END OF CHAPTER MATERIAL
Discussion and Critical Thinking
Discussion Questions
10.1. Compare and contrast upstream and downstream partners in a company’s supply chain.
Explain why value delivery network might be a better term to use than supply chain.
(AACSB: Communication)
Answer:
Producing a product or service and making it available to buyers requires building
relationships not only with customers but also with key suppliers and resellers in the
company’s supply chain. This supply chain consists of upstream and downstream partners.
The term supply chain may be too limited, as it takes a make-and-sell view of the business. It
suggests that raw materials, productive inputs, and factory capacity should serve as the
Yet, even a demand chain view of a business may be too limited because it takes a
step-by-step, linear view of purchase-production-consumption activities. Instead, most large
10.2. Compare direct marketing channels and indirect marketing channels. Name the various
types of resellers in marketing channels. (AACSB: Communication)
Answer:
Direct marketing channels have no intermediary levels; the company sells directly to
10.3. Name and describe the three strategies available when determining the number of
marketing intermediaries. (AACSB: Communication; Reflective Thinking)
Answer:
Companies must determine the number of channel members to use at each level. Three
strategies are available: intensive distribution, exclusive distribution, and selective
10.4. List and briefly describe the major logistics functions. Provide an example of a decision a
logistics manager would make for each major function. (AACSB: Communication;
Reflective Thinking)
Answer:
The major logistics functions include warehousing (storing their tangible goods while they
wait to be sold), inventory management (maintaining the delicate balance between carrying
10.5. What are third-party logistics providers and why do companies use them? (AACSB:
Communication)
Answer:
Although most big companies love to make and sell their products, many loathe the
associated logistics “grunt work.” They detest the bundling, loading, unloading, sorting,
storing, reloading, transporting, customs clearing, and tracking required to supply their
Critical Thinking Exercises
10.6. The most common type of contractual vertical marketing system is the franchise
organization. Visit the International Franchise Association at www.franchise.org/ and find
a franchise that interests you. Write a report describing the franchise. Identify what type
of franchise it represents and research the market opportunities for that product or
service. (AACSB: Communication; Use of IT; Reflective Thinking)
Answer:
Students’ responses will vary. The three types of franchises are manufacturer-sponsored
retailer franchise systems, manufacturer-sponsored wholesaler franchise systems, and
10.7. Form a small group and research the distribution challenges faced by companies
expanding into emerging international markets such as China, Africa, and India. Develop
a multimedia presentation on how one company overcame these challenges. (AACSB:
Communication; Reflective Thinking; Use of IT)
Answer:
While emerging markets such as India and China have populations exceeding a billion
Coca-Cola’s Micro-Distribution Center (MDC) in Africa:
Unilever’s Shakti model in India:
10.8. The term last mile is often used in the telecommunications industry. Research what is
going on in this industry and how the last mile has evolved in recent years, and then
predict where it is heading in the future. What companies are major players in the last
mile and how does the concept of net neutrality fit in? (AACSB: Communication;
Reflective Thinking)
Answer:
The last mile term refers to the relatively short distance to deliver telecommunication
services to and from homes or businesses. Technologies include telephone systems, ISDN,
DSL lines, coaxial cables used to deliver cable television and broadband Internet, wireless
Net neutrality is a principle that holds that everyone should have unfettered access to the
Internet and that service providers should treat data on the Internet equally. However, some
users and content providers are “data hogs,” requiring greater amounts of the limited
bandwidth. In short, Internet service providers could not charge higher fees for customers
Minicases and Applications
Online, Mobile, and Social Media Marketing: Self-Publishing
Do you think that you have what it takes to write a best-selling novel? In the past, authors had to
go through traditional publishing houses to print and distribute their work, but technology has
turned the publishing industry on its head. Although aspiring authors could always self-publish a
book, selling it through the traditional channels—book stores—was only a pipedream for most.
But that has all changed thanks to the Internet and social media. Amazon’s Kindle Direct
Publishing is a popular platform for self-publishers, but others such as Smashwords, Author
Solutions, and Fast-Pencil offer similar services with hundreds of thousands of authors and titles.
For example, Amanda Hocking’s self-published e-book sales caught the attention of a publisher,
and now the former social worker is a millionaire. Self-published books have grown nearly 300
percent in less than ten years, with the majority being e-books. Almost 40 percent of readers now
own e-readers, such as Kindles and iPads. That creates opportunities for anyone wanting to
distribute their works to these avid readers. For example, after being turned away by traditional
publishers, author Christine Bronstein created her own online social network to promote her
book, Nothing But the Truth, So Help Me God: 51 Women Reveal the Power of Positive Female
Connection, which launched on Amazon and Barnes and Noble sites.
10.9. Visit a self-publishing site such as Amazon’s Kindle Direct (https://kdp.amazon.com/)
and create a presentation to give to aspiring authors about distributing their works this
way. (AACSB: Communication; Use of IT; Reflective Thinking)
Answer:
There’s a short video on the Amazon Kindle Direct site that drives home the point that
authors do not have to go through publishing houses to get their books distributed. Authors
can load their book on Amazon and it will appear within 24 hours, they set their own prices,
Instructors may want to assign different self-publishing sites to groups of students to see the
variety and to compare alternatives for independent authors.
10.10. What other industries’ channel of distribution has been impacted dramatically by online,
mobile, and social media? (AACSB: Communication; Reflective Thinking)
Answer:
One notable industry is the music industry. Consumers can download music on to their
computers, tablets, and phones and/or store it on the cloud to access from any device. Gone
are the days of going to a retail store to purchase CD’s (previously albums) that required
Marketing Ethics: Trucker Rest Rules
Large trucks are an important piece of the logistics chain. However, there were 333,000 large
truck crashes in 2012, resulting in almost 3,800 fatalities, the majority being drivers or
passengers of other vehicles, not the truck driver. One accident in 2014 caused an public uproar
when a Walmart truck driver fell asleep at the wheel after being awake for 24 hours and crashed
into another car, killing one person and critically injuring others, one being a well-known
comedian. The U.S. Department of Transportation’s Federal Motor Carrier Safety Administration
enacted tougher hours-of-service rules that went into effect in July 2013. One report claimed that
the industry would lose $1 billion in lost productivity as a result of these rules, while another
concluded the industry would realize almost $500 million in benefit from reduced driver
mortality. The new rules have caused considerable controversy and have caused hardships for
drivers. As one driver put it, “If the wheels aren’t turning, you’re not earning.”
10.11. Research the DOT’s trucker hours-of-service rules and write a brief report outlining the
rules. What is the current status of the 2013 rules? (AACSB: Communication; Reflective
Thinking)
Answer:
In 2003, rules stated that drivers can drive no more than 14 hours at a time. The rules that
took effect in July 2013 added that total hours driving per week dropped from 82 hours to 70
hours. Additionally, every seven days, drivers must take a 34-hour rest that covers two
10.12. Do you think it is ethical that the trucking industry wants the rules repealed? Explain why
or why not. (AACSB: Communication; Reflective Thinking; Ethical Reasoning)
Answer:
Students’ responses will vary. Some students will cite the number of large truck crashes to
support the rules. However, the number of large truck crashes, while creeping up, is
Marketing by the Numbers: Tyson Expanding Distribution
Tyson Foods is the largest U.S. beef and chicken supplier, processing more than 100,000 head of
cattle and 40-plus million chickens weekly. Primary distribution channels are supermarket meat
departments. However, the company is now expanding distribution into convenience stores.
There are almost 150,000 gas stations and convenience stores where the company would like to
sell hot Buffalo chicken bites near the checkout. This is a promising channel, as sales are
growing considerably at these retail outlets and profit margins on prepared foods are higher than
selling raw meat to grocery stores. Tyson will have to hire ten more sales representatives at a
salary of $45,000 each to expand into this distribution channel because many of these types of
stores are independently owned. Each convenience store is expected to generate an average of
$50,000 in revenue for Tyson. Refer to Appendix 3: Marketing by the Numbers to answer the
following questions.
10.13. If Tyson’s contribution margin is 30 percent on this product, what increase in sales will it
need to break even on the increase in fixed costs to hire the new sales reps? (AACSB:
Communication; Analytical Reasoning)
Answer:
10.14. How many new retail accounts must the company acquire to break even on this tactic?
What average number of accounts must each new rep acquire? (AACSB:
Communication; Analytical Reasoning)
Answer:
Each retailer generates an average of $50,000 for Tyson, so to break even, 30 new retail