978-1305405769 Chapter 13 Part 2

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Chapter 13: Marketing Channels and Supply–Chain Management

DISCUSSION STARTERS

Discussion Starter 1: Keeping Up with Demand for a Hot Product

ASK: How does a firm ensure they are able to meet demand for a hot new product?

http://www.youtube.com/watch?v=drytcFSsKck

Discussion Starter 2: Warehousing and Shipping

ASK: How many of you have ever been inside a distribution warehouse?

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Chapter 13: Marketing Channels and Supply–Chain Management

CLASS EXERCISES

Class Exercise 1: Channel Conflict

The objective of this class exercise is to aid student understanding of the dimensions of channel selection

and their possible relationships with channel conflict.

Prompt for students:

Many manufacturers sell products in outlet stores at 25 to 70 percent off retail prices. Retailers do not like

the added competition from their own suppliers despite manufacturers’ claims that they are only selling

last season’s merchandise.

1. How could business objectives, buyer behavior, product attributes, or environmental forces affect a

manufacturer’s decision to distribute through outlet stores?

2. By selling in outlet stores, how have these manufacturers changed their intensity of market

coverage? How is customer service different at an outlet store?

3. Which of the following may be responsible for the conflict between manufacturers and retailers?

a. Lack of clear communication

b. Deviation from role expectations

c. Diversification into product lines traditionally handled by other intermediaries

4. Should retailers develop store brands, refuse to stock certain items, or focus their buying power on

one supplier or group of suppliers? How should the conflict be resolved?

Answers:

1. These manufacturers have the resources to control their own channels and apparently have altered

2. If market coverage is seen as a continuum, then these manufacturers have moved from a selective or

3. Retailers expect manufacturers to supply relatively exclusive rights to distribute their branded goods.

4. If retailers try to use coercive power, they will most likely hurt themselves by eliminating some of

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Chapter 13: Marketing Channels and Supply–Chain Management

their best-selling brands. The conflict might be resolved by specifying the roles of each channel

member (i.e., who sells what season’s merchandise).

Class Exercise 2: Market Coverage

The purpose of this exercise is to improve students’ understanding of the intensities of market coverage.

Identify the intensity of market coverage for each of the following products:

Question

Answer

1.

Potato chips

intensive

2.

Gucci handbags

exclusive

3.

Large-screen televisions

selective

4.

Rolex watches

exclusive

5.

Clinique cosmetics

selective

6.

Carbonated beverages

intensive

7.

Range Rover vehicles

exclusive

8.

Stereo systems

selective

9.

Levi jeans

selective

10.

Apple iPads

selective

11.

Gasoline

intensive

12.

Cannondale bicycles

selective

13.

Jaguar automobiles

exclusive

14.

Nintendo Wii games

selective

15.

Reebok shoes

selective

Class Exercise 3: Finding the Best Distribution Channels

In this chapter, students learned about the complexity of choosing the appropriate channel for distributing

goods and creating value for the organization and the consumers. In this exercise, students can explore the

issues of matching goods to the best suited supply chain—delivering goods to the appropriate consumers.

For each of the following products, list the key considerations in selecting a supply chain and the

appropriate level of distribution intensity.

2. A new brand of bubble gum.

3. An innovative new home appliance.

4. An orthopedic dog bed.

5. A regional pasta brand which is expanding nationally.

Class Exercise 4: Planning a Distribution Strategy for Your School

In this chapter, students learned of the importance of matching the supply chain elements to the strategic

objectives of the product, most importantly to meet the needs of the consumers. In this exercise students

can plan a distribution strategy for the campus.

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Chapter 13: Marketing Channels and Supply–Chain Management

Students’ answers should be based on the following questions, which are based on this scenario: An

alumnus of your university has agreed to donate a truckload of Florida oranges (packaged in cases) to be

used as a fundraiser for the marketing club. The truck will be arriving in four weeks and must be unloaded

and on its way back to Florida in 48 hours of its arrival.

Step 1: What issues will have to be dealt with to make best use of this donation?

Step 2: What costs will have to be managed to make this a successful fundraiser?

Step 3: How will you ensure the commitment to a 48-hour turnaround on the truck?

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Chapter 13: Marketing Channels and Supply–Chain Management

Chapter Quiz

1. Industrial distributors are increasingly carrying more _____ products.

a. convenience

b. business

c. consumer

d. expensive

e. bulky

2. The elimination of marketing intermediaries

a. reduces the total costs to consumers.

b. reduces the total number of transactions.

c. requires that the services they provide be performed by someone else in the marketing channel.

d. is beneficial to both manufacturers and consumers.

e. assures consumers of higher product quality.

3. An agreement in which the products of one organization are distributed through the marketing

channel of another organization is called

a. dual distribution.

b. marketing intermediation.

c. channel conflict.

d. a strategic channel alliance.

e. a channel partnership.

4. When only one outlet in a relatively large geographic area is used to distribute a product that is

consumed over a long period of time, a(n) ___________ channel arrangement is developed.

a. inclusive

b. general

c. exclusive

d. selective

e. physical

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Chapter 13: Marketing Channels and Supply–Chain Management

SEMESTER PROJECT

In this chapter, you learned the importance of having your product in the right place for consumers to

access it. In this exercise, you will determine the appropriate channels for you to distribute your product,

you. Since it would be impossible to personally visit every potential employer, in this exercise you will

focus on how to get your resume in a position to be viewed by potential employers.

Step 1: Identify any parameters you want to apply to your product, you. For example, do you want to stay

in the town you currently live in? Another parameter might be the industry you want to work in.

Step 2: Identify distribution channels that meet the needs of your product, taking into consideration the

identified parameters. Remember to think through both electronic and non-electronic means, such as a

career resource center. http://www.careers.org/

Step 3: Discuss how the parameters you placed on your product impact your distribution choices. How

would your distribution strategy change if you changed your parameters?

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Chapter 13: Marketing Channels and Supply–Chain Management

ANSWERS TO ISSUES FOR DISCUSSION AND REVIEW

1. Define supply-chain management. Why is it important?

2. Describe the major functions of marketing channels. Why are these functions better

accomplished through the combined efforts of channel members?

3. List several reasons consumers often blame intermediaries for distribution inefficiencies.

To consumers, intermediaries are not always visible in the distribution system and therefore are not

4. Compare and contrast the four major types of marketing channels for consumer products.

Through which type of channel is each of the following products most likely to be distributed?

a. New automobiles

b. Saltine crackers

c. Cut-your-own Christmas trees

d. New textbooks

e. Sofas

f. Soft drinks

traditional and is practical for producers of goods that sell to hundreds of thousands of consumers.

5. Outline the four most common channels for business products. Describe the products or

situations that lead marketers to choose each channel.

The first type of channel for business products is direct from producer to organizational customer.

6. Describe an industrial distributor. What types of products are marketed through an industrial

distributor?

7. Under what conditions is a producer most likely to use more than one marketing channel?

8. Identify and describe the factors that may influence marketing channel selection decisions.

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Chapter 13: Marketing Channels and Supply–Chain Management

Channel selection decisions usually are significantly affected by one or more of the following

9. Explain the differences among intensive, selective, and exclusive methods of distribution.

In intensive distribution, the product is distributed through many outlets for the convenience of

10. “Channel cooperation requires that members support the overall channel goals to achieve

individual goals.” Comment on this statement.

11. Explain the major characteristics of each of the three types of vertical marketing systems

(VMSs): corporate, administered, and contractual.

12. Discuss the cost and service trade-offs involved in developing a physical distribution system.

13. What are the main tasks involved in order processing?

14. Explain the trade-offs that inventory managers face when they reorder products or supplies.

How is the reorder point computed?

15. Explain the major differences between private and public warehouses. How do they differ from

a distribution center?

16. Compare and contrast the five major transportation modes in terms of cost, speed, and

dependability.

Railroads

Trucks

Pipelines

Waterways

Airplanes

Selection

criteria

Cost

Moderate

High

Low

Very low

Very high

Speed

Average

Fast

Slow

Very slow

Very fast

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Chapter 13: Marketing Channels and Supply–Chain Management

ANSWERS TO DEVELOPING YOUR MARKETING PLAN

The information obtained from these questions should assist students in developing various aspects of

their marketing plan found in the Interactive Marketing Plan exercise at www.cengagebrain.com.

1. Marketing intermediaries perform many activities. Using Table 13.1 as a guide, discuss the

types of activities where a channel member could provide needed assistance.

2. Using Figure 13.2 (or 13.3 if your product is a business product), determine which of the

channel distribution paths is most appropriate for your product. Given the nature of your

product, could it be distributed through more than one of these paths?

Students’ answers will vary based on their products.

3. Determine the level of distribution intensity that is appropriate for your product. Consider the

characteristics of your target market(s), the product attributes, and environmental factors in

4. Discuss the physical functions that will be required for distributing your product, focusing on

materials handling, warehousing, and transportation.

Students’ answers will vary, depending on the product, the intensity of distribution, and where their

target markets are located.

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Chapter 13: Marketing Channels and Supply–Chain Management

COMMENTS ON VIDEO CASE 13: TAZA CULTIVATES CHANNEL

RELATIONSHIPS WITH CHOCOLATE

Summary

Taza Chocolate is a small manufacturer of stone-ground organic chocolate made in the classic Mexican

tradition. The company markets most of its products through U.S. retailers, wholesalers, and distributors.

Individual customers around the world can also buy Taza chocolate directly from the Taza website, and

local customers can visit the company’s food truck or factory. The case presents the different marketing

challenges that come with each form of distribution. Taza also seeks to build positive relationships across

the entire supply chain.

Questions for Discussion

1. Which distribution channels does Taza use, and why are they appropriate for this company?

2. In what ways does Taza benefit from selling directly to some consumers? What are some

potential problems of selling directly to consumers?

3. In what ways are Taza’s distribution efforts influenced by the fact that its products are

organic?