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Chapter 15 - Distributing Products
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2. Choose two other retail companies that you are familiar with and answer the same questions.
Company 1: ______________________________________________
a. Where is the headquarters?
b. Give the current year’s revenue figure.
c. Is this an increase or decrease from the previous year? By what percentage?
d. Give the current year’s earnings.
e. How many stores does the company have?
f. Why did you choose this company?
Company 2: ______________________________________________
a. Where is the headquarters?
b. Give the current year’s revenue figure.
c. Is this an increase or decrease from the previous year? By what percentage?
d. Give the current year’s earnings.
e. How many stores does the company have?
f. Why did you choose this company?
Chapter 15 - Distributing Products
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Name: ___________________________
Date: ___________________________
critical thinking exercise 15-2
FORMS OF UTILITY
The text discusses five types of utility created by marketing. For one of the companies below, de-
scribe how it creates each type of utility with its goods or services.
a. Albertsons Grocery
b. Barnes & Noble bookstore
c. Buzy B’s Hair and Nail Styles
d. Disney World
e. H&R Block tax preparation service
f. DirecTV satellite service
g. Time magazine
Chapter 15 - Distributing Products
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Name: ___________________________
Date: ___________________________
critical thinking exercise 15-3
DISTRIBUTION CHANNELS
Let’s find out about the kinds of distribution channels that manufacturers in your area use. Call or
visit five manufacturers in your area and ask them the following questions. Record your answers on the
chart below.
1. What is your main product?
2. How do you distribute your product to consumers? Do you use a direct channel (straight from you
to consumers) or an indirect channel (through intermediaries)?
3. If you use wholesalers, what kind?
Manufacturer
Main
Product
Distribution Channel
Direct or Indirect
Wholesalers
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Name: ___________________________
Date: ___________________________
critical thinking exercise 15-4
RETAIL DISTRIBUTION STRATEGY
The text discusses three categories of retail distribution—intensive distribution, selective distribu-
tion, and exclusive distribution. For each of the categories, summarize the distribution strategy and give
three examples of each that are not included in the text discussion.
INTENSIVE DISTRIBUTION
Summarize the strategy:
Example 1: _____________________________________
Example 2: _____________________________________
Example 3: _____________________________________
SELECTIVE DISTRIBUTION
Summarize the strategy:
Example 1: _____________________________________
Example 2: _____________________________________
Example 3: _____________________________________
EXCLUSIVE DISTRIBUTION
Summarize the strategy:
Example 1: _____________________________________
Example 2: _____________________________________
Example 3: _____________________________________
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Name: ___________________________
Date: ___________________________
critical thinking exercise 15-5
CAREERS IN DISTRIBUTION
What would a career in distribution involve? What are the educational requirements? The future
job prospects?
The U.S. Bureau of Labor Statistics publishes the Occupational Outlook Handbook, a compre-
hensive analysis for thousands of careers. The handbook is available online at the Bureau’s website
(www.bls.gov/oco).vii (Sometimes the Web address for a location changes. You might need to search to
find the exact location mentioned.)
Choose a career in one of the distribution-related fields, such as retail sales representative, whole-
sale sales representative, or manufacturing sales representative. Summarize below the information given
in the Handbook.
1. Describe the nature of the work for this career.
2. What are the working conditions?
3. What training and qualifications are needed?
4. How many jobs are available in this career area?
5. What is the job outlook for the next decade?
6. What are the median annual earnings for this career?
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bonus
case
bonus case 15-1
MULTILEVEL MARKETING: SAFE OR SCAM?
Since the onset of the recent financial crisis, millions of Americans have looked for ways to earn addi-
tional income. For some, multi-level marketing companies like Avon and Herbalife presented a good avenue
for making extra cash. In these types of operations, individuals pay the company for a bulk amount of goods
that they then sell to other people. According to multi-level marketing firms and their trade groups, the system
allows consumers to purchase their favorite products at a cut rate while also earning money. For many dissatis-
fied distributors, however, the unregulated nature of multi-level marketing creates a natural breeding ground
for pyramid schemes.
Multi-level marketing companies try to drive their distributors into a frenzy of excitement about their
products. This causes them to buy more and more stock, often accumulating debt in the process. As people go
deeper into the multi-level marketing rabbit hole, the venture can end up consuming their lives. That’s what
happened to Santa Fe hairstylist Enrique Martinez and his wife Michelle when they started to purchase ship-
ments of probiotic chocolate from a company called MXI Corp. The couple had experience with multi-level
marketing before and thought they could handle the pressure, even though their past forays hadn’t earned them
any cash. Within five years, the couple had amassed more than $100,000 in debt and was spending $2,000 a
month on “healthy chocolate” that did little more than take up space in their house.
Defenders of the industry point out that many multi-level marketing firms offer full refunds to their
distributors for any unsold stock. In fact, all 171 members of the Direct Selling Association are required to
grant refunds. Unfortunately for the Martinez family, MXI Corp is not part of that trade group. But even if the
couple could have been refunded for their unsold stock, there’s a good chance they wouldn’t have taken the
opportunity to do so. According to consumer advocates, that’s because the intense, emotional nature of multi-
level marketing leads many distributors to simply throw away unwanted stock rather than return it. “These
companies have some sort of magical hold on people,” said Brent Wilkes, who studies the effects of these
firms on Latin Americans. All told, 16 million Americans will become involved with multi-level marketing
sometime this year. While a few people may earn money, many others will be in danger of facing the same fate
that met the Martinez family. viii
discussion questions for bonus case 15-1
1. What’s should potential participants do before getting involved in multi-level marketing?
2. What protection does a company’s membership in the Direct Selling Association offer multi-level
marketing participants?
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notes on discussion questions for bonus case 15-1
1. What’s should potential participants do before getting involved in multi-level marketing?
2. What protection does a company’s membership in the Direct Selling Association offer multi-level
marketing participants?
Since members of the Direct Selling Association are required to provide refunds for un-
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endnotes
i Source: Claire Suddath, “Viral Fast Food’s Unholy Rise,” Bloomberg BusinessWeek, September 18, 2014.
ii Source: Matthew Boyle, “How Acosta Stocks Your Grocer’s Shelf,” Bloomberg Businessweek, March 24, 2011.
iii Source: Olga Karif, “Vending Machines Get Smart to Accommodate the Cashless,” Bloomberg BusinessWeek,
August 29, 2013.
iv Source: Ryan Underwood, “Want to Build Your Social-Media Following? Get Visual,” Inc., November 2013.
v Source: Daniel Machalaba, “The Little Engine Really Could,” The Wall Street Journal, May 23, 2011.
vi The Internet is a dynamic, changing information source. Web links noted of this manual were checked at the time
of publication, but content may change over time. Please review the website before recommending it to your stu-
dents.
vii The Internet is a dynamic, changing information source. Web links noted of this manual were checked at the time
of publication, but content may change over time. Please review the website before recommending it to your stu-
dents.
viii Source: Max Ehrenfreund, “Sometimes, Life is Like a Box of Cacao Products,” The Washington Post, August 1,
2014
