Chapter 15 – Distributing Products
78. Candy, gum, cigarettes, and popular magazines are usually distributed using a selective
distribution strategy.
79. A distribution strategy that puts the product into as many retail outlets as possible is
known as an intensive distributive strategy.
80. Producers of shopping goods such as furniture, appliances, and clothing usually rely on
an exclusive distribution strategy.
81. An advantage of a selective distribution strategy is that consumers are able to find a
popular product at a wide variety of retailers.
82. Retailers that participate in an exclusive distribution strategy will have a strong incentive
to carry a large inventory of the good and provide exceptional service to customers.
15–22
83. In order to succeed in today’s tough economic times all retailers must compete with low
prices.
Feedback: Some retailers seem to compete mostly on price, but others, such as specialty
stores, use variety as a competitive tool.
84. Words 4 Hire is a nationwide chain of stores that offers such a huge selection of
paperback and hardback books at such competitive prices that small local bookstores have
a hard time competing with them. Words 4 Hire is best classified as a discount store.
Feedback: Discount stores typically carry a wide array of products, whereas Words 4 Hire
specializes only in books. Thus, Words 4 Hire is better classified as a category killer. This
classification consists of stores that compete by offering a very large selection of products
within a single category.
85. Saul-Mart is the name of a new chain of discount stores. A major part of Saul-Mart’s
competitive strategy is likely to be based on keeping its prices lower than those of other
types of retailers.
Feedback: Various types of retail stores emphasize different competitive strategies. Discount
stores tend to place a great deal of emphasis on low prices.
15–23
86. Soundworthy Stereo is a producer of high quality speakers and stereo components. The
company sells its products through a few preferred retailers in any geographic area.
Soundworthy uses a selective distribution strategy.
Feedback: A distribution strategy that uses a preferred group of retailers is known as a
selective strategy.
87. The main difference between selective distribution and exclusive distribution is the
number and type of market segments the firm chooses. In a selective strategy, a variety of
profitable niche markets are selected, while in an exclusive strategy one specific market
segment is targeted, and all others are excluded.
Feedback: The difference between selective and exclusive distribution has to do with the
number of retailers who sell the good in a given area. In a selective strategy, the product is
sold by a select group of preferred retailers; in an exclusive distribution strategy the product is
sold by only one retailer.
88. The Newsville City Press is a daily newspaper serving a city with a population of just
over 200,000. The publishers have placed vending machines for their paper throughout
Newsville and its suburbs. They also sell their papers at most of the supermarkets,
convenience stores, bookstores, and drug stores in the area. The Newsville City Press uses
an intensive distribution strategy.
Feedback: An intensive distribution strategy puts products in as many retail outlets as
possible, including vending machines.
15–24
89. The owners of the TriCities Mall recently renovated the mall’s interior. Much of the
interior of the Mall was made to look like scenes from famous movies. The mall also hired
employees to dress like characters from these movies. There are many types of shops in
the mall, including six different jewelers, however only one jeweler carries the very
expensive Romex brand of watch that appeals to customers who are looking for status in
their jewelry. Romex is practicing exclusive distribution by placing its brand in only one
store in a given area.
Feedback: Exclusive distribution is the use of only one retail outlet in a given geographic
area.
90. Firms that rely on electronic retailing are almost guaranteed success because they give
companies easy access to literally millions of consumers all over the world.
91. Electronic retailing is selling goods and services over the Internet to the final consumer.
92. Because of delivery issues and problems with communication, Internet sales declined to
$150 billion in 2008 and are expected to keep falling.
15–25
93. Some Web sites are trying to improve their service by providing assistance from a real
person.
94. A large number of traditional retailers have developed online sites in recent years, giving
customers a choice of shopping techniques.
95. Traditional retailers that have begun using the Internet to supplement their physical stores
are finding that the Internet not only provides a new way to sell goods, it also requires a
new system to distribute goods.
96. Telemarketing is the sale of goods and services by telephone.
15–27
102. In multilevel marketing, salespeople not only sell the product, they also recruit other
people to sell the product.
103. In multilevel marketing “upliners” recruit “downliners” and receive a commission on
the sales their downliners make.
104. The major disadvantage of multilevel marketing is that the high entry cost for most
sellers means that only relatively wealthy individuals can use this approach.
105. Although there have been some unethical firms involved in multilevel marketing, this
form of retailing remains quite successful.
15–29
110. Many firms that want to use an intensive distribution strategy would find vending
machines an attractive method of selling their goods.
Feedback: A major advantage of vending machines is that they can be located in a wide
variety of locations including airports, office buildings, schools, motels, and service stations.
Firms using an intensive distribution strategy want to make their products widely available,
and vending machines can help them achieve that objective.
111. Fancy Feet sells high quality socks and stockings by sending catalogs to customers
and offering them a toll-free telephone number so that they can call in their orders 24
hours a day any day of the year. Fancy Feet uses telemarketing.
Feedback: Telemarketing is the sale of goods and services by telephone.
112. Direct selling has all but disappeared as a major form of nonstore retailing because
the trend toward two-income households means fewer opportunities for selling in the
home.
Feedback: It is true that the increasing number of people who work outside the home has put
a dent in the success of direct selling. However, it still remains a popular form of nonstore
retailing. As our text points out, lingerie, artwork, and candles are some of the new array of
products that are being sold using direct selling. Direct selling has managed to change with
the times with some degree of success. For example, in response to the increase in the number
of people working outside the home, direct sellers have changed tactics, reaching customers at
places of work or during evenings or weekends.
15–30
113. In multilevel marketing, salespeople have little incentive to recruit new salespeople,
because the new salespeople may compete against them and reduce their income.
Feedback: In multilevel marketing, salespeople receive a commission not only on their own
sales, but also on the sales of any new salespeople they recruit. This gives existing salespeople
an incentive to recruit new people.
114. Chris Cole is a salesperson for Green Scene Lawn Care products. Chris’ job requires
him to sell Green Scene products, but he is also expected to recruit more salespeople for
the company. He will earn a commission on all of the sales earned by the salespeople he
recruits. Green Scene is using a retail distribution strategy known as multilevel
marketing.
Feedback: In multilevel marketing, salespeople are expected to recruit more salespeople until
a large sales force has been created. Each salesperson receives a commission on the sales of
his or her recruits.
15–33
124. Wholesaler-sponsored chains consist of stores that are all owned by a single
corporation.
125. Retailers agree to cooperate with producers in administered distribution systems
because the producers provide extensive marketing services to the retailer for free.
126. In an administered distribution system, retail stores manage all of the marketing
functions at the retail level.
127. The entire collection of organizations that move goods and services from the source
of raw materials to the final consumer is referred to as the supply chain.
15–36
135. Lazee Ladd Furniture obtains materials from several suppliers and uses these
materials to produce its goods. It relies on several marketing intermediaries to help it
distribute the furniture. Together, Lazee Ladd, its suppliers, and the marketing
intermediaries are all part of a supply chain.
Feedback: A supply chain consists of all organizations that move goods from sources of
materials to the ultimate consumer.
136. For a supply chain to be efficient, all of the activities must be performed by
organizations that are owned by the manufacturer.
Feedback: Supply chains are longer than channels of distribution and typically consist of
many different organizations. A single supply chain might include farmers, mining
companies, suppliers or all kinds, manufacturers, wholesalers and retailers. Thus, it often is
impractical for a manufacturer to own all organizations in the chain. New software is
available which makes it possible to coordinate the movement of goods and information so
that consumer wants can be translated into products with the least amount of materials,
inventory, and time.
15–39
146. The basic transportation service criteria are speed, cost, dependability, flexibility,
frequency, and reach.
147. In the U.S. the largest percentage of goods is shipped by truck.
148. Water transportation is the least expensive way to send goods overseas.
149. Water transportation has declined to the point where it now accounts for a very small
part of transporting goods.
150. Water transportation has benefits and drawbacks; for example it is inexpensive but
slow.
15–40
151. A value of shipping by truck is that trucks can deliver small shipments to remote
locations.
152. When truck trailers are placed on rail cars to travel long distances, the process is
known as leapfrogging.
153. Pipelines are used primarily to transport water, petroleum, and petroleum products.
154. Pipelines move liquid products very efficiently and can even move products like
coal.