(17 cards)
What are distribution channels?
The system that moves a product from manufacturer to consumer
Helps manage product flow, ownership, payments, information, and promotion
What are the five linkages in distribution?
- Product Flow: Manufacturer → wholesaler → retailer → consumer
- Title Flow: Transfer of ownership
- Payment Flow: Money/credit exchange
- Information Flow: Shared data among channel members
- Promotion Flow: Advertising/promo efforts across channel
These linkages help streamline the distribution process.
List the methods of distribution based on channel length.
- 1-Step: Manufacturer → Consumer
- 2-Step: Manufacturer → Retailer → Consumer
- 3-Step: Manufacturer → Wholesaler → Retailer → Consumer
- 4-Step: Manufacturer → Agent → Wholesaler → Retailer → Consumer
The 3-Step method is the most common.
What are the functions of wholesalers?
- Buy
- Sell
- Finance
- Inform
- Promote
- Bulk breaking
- Transport + warehouse products
Wholesalers play a crucial role in the distribution process.
What is a merchant wholesaler?
A wholesaler that owns the product
Example: General distributors
What is the role of retailers?
Sell goods/services directly to end consumers
Retailers are the final link in the distribution chain.
Name two types of retailers.
- Department Stores (e.g., JC Penney, Macy’s)
- Discount Houses (e.g., Big Lots, Dollar General)
Each type of retailer serves a different market segment.
What is a franchise?
A contractual agreement between a dealer (franchisee) and supplier (franchisor)
Examples include McDonald’s and KFC.
Define intensive distribution level.
Max exposure for convenience goods
Examples: Coke, chips
What is price in marketing?
Value placed on what is exchanged
Price is a critical factor in marketing strategies.
What are pioneer pricing strategies?
- Price Skimming: Start high → lower later
- Penetration Pricing: Start low to gain market share
These strategies are used for new products.
What is psychological pricing?
Pricing that considers the psychological impact on consumers
Examples include odd-even pricing and prestige pricing.
What are the pricing objectives?
- Profit Maximization
- ROI (Return on Investment)
- Sales/Volume Growth
- Competition-Oriented
- Survival Pricing
- Status Quo
These objectives guide pricing strategies.
What is the formula for markup on cost?
Markup on Cost = (P - C) / C
Where P = Price, C = Cost.
Fill in the blank: The method of pricing based on consumer demand elasticity is _______.
Demand-Oriented
Examples: Insulin (inelastic), cereal (elastic).
What is the definition of a cash & carry wholesaler?
Buyer pays cash and self-picks up products
Example: Local produce.
True or False: Exclusive distribution is aimed at maximizing exposure for specialty goods.
False
Exclusive distribution focuses on prestige and control.
