978-0077861049 Chapter 10 Solution Manual Part 2

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Chapter–by–chapter aids: Chapter 10

$200,400. This analysis may warrant some class discussion. Some students will argue that it should

be easy to increase share of purchases by “just a few percentage points” – especially when this is

compared with the much higher percentage used in the column for selective distribution. And, in

some cases, this might be possible. But, many firms mistakenly assume that such increases are

going to come easily. They forget that it may be expensive – if possible at all – to try to extract “extra”

effort from such a large network of retailers. The retailers may simply do what they want to do –

depending on their own objectives, what other products they carry, and what profit they can make in

other ways.

Part IV

IV–10–10 Perreault, Cannon, & McCarthy

Case 32: Lever, Ltd.

This case can be used to show Place decisions in an international setting. The discussion can focus on

market segmentation by a Canadian subsidiary of a U.S. multinational corporation. See case discussion.

Case 34: Chess Aluminum Worldwide

This case can be used here to illustrate the need for a coherent distribution (Place) policy as part of an

overall strategy. The case focuses on the different channels that a company is using in different countries

around the world, so it also serves as a useful vehicle for covering some of the “typical” problems (and

errors) faced by firms as they get into exporting. See case discussion in Part V.

CHAPTER 10 – COMMENTS ON USE OF ETHICS QUESTION WITH THIS CHAPTER

Situation: Assume you are the sales manager for a small producer of hip–hop fashions. As you arrive at a

trade show to promote your firm’s new line, your assistant pulls you aside to warn you that some of the

owners of shops that usually carry your line are looking for you—and several are hopping mad. They’ve

heard rumors that a big retail chain will be carrying your new line in all of its stores. In the past, your firm

has distributed its fashions only through these small, “independent” retail shops, and they see the big

chains as threats. Although you have had some negotiations with a buyer for the big retail chain, no deal

has been reached yet. What will you say to the owners of the small shops, many of whom helped your

firm get started and have always supported your marketing plans? If you are certain that most of these

small retailers will not place any orders if they think the big chain will be carrying the same line, will you

respond differently? Explain your thinking.

This scenario addresses an interesting question that faces many fast–growing firms. New start-up firms

(or firms with new products) often rely on independent retailers (or wholesalers) for distribution and

marketing support when the big players are not interested, which is often the case if they are already

carrying a competing product. However, as soon as an upstart becomes popular, bigger middlemen will

notice and want to enter the channel. Consequently, as a producer moves into the larger retail chains, it is

likely to be seen by smaller retailers or wholesalers as disloyal. They view the decision as a breach of

faith, even when there was not a contract in place to prevent it.

This scenario makes the discussion more complex, because the fashion producer has not yet actually

made a deal with a big retail chain (but would probably like to). It is important that students see this for

what it is—a potentially life or death issue for the producer. Being honest about negotiating with the large

chain will surely alienate current small retail outlets and result in a nearly instant failure of the current

marketing strategy as they spread the word. If negotiations with the large retail chain break down, the

fashion producer will have no access to customers. This makes the small retail shop owners’ response

even more crucial. Of course, lying now, and being found out later, may cost the fashion producer her

credibility.

Problems like this can sometimes be avoided if managers think clearly in advance about how to help

current distributors at the same time as working to get improved distribution. After all, the current small

shops will probably continue to be important to the producer even if a deal is struck with a large retail

chain. For example, it might be that certain types of fashions would go first (or only) to the smaller,

independent shops. That sort of plan may or may not satisfy the owners of the small shops, but it is better

to have a positive plan that can be discussed truthfully than to have nothing to say except “no comment.”

Chapter–by–chapter aids: Chapter 10

Instructor’s Manual to Accompany Essentials of Marketing IV–10–11

CHAPTER 10 – COMMENTS ON USE OF CREATING MARKETING PLANS

QUESTION WITH THIS CHAPTER

The Marketing Plan Coach software on the text website includes a sample marketing plan for Hillside

Veterinary Clinic. Look through the “Marketing Strategy” section.

a. Why does Hillside sell its product directly instead of indirectly?

b. Hillside has a small selection of pet supplies that it sells to people who bring in their pets. What

products does it resell at retail? What channel functions does it provide, and what channel

functions are performed by its suppliers?

This chapter notes that services are usually sold directly. Services typically have to be produced in the

presence of the customer – and may involve co–production with the customer. This allows for some class

discussion on why most medical services are offered directly from caregiver to patient. The quality of a

diagnosis largely depends on information provided by the patient (in this case, the pet owner). There are

also no suitable intermediaries for this type of product.

The sample marketing plan does not focus on pet supplies, but the clinic retails dog food, leashes, and

collars. While the marketing plan does not specifically address questions in part b, most students have

enough familiarity with retail services to figure this out. A retail location for pet supplies likely provides the

following functions: 1) accumulating (choosing products that meet its customers’ needs), 2) bulk breaking

(making goods available in desired quantities) and, 3) assorting (putting together those specific goods

desired by HVC’s target market). It may also provide information to suppliers.

Supplier–wholesalers in the pet food industry are likely to perform similar functions – although to a

different extent. The wholesaler may provide products that work particularly well at vet clinics – as

opposed to larger competitors like Walmart or PetSmart. Also, the supplier may sell to HVC in much

smaller quantities as compared to larger competitors – so it provides bulk-breaking functions, too.

CHAPTER 10 – SUMMARY OF CONNECT HOMEWORK EXERCISES

Question 1: A Tale of Two Stores: Apple Stores and Gateway Country Stores

Question Type: Case Analysis

Learning Objectives: integrating case, all objectives in chapter

Topic: Channel relationships

AACSB: Technology

Bloom’s: Remember, understand, analyze

Question 2: Soft Drink Channels

Question Type: Video Case

Learning Objectives: 10.2, 10.4, 10.5, 10.6, 10.7, and 10.8

Topic: Channel relationships

AACSB: Technology

Bloom’s: Remember, understand, analyze

Question 3: Regrouping Using Intermediaries

Question Type: Click And DragLearning Objectives: 10.3

Topic: Channel specialists may reduce discrepancies and separations

AACSB: Reflective thinking

Bloom’s: Remember, understand, apply

Part IV

IV–10–12 Perreault, Cannon, & McCarthy

Chapter–by–chapter aids: Chapter 11

Instructor’s Manual to Accompany Essentials of Marketing IV–11-1

CHAPTER 11: DISTRIBUTION CUSTOMER SERVICE AND

LOGISTICS

CHAPTER 11 – COMMENTS ON QUESTIONS AND PROBLEMS

11– 1. A firm should offer the customer service level that is sufficient to meet customer needs, but not

so high that it exceeds customers’ needs and simply adds unnecessarily to the cost of the

firm’s offering. One example that has attracted a lot of attention recently is the “just–in–time”

but not in advance, which would increase the costs of handling, storage, damage, and the like.

For additional discussion, see section “Physical Distribution Customer Service.”

11– 2. There is no reason to expect that students know much about furniture manufacturing or the

upholstery fabrics industry.. Thus, this is intended as a thought question and there is not a

single correct answer. Rather, the idea is for the student to think about what the customer’s

needs might be – based on what they do know – and come up with an “educated guess” about

Many students will recognize that furniture is available in a variety of different upholstery

fabrics – either as part of the selection at a retail store or via custom order through a retailer.

Further, with a little thought, most students will see that furniture producers usually produce a

variety of different types of furniture (for example, chairs, sofas, loveseats, etc.). Since the

some other style – to wait for a correct fabric to arrive. (This is becoming even more important

now because many U.S. furniture companies are shifting to overseas production, primarily in

China but also to countries in Eastern Europe and the Middle East). He would like to rely on

– not only because of the cost of capital invested in inventory but also because of the risk of

having too much left over if a fabric proves to be unpopular and is discontinued. For some

small producers, this might also relate to questions about minimum order size. Small producers

11– 3. Student responses to this question will vary – but an out–of–stock situation might prompt a

customer to find another source for the desired product. When posing this question in class we

have found that most students focus on situations where they selected a product or store

because of a higher customer service level. It can be useful, however, to ask students to think

where you pick up your own purchase, mail order operations that offer low prices but slow

delivery, and certain types of discount stores that have a limited inventory selection but good

prices on what they do carry.Delete this page11– 4. Basically, there are trade–offs between

computerized inventory/order system) might be more expensive, but it more than saves its cost

Part IV

place and/or why it is important, so students should not have a lot of trouble coming up with

“hypothetical” answers. On the other hand, most students don’t have a clear idea how difficult it

sometimes is for companies with different priorities, different philosophies, different computer

up with ideas, ask them to think about times when they have worked with a group of people

where it was difficult to get cooperation and then ask them if the same problems might apply to

relationships among whole firms.

area are discussed throughout the chapter. Products are now stored in computer–controlled

warehouses and moved using automated conveyor systems. Computers are also being used

to keep track of inventory – and to order stock only when it is needed. EDI (electronic data

scanners/receivers to constantly update information about inventory and product flows. In

addition, many wholesalers allow customers to connect to their computers to check on the

current availability or prices of products, and even to use computer–to–computer connections to

opportunities for some wholesalers to be more efficient.

11– 7. A just–in–time delivery system can result in big problems if there is a breakdown in product

quality – especially if products are not standardized (for example, different styles of seats in

different type of upholstery for different makes of automobiles on a production line). At the

extreme, one defective product within a delivery may mean that the whole production line must

can be very, very expensive. As producers offer more choices and more features in the

products they produce, quality becomes even more important. (The issue of service quality is

discussed in more detail in Chapters 8 and 9 – so this question can help to tie together quality

11– 8. It is no accident that firms that want just–in–time delivery systems prefer to work with suppliers

who are located in close proximity.. The greater the distance between the supplier and the

customer, the greater is the likelihood of some unexpected complication causing delays or

irregularities in deliveries. Such problems are likely to be magnified in international shipments,

etc.

When a supplier is providing just–in–time delivery for its international customers, it is likely to

need facilities in the vicinity of the customer’s factory – or alternatively work with an