Chapter 13 Marketing Channels and Supply Management Multiple Choice 1.Caterpillar Company charges premium prices for its heavy equipment. It is successful because _____. a. the equipment is high quality b. its distribution is unparalleled c. its customer support system is strong d. both a and b (d; Moderate; p. 397) 2. Another reason for Caterpillar’s success is that its dealers _____. a. operate at low cost b. build strong customer relationships in their communities c. are skilled in promotion d. discount prices to their best customers (b; Moderate; p. 398) 3. Why is Caterpillar’s service to dealers and customers such an advantage in winning and keeping customers? a. The high quality equipment reduces downtime combined with fast service. b. There is no freight charge on parts with a minimum order. c. All service personnel have at least six years experience in their jobs. d. All of the above are true. (a; Challenging; 398) 4. Choose the item below that is not a reason why Caterpillar enjoys a close working relationship with its dealers. a. extraordinary dealer support b. dealer performance c. Internet communication d. dealer profitability (a; Moderate: 398) 5. Which of the following is not a typical supply chain member? a. reseller b. customer c. intermediary d. intermediary’s creditor (d; Easy; p. 399) 18 6. _____ from the manufacturer or service provider is the set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service. a. Downstream b. Upstream c. Separated d. None of the above (b; Moderate; p. 399) 7. A better term for supply chain would be _____. a. supply and demand chain b. demand chain c. channel of distribution d. distribution channel (b; Easy; p. 399) 8. With the advent of the Internet, most companies are forming _____ with other firms. a. stronger relationships b. more numerous and stronger relationships c. more numerous and complex relationships d. more profitable relationships (c; Challenging; p.399) 9. When suppliers, distributors, and customers partner with each other to improve the performance of the entire system, they are participating in a _____. a. value delivery network b. channel of distribution c. supply chain d. demand chain (a; Moderate; p. 399) 10. The logistics and distribution manager of BeltWay Enterprises, Inc. regularly deals with the four major questions concerning marketing channels. Identify the one that is not associated. a. How do channel firms interact and organize to do the work of the channel? b. What is the nature of marketing channels and why are they important? c. What problems do companies face in designing and managing their channels? d. What role do financial and transportation members play in retaining customers? (d; Challenging; p. 399) 19 Producers benefit from using intermediaries because they _____. employee in the channel (b. long-term commitments c. products c. customer’s choices d. assortment of products d. Easy. p. p. Joe Blanco has discovered that his intermediaries usually offer his firm more than it can achieve on its own because of their contacts. a. working relationships with foreign distributors (c. A company’s channel decisions directly affect every other_____. products. financial support b. a. p. operate less expensively c. the role of marketing intermediaries is to transform the _____ made by producers into the _____ wanted by consumers. marketing decision c. and _____. Moderate. 400) 14. final users and marketing members c. 400) 12. offer greater efficiency in making goods available to target markets b. products b. Moderate. 401) 16. 401) 20 . fast service c. assortment of products. scale of operation d. assortment of products. assortment of products (d. p. products. Moderate. a. major problems d. experience. specialization. Distribution channel decisions often involve _____ with other firms.11. the government at various levels (c. 400) 13. financial losses (b. From the economic system’s point of view. Moderate. intermediaries d. Easy. p. Most producers today sell their goods to _____. short-term commitments b. a. final users b. save a lot of work d. a. 400) 15. channel member b. p. are generally backlogged with orders (a. a. a. 402) 21 . form b. What are the three gaps that separate goods and services from those who would use them? a. a. middleman’s functions b. a. p. place. Moderate. time. product to region d. place. Choose it. 402) 22.17. p. Intermediaries play an important role in matching _____. financing d. complexity c. we say that the number of intermediary levels indicates the _____ of a channel. need (c. possession. In marketing terms. risk taking (b. a. p. Easy. 402) 20. financing (d. Easy. physical distribution b. p. form c. profit lost c. place. p. Choose it.” a. place. dealer with customer b. none of the above (b. 402) 21. but you cannot eliminate the _____. One of the following is not a key function that intermediaries play in helping to fulfill a completed transaction. involvement d. possession d. 401) 19. time lost d. depth b. There is an old saying. information c. “You can eliminate the middleman. lost customers (a. One of the following is not a key function that intermediaries play in completing transactions. time. 401) 18. promotion c. Challenging. Easy. length (d. supply and demand c. Moderate. negotiation d. p. time. promotion b. flow of ownership. customer d. 404) 22 . When two Burger King restaurants have a disagreement over who should be able to sell in quantity at a discount to local athletic teams. channel conflict d. Challenging. An advantage of a channel of distribution over selling direct to consumers is that each channel member plays a _____ in the channel. Moderate. they are in a _____ conflict. As a producer of goods. more potential ideas d. problematic c. time-saving part b. Joanie is experiencing _____.23. promotion b. p. all of the above (b. channel delusion b. 404) 27. Easy. payment flow. specialized role c. a. Easy. 403) 26. and _____ flow. a. less profit b. decisional role d. a. All of the institutions in a channel are connected by several types of flows. acquisition c. vertical b. channel mismanagement (c. a. Joanie Calvert is experiencing a disagreement with intermediaries in the channel over who should do what and for what rewards. channel problems c. information flow. 403) 25. p. 402) 24. p. less control c. return product (a. no-win d. a. informational role (b. horizontal (d. you would be concerned that a greater number of channel levels means _____ and greater channel complexity. including physical flow. moderate. administered. contractual. attain efficiency and assign member roles c. 404) 29. chain b. customer-driven (a. 405) 31. corporate. Historically. 405) 33. contractual. franchised (c. Challenging. A conventional distribution channel consists of one or more _____ producers. What are the three major types of vertical marketing systems? a. and retailers. no-win d. a profit-maximizing strategic plan b. corporate. 405) 30. administered d. independent c. An advantage of a vertical marketing system (VMS) is that it acts as a _____ system. modern d. more efficient c. Staples Office Supply opened an online store that created competition with many of its dealers. unified b. a. a. problematic c.28. mass distribution d. A corporate VMS has the advantage of controlling the entire distribution chain under _____. single ownership c. wholesalers. contract d. vertical b. The corporate office created _____ conflict. product-related b. contractual. assign member roles and manage conflict d. conventional channels have lacked the leadership to _____. independent. p. p. independent c. all of the above (c. a. estranged (b. Moderate. p. corporate. Easy. few intermediaries (b. 405) 32. Easy. Easy. horizontal (a. p. assign channel member roles and attain efficiency b. Challenging. p. a. p. a. 405) 23 . Leadership in this type of marketing system is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members. p. You and your best friend are exploring the possibility of buying into a franchise but are not sure what type to go into. This is the scenario. 407) 38. oral agreements b. corporate VMS (a. 405) 35. a. manufacturer-sponsored retailer franchise system b. The most common type of hybrid marketing channel is the _____. You discover that one of the following is not a common type and want to stay clear of it. manufacturer-sponsored wholesaler franchise system c. A distinguishing feature of a contractual VMS is that coordination and conflict among the independent members of the channel are attained through _____. vertical marketing system c. a. administered VMS c. corporate VMS d. Easy. limited liability corporations d. administered franchise d.34. 408) 24 . Moderate. Easy. service-firm-sponsored retailer franchise system (c. horizontal marketing system b. franchise organization b. contractual agreements (d. a. dual distribution system b. horizontal multichannel system (b. multichannel distribution system c. Which one is it? a. p. 406) 37. working partnerships c. p. 406) 36. Moderate. The most common type of contractual agreement in business is the _____. p. a. wholesaler-sponsored retail franchise system d. p. conventional marketing channel d. conventional marketing channel (b. Challenging. p. p. p. less net profit c. a. Studies show that _____ is a major trend whereby product and service producers are bypassing intermediaries and going directly to final buyers. the corporate merger (c. 408) 40. greater conflict b. you want to start reaping the benefits of a multichannel distribution system. a. disintermediation d. sell at a higher gross margin d. Moderate. You should enjoy all of the following except one. The major disadvantage of a multichannel system is that it is harder to control and it can generate _____. spreading abroad fast (b. establishing a budget b.39. holding steady d. the vertical marketing system b. expand sales b. Easy. a. deceasing b. identifying major channel alternatives c. Easy. gain opportunities to tailor products and services to needs of diverse segments (c. inefficiency (a. 408) 41. As marketing manager for Globe Imports and Experts. Challenging. a. fewer domestic sales d. 408) 43. Challenging. the corporate marketing system c. setting channel objectives. p. increasing c. seeking legal advice (b. seeking regulatory approval d. _____. Designing a channel system calls for analyzing consumer needs. The use of multichannel systems in the United States is _____. or that radically new types of channel intermediaries are emerging to displace traditional ones. and evaluating them. a. 408) 42. expand market coverage c. 409) 25 . Please find it. Easy. better terms (c. p. higher-priced products d. none of the above (c. number. co-op advertising b. repairs d. and ___ of intermediaries. it is best to consider in terms of types. 412) 26 . become more efficient c. 412) 48. When identifying the major channel alternatives. products in their maturity or decline stage (b. size b. 411) 47. lower-priced products b. perishable products c. Moderate. lower prices b. p. faster delivery d. efficiency and reduced conflict (c. In establishing add-on services. responsibilities d. 409) 45. To increase a channel’s service level. you would consider all except which of the following? a. a. Easy. more add-on services. customer service d. Moderate. p. credit c. p. power c. a. Moderate. Which type of product might require a more direct marketing channel to avoid delays and too much handling? a. fair prices c. delivery b. p. a.44. 409) 46. Companies should state their channel objectives in terms of targeted levels of _____. customer assembly (d. and _____. it must provide a greater assortment of products. selective c. 413) 53. exclusive b. p. the producer must establish a list price. direct (b. Generally these dealers are given a right to _____. intensive d. 413) 51. a. p. of the intermediaries who are willing to carry its products. intensive distribution d. and _____ distribution. This is an example of _____ distribution. When establishing the responsibilities of channel members. Easy. but fewer than all. intensive (d. and define each channel member’s _____. dual (b. Moderate. Sometimes a producer chooses only a few dealers in a market area to distribute its products or services. international d. p. exclusive distribution b. a. Easy. p. three strategies are available: intensive. 413) 50. exclusive b. Easy. selective distribution c. selective c. in fact. a. Chewing gum is stocked in many outlets in the same market or community. multichannel d. exclusive. p. customers (b. 413) 52. When determining the number of channel members to use at each level. territory c. selective c. multichannel b. 414) 27 . administered distribution (a. it is placed in as many outlets as possible. a. Moderate. legal rights d. a.49. sales volume b. This type of distribution is used when the producer wants more than one. give a fair set of discounts for intermediaries. control c. Easy. p. p. reducing conflict b. the markets are actually much smaller that they appear because of _____. 415) 28 .54. inadequate distribution systems b. p. indifference toward Western products c. You are faced with channel management at work. extend b. Evaluating the major alternatives for channel members should be centered around all of the following except which one? a. economic factors b. p. Moderate. Moderate. 415) 58. and evaluating channel members over time. Mexican d. Canadian (b. motivating d. a. a. adaptive criteria d. 414) 56. 414) 55. p. It is especially difficult for many Western firms to break into the closely knit tradition-bound _____ distribution network. adapt c. Japanese c. Chinese b. China and India each contain more than a billion people. _____. Easy. government control d. a. It is common for international marketers to _____ their channel strategies for each country. Challenging. reducing waste c. restrict d. a lack of resources (a. all of the above (c. a. seek approval for (b. 414) 57. However. managing. This calls for selecting. channel leadership (d. selective distribution d. inclined b. 416) 60. Sometimes a seller requires its dealers to abstain from handling competitors’ products in an arrangement called _____. Moderate.418) 63. sales quotas b. and _____. potential relationship management c. a. legally free d. growth and profit record. financial standing c. a company should determine and evaluate each channel member’s years in business. other lines carried. legally biased c. p. Easy. p.418) 62. primary relationship management b. cooperation. exclusive pricing (b. 418) 29 . Most companies practice strong PRM to forge long-term relationships with channel members. companies are _____ to develop whatever channel arrangements suit them. a. reputation b. perennial relationship management d. p. 416) 61.59. coerced (c. customer delivery time d. a. partner relationship management (d. exclusive dealing c. p. Easy. all of the above (d. average inventory levels c. For the most part. What does PRM stand for? a. Producers must regularly check channel member performance against standards such as which of the following? a. employees’ skills d. When selecting intermediaries. executives’ ability to plan strategically (a. Challenging. exclusive distribution b. Moderate. Exclusive dealing is legal as long as it does not _____ or tend to create a monopoly and as long as both parties enter into the agreement _____.c controlling the physical flow of goods. legally b. services. positioning it (c. p. selling a product is sometimes easier than ______. making it b. none of the above (c. voluntarily c. 418) 65. Challenging. a. p. Marketing logistics (physical distribution) involves getting the right product to the right customer in the right place at the right time.d gathering customer’s ideas for new products. In today’s global marketplace. Moderate. horizontal marketing systems (b. (d. Easy. Exclusive territorial agreements are normal practices in _____. 419) 66. a. p. 419) 30 . _____ describes those arrangements whereby the producer of a strong brand sells it to a dealer only if the dealer will take some or all of the rest of the line. Exclusive distribution b. Easy. 419) 67. a. substantially lessen competition.b implementing . Exclusive dealing c. vertical marketing systems b. p. integrated marketing systems d. substantially lessen competition.64. Exclusive tying d. Easy. franchises c. Which one of the following is not included in this process? . Tying agreement (d. advertising it c. 419) 68. getting it to the customer d. voluntarily d. and information .a planning . restrict trade. p. a. managers of ReadMore Magazines would consider all of these types of distribution except ______. move goods rather than just store them d.69. 419) 71. liberal return policies. Challenging. and ______. p. smaller inventories. Why are companies placing greater emphasis on logistics? . p. reverse (c. reduce personnel in the supply chain (b.a to give customers better service or prices .c a need for improved logistics management .b tremendous cost savings to the company and its customers . smaller shipping lots b. a. it must use slower delivery. Moderate. Moderate. it must provide rapid delivery.b flexible assortments . For Wilheight Company to provide maximum customer service. hold larger volumes c. The difference between distribution centers and storage warehouses is that the former are designed to _____. . Easy. larger shipping lots c. inverse d. For a company to minimize distributions costs.a low cost merchandise . eliminate small-order dealers d. inbound c. 420) 72.d all of the above (d. and _____. store goods for longer periods b. p.c more credit options . none of the above (c. 420) 73. a. a. p. Today’s marketers prefer customer-centered logistics thinking. 419) 70. large inventories. Easy. 420) 31 .d all of the above (b. outbound b. To be current in their thinking. p. p. located in a seaport town. truck b. air (a. none of the above (a. limited inventory logistics d. 32 . Jewels for the Rich and Famous sells very exclusive jewelry with a minimum price of $25. p. water d. and sand to local markets. water b. 421) This transportation mode accounts for more than 69 percent of actual tonnage shipped in the United States today. p. Which of the following transportation modes is used for digital products? a. Challenging. Management should consider using _____ as its main carrier. pipeline d. 422) 78. Moderate. air (c. It has just been awarded a contract with a company 500 miles down the seacoast. called _____. p. rail c. rail c. p. Speed of delivery to distant markets is a must. reduction-inventory management b.74. Easy. To reduce inventory management costs. Internet d. Easy. Grayville Rock and Gravel. a. Which one is it? a. many companies use a system where they carry only small inventories of parts or merchandise. a. 422) 76. rail b. Management should consider switching from truck to _____ transport. truck d.000 to customers around the world. just-in-time logistics c. 422) 77. sells rock. air c. Easy. a. 421) 75. gravel. rail c. often only enough for a few days of operation. truck b. supply chain management (b. brown (UPS) (b. piggyback d. availability d. 2. skilled operators b. p. 424) 33 . Companies manage their supply chains through _____. transportation modes (b. airtruck. Challenging. a. trainship b. When major producers or suppliers work directly with a major retailer in ordering and shipping products. a. information c. a. 423) 80. Easy. p. Moderate. 423) 84. cost. rail and truck. 3. harmonize all of the company’s logistics decisions d. weight b. p. Julie will begin the practice of _____. customer choice c. Julie Newmar recognizes that her company needs to provide better customer service and trim distribution costs through teamwork. p. reduce conflict and increase cooperation among channel members (c. distance (c. supply chain management c. Challenging. Challenging. integrated logistics management b. and _____. water and truck. shippers must balance the considerations of speed. p. their own trucking and distribution systems (b. 423) 82. the Internet d. piggyback. a. reduce costs b. In choosing a transportation mode for a product. water and rail. piggyback. dual distribution modes b. 423) 81. fishyback. horizontal marketing system (a. fishyback c. increase services with minimal cost c. trainship (d. fishyback. a. airtruck. they often use _____ to save much time and money. What is the goal of integrated supply chain management? a. continuous inventory replenishment systems c. the Internet d. dependability.79. Match these intermodal transportation combinations: 1. trainship. p. customer relationship management d. fishyback. Challenging. both inside the company and among all the marketing channel organizations. 423) 83. subcontractors b. the entire supply chain c. Moderate. third-party logistics providers (d. 427) 34 . 30 percent (c. 20 percent c. p. a. manufacturers and distributors spent more than _____ on third-party logistics services. 10 percent b. When Home Depot allows key suppliers to use its stores as a testing ground for new merchandising programs. partnering d. partnership management c. third parties c. the manufacturer (b. Today. a. a. Last year. cross-functional. 424) 87. Easy. 20 percent d. a growing number of firms now outsource some or all of their logistics to _____. Easy. $61 billion. shared services b. none of the above (c. Challenging. Moderate. a. 424) 86. 425) 88. The success of each channel member depends on the performance of _____. it is using _____. key channel members b.S. cross-functional teams b. U. and the market has been growing by _____ per year. 425) 89. channel members d. cross-company teams c. shared projects d. $51 billion. $71 billion. Smart companies coordinate their logistics strategies and forge strong partnerships with suppliers and customers to improve customer service and reduce channel costs through _____. $41 billion. p.85. a. cross-company teams (d. p. the channel captain d. It is more efficient to use them in many cases. c. Moderate. A major role played by intermediaries is to buy large quantities of products from many producers and break them down into the smaller quantities and broader assortments wanted by consumers. (True. p. The reasons for Caterpillar’s success is high-quality products. b. 400) 96. (True. ICC and the federal government are beginning to mandate and regulate some industries. few producers sell through intermediaries today. 427) True – False 91. Easy. p. Moderate. Producing a product or service and making it available to buyers requires building relationships not just with customers. p. They can perform the services at less cost. Which do you think it is? a. Challenging. Moderate. Companies use third-party logistics providers for all of the following reasons except one. Easy. Companies often forget to pay enough attention to their distribution channels so as to make long-term commitments to other firms. Easy. and a lean organization that is responsive to customer needs. (False. The company is free to focus more on its core business. p. With the success of the Internet. p. 398) 93. (True. (True. p. a steady stream of innovative new products. (False. but also with key suppliers and resellers in the company’s supply chain. 401) 35 . (True. 399) 95. Supply chain is a common term used for a channel of distribution. 399) 94. p. 400) 97. It may be too limited because it takes a make-and-sell view of the business. (d.90. p. 397) 92. flexible and efficient manufacturing. Easy. Caterpillar’s exceptional parts department gives it a high advantage in winning and keeping customers. d. Easy. company. (False. p. it is using a corporate VMS. p. which has no intermediary levels so the company sells directly to consumers. and no formal means exists for assigning roles and resolving channel conflict. p. financing. and risk taking. Now she is irritated and demands fairness. 403) 101. This is an example of horizontal conflict. When the NewWay Dry Cleaners and The Easy Laundromat in your hometown join forces to follow a new marketing opportunity. 402) 99. p. p. contact. 404) 102. (True. (True. (False. 407) 36 . Challenging. Challenging. such as helping to complete information. (False. and retailers. promotion. matching. (True. A conventional distribution channel consists of one or more independent producers. 402) 100. Moderate. (True. Each is a separate business seeking to maximize its own profits. p. (True. When Sherwin Williams Paint Company integrates successive stages of production and distribution under a single ownership and attains coordination and conflict management through regular organizational channels. It is safe to say that distribution channels are complex behavioral systems in which people and companies interact to accomplish individual. even at the expense of the system as a whole. Easy. Judy Smith is the manager of the local McDonalds franchise in Carterville. Moderate.98. No channel member has much control over the other members. The franchise organization is the second most common type of contractual relationship wherein a channel member called a franchiser links several stages of the production-distribution process. A growing trend is to use a direct marketing channel. 405) 104. 405) 103. Recently the home office did not let her participate in coop advertising like the other McDonalds in her district. p. Challenging. They can also help to fulfill the completed transactions like e-procurement. 406) 105. Members of the marketing channel perform many key functions. and negotiation transactions. they are forming a horizontal marketing system. wholesalers. and channel goals. Moderate. S. p. the greater the assortment provided. and specific services to be performed by each party. (True.106. a company must convince distributors that they can succeed better by working together as a part of a cohesive value delivery system. schools. p. Last week the owners opened up a walk-in discounted consumer produce outlet. p. Easy. p. (False. (True. 408) 107. Moderate. The faster the delivery. its competitors. p. (False. and exclusive seeks only one outlet in a given market area. Disintermediation as a trend is on the rise in U. p. Most companies identify their major channel alternatives in terms of types of intermediaries. (True. Always Fresh Produce Company has a route selling to more than 100 groceries. its marketing intermediaries. (True. average cash flow levels. territorial rights. Moderate. treatment of damaged and lost goods. the nature of the company. (False. and restaurants at wholesale prices. the more the channel’s service level is restricted. (False. p. customer delivery time. 414) 113. Moderate. 410) 109. 411) 110. Generally speaking. and the environment. and the more add-on services supplied. p. Moderate. 414) 114. These standards typically include sales quotas. its products. Once marketers learn how to penetrate foreign markets and their distribution systems. selective distribution seeks several outlets. Challenging. Challenging. a company’s marketing channel objectives are influenced by the level of customer service sought. and the cooperation of each channel member. conditions of sale. 413) 112. Always is now using a multichannel distribution system. the number of intermediaries. They should agree on price policies. In managing its channels. Intensive distribution seeks many outlets in a market. all of them become a challenging but relatively easy job. 416) 115. business. The producer and intermediaries need to agree on the terms and responsibilities of each member. A producer must regularly check each channel member’s performance against standards. Easy. Easy. (True. p. p. 412) 111. Challenging. 409) 108. 418) 37 . and services to the customer. (False. almost all companies. 423) 121. sand. (True. 421) 119. 420) 118. p. p. Challenging. distributors. Some of the major corporations like Proctor & Gamble and General Motors have developed logistics systems that both maximize customer service and minimize distribution costs. 399) 38 . final goods. suppliers. Easy. (True. The tasks involved in planning. Moderate.116. Challenging. both inside the company and among all the marketing channel organizations. The basis behind integrated logistics management is providing better customer service and trimming distribution costs. Companies use third-party logistics providers because they can often do it more efficiently and the company can concentrate on its main focus. Supply chain takes a make-and-sell view of the business and demand chain takes a step-by-step linear view of the purchase-production-consumption activities. implementing. This requires teamwork. 425) 122. large and small. (False. and ultimately customers who partner with each other to improve the performance of the entire system. 422) 120. The terms supply chain and demand chain are limited. Explain why “value delivery network” is a more relevant expression to use. p. p. (False. (False. (Easy. large trucks are a good choice because of their low cost per ton shipped. Today. Easy. Easy. outsource most of their logistics to third-party logistics (3PL) providers. (True. and controlling the physical flow of materials. 427) Essay 123. p. (False. p. or rock over large distances. 419) 117. Moderate. When shipping large amounts of bulk products such as forest products. The key to managing inventory is to balance the costs of carrying larger inventories against resulting sales and profits. and related information from points of origin to points of consumption to meet customer requirements at a profit describes supply chain management. p. coal. p. Value delivery network is more appropriate because it is made up of the company. What are the eight key functions that members of the marketing channel perform? Some help to complete transactions by providing information. wholesaler. and negotiations. wholesalers. Others help to fulfill the completed transactions with physical distribution. Channel members add value by bridging the major time. In contrast. p. Each is a separate business seeking to maximize its own profits. a VMS consists of producers. (Moderate. and no formal means exists for assigning roles and resolving channel conflict. 402) 126. or retailer. promotion. and retailers acting as a unified system. even at the expense of the system as a whole. 401) 125. matching. Compare and contrast a conventional distribution channel with a vertical marketing system (VMS). Such systems offer advantages to firms facing large and complex markets. They buy large quantities from many producers and break them down into the smaller quantities and broader assortments wanted by consumers. Larger bottom-line profits may occur. p. or wields so much power that they must all cooperate. has contracts with them. financing. No channel member has much control over the other members. p. and retailers. Why are multichannel distribution systems gaining popularity today? These systems exist when a single firm sets up two or more marketing channels to reach one or more customer segments. Intermediaries help to match supply and demand. wholesalers. contact. place. 408) 39 . It allows the firms to expand sales and market coverage. They transform the assortment of products made by producers into the assortment wanted by consumers. p. (Moderate. The VMS can be dominated by the producer.124. How do channel members add value to a marketing system? Intermediaries reduce the amount of work that must be done by both producers and consumers. The former consists of one or more independent producers. It allows firms to gain opportunities to tailor its products and services to the specific needs of diverse customer segments. (Challenging. (Easy. and risk taking. 405) 127. and possession gaps that separate goods and services from those who would use them. One channel member owns the others. and related information from points of origin to points of consumption to meet customer requirements at a profit. pp. For the most part.128. 413) 129. Third-party logistics providers allow the distributor to focus on its core business. More time can be spent with employees. Examples are name brand blue jeans and computers. companies are legally free to develop whatever channel arrangement that suits them. inbound. and as long as both parties enter into the agreement voluntarily. (Challenging. implementing. When the seller allows only certain outlets to carry its products it is using exclusive distribution. final goods. as long as they do not substantially lessen competition or tend to create a monopoly. (Easy. Supply chain management manages upstream and downstream value-added flows of materials. Producers of convenience products and common raw materials typically seek intensive distribution as a strategy to stock their products in as many outlets as possible. Exclusive distribution is used when the producer wants to stock its products with only one or a few dealers in an area. Others engage in tying agreements when they sell a strong brand to dealers only if the dealers will take some or all of the rest of the line. (Challenging. The goods are available where and when consumers want them. Why are more companies using third-party logistics providers? Marketing logistics deals with the planning. Supply chain management is concerned with outbound. customers. 418-419) 130. and related information among suppliers. Selective distribution is used when selling to more than one. resellers. final goods. When the seller restricts the territory where its goods may be sold it engages in exclusive territorial agreements. Explain the difference between marketing logistics and supply chain management. and final consumers. and controlling of the physical flow of materials. and planning. They can generally distribute the goods more efficiently and at lower cost. 419. but fewer than all of the intermediaries who are willing to carry a company’s products in a given market. the company. pp. 427) 40 . and reverse distribution. such as chewing gum. Discuss the major public policy and distribution decisions. Examples are expensive cars and prestige clothing. p. Distinguish between the three distribution strategies.