TEST 1 IDENTIFICATION CHAPTER 4

Question 1

is a plan for the distribution and movement of
products and services from the producer to the customer.

Answer 1

Channel Design

Question 2

is also understood as the process involved in the
development of new marketing channels that no one has tried
before or it can also refer to the strategy of modifying existing
channels.

Answer 2

Channel Design

Question 3

A ______ is defined as “a chain of linked businesses or individuals
through which a product or service passes from one person or firm to
another.”

Answer 3

Channel

Question 4

3 STAGES IN C H A N N E L P L A N N I N G

Answer 4

Step 1: Analyzing Consumer Needs
Step 2: Setting Channel Objectives
Step 3: Identifying Major Alternatives
Step 4: Evaluating the Major Alternatives

Question 5

This involves understanding customers’ preferences,
expectations, and behaviors regarding how they want to access and purchase
products or services. It can be done by answering the following questions:
* Do the customers want to buy from a nearby location, or are they willing to go to
a place away from their homes to buy the product or service?
* Do they want to purchase the product or service online, in person, or by phone?
* Do they want specialized products or services or value breadth of assortment?
* Do the consumers want add-on services with the main product, such as delivery,
installation, repair, etc., or are they ready to get these services from some other
place?

Answer 5

Step 1: Analyzing Consumer Needs

Question 6

After analyzing consumer needs, the next step is to establish clear channel
objectives. It means that the company, in this step, will have to state its
marketing channel objectives according to the targeted level of customer service.
For this, a company has to first identify different segments of consumers who
want different service levels and then decide which segment they should serve
along with the best channel for each of the selected segments. The basic motive
of the company for each segment is to minimize the total channel cost of meeting
the requirements of customer service
Other factors that influence the channel objectives of a company include the
company’s nature, its products, marketing intermediaries, competitors, and the
environment. For example, a company can decide between which marketing
function to handle itself and which to give to the intermediaries through its size
and financial situation. Besides, the companies selling perishable products may
use more direct marketing so they can avoid delays and too much handling of the
product.

Answer 6

Step 2: Setting Channel Objectives

Question 7

In this step, businesses need to identify major alternatives for their distribution
channel. This involves considering the types of intermediaries, determining the
number of marketing intermediaries, and defining the responsibilities of channel
members.

Answer 7

Step 3: Identifying Major Alternatives

Question 8

6 Types of Intermediaries

Answer 8

Retailers
Wholesalers
Distributors
Agents/Brokers
Carrying & Forwarding Agents
Logistics service providers

Question 9

can be considered
based on the nature of the product, target market, and distribution strategy.

Answer 9

types of intermediaries

Question 10

: These can include brick-and-mortar stores, online
retailers, department stores, supermarkets, or specialty shops

Answer 10

Retailers

Question 11

: These purchase products in bulk from manufacturers and
distribute them to retailers or other businesses.

Answer 11

Wholesalers

Question 12

: Act as intermediaries between manufacturers and retailers,
specializing in specific industries or geographical areas.

Answer 12

Distributors

Question 13

: facilitate transactions between buyers and
sellers without taking ownership of the products. They earn commissions or
fees for their services.

Answer 13

Agents/Brokers

Question 14

: also known as clearing and
forwarding agents (CFAs) or freight forwarders, they are
intermediaries that handle the logistics of transporting goods,
including customs clearance and arranging for the movement of cargo
across borders.

Answer 14

Carrying & Forwarding Agents

Question 15

• also known as third-party logistics (3PL)
  providers- are companies that specialize in managing and optimizing various
  aspects of a company’s supply chain, including transportation, warehousing, and
  distribution.

Answer 15

Logistics service providers

Question 16

3 Number of Marketing Intermediaries

Question 17

: The decision regarding the ___depends on various factors, such as the complexity of the
product, target market coverage, and distribution efficiency.

Answer 17

Number of Marketing Intermediaries

Question 18

: This involves placing products in as many outlets as
possible to maximize market coverage. The basic aim of this strategy is to make the products available where and when the consumers want. This approach suits low-
cost or convenience products.

Answer 18

Intensive Distribution

Question 19

: It involves granting exclusive rights to a single
intermediary or a limited number of intermediaries in a particular geographic area
or market segment. This strategy is often employed for luxury or specialized
products.

Answer 19

Exclusive Distribution

Question 20

: It involves selecting a limited number of intermediaries
based on their ability to effectively reach specific market segments. This strategy is
often used for products with unique characteristics or targeted customer segments

Answer 20

Selective Distribution

Question 21

Once the major alternatives have been identified, businesses need to evaluate
them based on factors, such as cost, efficiency, market reach, customer
satisfaction, and compatibility with overall business objectives. This evaluation
helps in selecting the most suitable channel design alternative. For better
evaluation, it is essential to check each alternative against economic, control, and
adaptive criteria.

Answer 21

Step 4: Evaluating the Major Alternatives

Question 22

: With the help of this criteria, a company can compare the
likely sales, profitability, and cost of different alternatives.

Answer 22

Economic Criteria

Question 23

: If a company is using intermediaries for distributing its
products to consumers, it generally means giving the intermediaries some control
over the marketing of the product. Some intermediaries have more control over
the marketing than others. Besides, keeping other things equal, a company always
prefers to keep as much control as possible over itself.

Answer 23

Control Criteria

Question 24

: Even though the channels involve long-term
commitments, a company tries to keep the channel as flexible as possible
so that it can easily adapt to environmental changes.
Change circumstances;
 Addition and elimination of products
 Additional service support required
 New territory coverage
 New institutional business lead
 Price increases and adverse consumer reactions
 Rationing of stock due to limited availability

Answer 24

Adaptive Criteria

Question 25

The cost of the distribution channel ultimately gets reflected in the price the end- user or consumer the product or service has to pay. Cost elements of the channel network include: *Margins of the channel partners *Cost of transportation of goods between the company and the end user *Cost of order booking and execution *Cost of stock returns/date expired stocks taken back from the market *Cost of any reverse logistics required- for example, getting empties back

Answer 25

COST OF THE CHANNEL SYSTEMS

Question 26

10 SELECTING CHANNEL PARTNERS

Answer 26

1. Alignment with Business Objectives and Values 2. Market Reach and Customer Access 3. Reputation and Reliability 4. Financial Stability and Growth Potential 5. Technical and Support Capabilities 6. Industry Expertise and Capabilities 7. Sales and Marketing Capabilities 8. Commitment to Collaboration and Communication 9. Compliance and Ethical Standards 10. Flexibility and Adaptability

Question 27

includes efforts in designing capacity- building programmers, training, promotion support, marketing research, hand of course working along with the company sales personnel 1. Align your goals 2. Develop an online training program 3. Introduce a tiered system 4. Provide certification incentives 5. Communicate frequently and keep them up to date 6. Offer high-level support 7. Track and report progress

Answer 27

Motivating channel members

Question 28

are all businesses or individuals involved in the process of moving products from the manufacturer to the end consumer.

Answer 28

Channel members

Question 29

sometimes called intermediaries or middlemen, work together to complete the various tasks it takes to get a product from production through to sale. While a producer could decide to market and sell products directly to consumers, usually they use channel members to make the process more efficient.

Answer 29

Channel members

Question 30

are companies that collaborate with manufacturers or producers to market and sell their products or services, acting as a distribution network rather than internal sales teams.

Answer 30

Channel partners

Question 31

This starts at the time the channel member is recruited & continues right through the time that the channel member is associated with the company. *Product knowledge *Sales Techniques *Customer Service *Brand Messaging *Industry Regulations

Answer 31

TRAINING CHANNEL PARTNERS

Question 32

– this power emanates( derive) out of the eminent position that the company holds in the industry.

Answer 32

Referent Power

Question 33

– implies that the company has some special knowledge that is value-adding to the channel partner.

Answer 33

Expert Power

Question 34

– enforcing any task expected of the intermediary as per the agreement or contract signed with the company.

Answer 34

Legitimate Power

Question 35

– using the channel partners for the distribution of its goods and services has the ability to give additional support to help increase volumes.

Answer 35

Support Power

Question 36

– competition faced by the firm in the market.

Answer 36

Competition Power

Question 37

– company provide the incentives to the channel partners to perform additional task at specific points of time.

Answer 37

Reward Power

Question 38

– the power of ‘threat’ used by the company.

Answer 38

Coercive Power

Question 39

– the standard definition of input vs. output applies here also.

Answer 39

*Efficiency

Question 40

* – the analysis of how well the channel system meets its objectives.

Answer 40

Effectiveness

Question 41

– channel has been designed for a current volume of business handling a specific number of customers.

Answer 41

*Capacity

Question 42

*– the ability to handle changing demand patterns.

Answer 42

Agility

Question 43

*– The channel network should deliver the same level of service day after day or month after month without fail.

Answer 43

Consistency

Question 44

*– a measure of the commitment to the performance of obligations and the certainty with which commitment is met.

Answer 44

Reliability

Question 45

– channel system may have all qualities described above, but it still have to do business in a fair and above board manner.

Answer 45

*Integrity

Question 46

is a strategy that companies use to streamline their operations.

Answer 46

Vertical integration

Question 47

It involves taking ownership of various stages of its production process. Companies achieve vertical integration through mergers or acquisitions or by establishing suppliers, manufacturers, distributors, or retail locations rather than outsourcing them.

Answer 47

Vertical integration

Question 48

often requires significant initial capital investment.

Answer 48

Vertical integration

Question 49

happens when a company moves a process in- house so as to take control of earlier, or upstream, steps in the supply chain process.

Answer 49

Backward integration

Question 50

by contrast, forward integration is when a company takes ownership of processes further along, or downstream, in the supply chain, perhaps by taking control of distribution or sales of finished goods and services

Answer 50

Forward Integration

Question 51

When a company vertically integrates processes both upstream and downstream, it’s pursuing balanced integration. Naturally, this can occur only when a company sits somewhere in the middle of a supply chain (rather than at one end or the other). Balanced integration can be trickier to pull off but can also offer greater benefits when executed well.

Answer 51

Balanced Integration

Question 52

–employing existing channel partners like wholesalers & retailers or developing partners like C&F agents and distributors.

Answer 52

Outsourcing

Question 53

– their main job is distribution and hence, there is a focus.

Answer 53

Core competence

Question 54

– they are independent, and they are eligible to get all benefits of their operations.

Answer 54

Motivation

Question 55

– they are not bound by the strict rules of operations that a firm has to follow.

Answer 55

Flexibility in operations

Question 56

– can manage their customers and environment better as he has built up relationships over a period of time.

Answer 56

Local Strengths

Question 57

– he is answerable to himself to start with and if he is abiding by the rules set by the company, he can do well.

Answer 57

Independent Operations

Question 58

 – the 3P operator knows that if he does not perform well, he can be replaced.

Answer 58

Threat of replacement

Question 59

– he knows his territory and its nuances extremely well and can keep a sharp lookout for his competitor’s activities.

Answer 59

High local knowledge

Question 60

refers to selling goods and services outside of traditional brick-and-mortar stores. Its includes:  Selling door-to-door  Selling through Vending Machines  Selling through tele-shopping networks  Selling through catalogues  Other forms of direct selling  Selling through electronic channels

Answer 60

Non-store retailing

Question 61

are those that use the Internet to sell goods to consumers directly. Electronic channels as selling tools are dependent on the following:  Access of consumers to computers  Access of consumers to the internet  The arrangements are made by the companies to market their goods on the internet.

Answer 61

Electronic channels