978-1337407588 Chapter 14 Solution Manual Part 3

Unlock access to all the studying documents.

View Full Document

Chapter 4: Retailing

Part 4: Integrated Case Assignments

Marketing Miscues

Microsoft Implies Distribution of Angry Birds on Windows Phone 7

Rovio Mobile is a leading independent developer of wireless games. The company has

developed games for companies such as Electronic Arts, Nokia, Vivendi, NAMCO Bandai, and

Rovio Mobile and Angry Birds

Rovio Mobile started in the early 2000s when three students at the Helsinki University of

Technology participated in a mobile game development competition sponsored by Nokia and

After a round of angel investment in 2005, the company changed its name to Rovio Mobile. This

was the beginning of the development of numerous successful games that gave the company a

Angry Birds was released in December 2009 for Apple’s iOS platform. It is a puzzle video game

in which players use slingshots to launch birds with the intent of destroying pigs on the playing

The popularity of the Angry Birds game is exemplified by the download reports and logged

Chapter 4: Retailing

Windows Phone 7

Launched in 2010 and developed by Microsoft, Windows Phone 7 is a re-branding of Windows

Mobile and is targeted to the consumer marketplace instead of the business marketplace. As

Microsoft, however, apparently jumped the gun on saying that it would be a distributor of Angry

Birds. Just days before the actual launch of the phone, with an Angry Birds icon on the phone’s

Sources: Rovio Mobile website, http://rovio.com (Accessed May 2, 2011); Jon Mundy,

“Interview: Rovio on the Origin of Angry Birds, Being Inspired by Swine Flu, and Why You

May Never See an Angry Birds 2,” Pocket Gamer, October 13, 2010,

Maker Is Angry with Microsoft,” PCWorld, October 11, 2010,

Popkin, “Angry Birds Fail to Negotiate Peace Treaty,” Technolog, November 22, 2010.

Open-Ended Questions

1 Describe the channel of distribution for Angry Birds.

Rovio creates an Angry Birds version for various platforms. Customers do not obtain the

2 Who has the channel power in the distribution of online games?

The popularity of Angry Birds has clearly given Rovio the channel power, regardless of the

Chapter 4: Retailing

Closed-Ended Questions

True/False

1. Rovio Mobile, in its ongoing negotiations with Microsoft described in the case, was being

courted by the software giant to sell Angry Birds to the users of its Windows Phone 7

platform.

PTS: 1 OBJ: 14-2 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level I Knowledge

2. None of the classic marketing discrepancies apply to the marketing channels for a

downloadable product such as Angry Birds.

PTS: 1 OBJ: 14-1 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level I Knowledge

3. As of this writing, you cannot download Angry Birds on to your BlackBerry phone. As yet,

Angry Birds can’t achieve the economies of scale that it could while producing the app.

PTS: 1 OBJ: 14-1 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level I Knowledge

4. Online sales of apps should always be seen as a direct channel to consumers.

Chapter 4: Retailing

PTS: 1 OBJ: 14-2 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level I Knowledge

Multiple Choice

1. What Microsoft did to make it possible for users of its Windows Phone 7 to play Angry

Birds can best be described as _____.

a. intellectual theft, at least temporarily

b. an intermediary

c. a reseller

d. a wholesale distributor

e. a franchisee

PTS: 1 OBJ: 14-1 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level II Comprehension

2. Just like a company that manufacturers the smartphones on which users can play Angry

Birds, Rovio Mobile benefits from the principle of _____ in distributing its product via

Microsoft, the App Store, and Android Market?

a. economies of scale

b. intermediaries

c. contact efficiency

d. overcoming discrepancies

e. All of the above

PTS: 1 OBJ: 14-1 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level II Comprehension

3. Which of the following channel functions applies in the download delivery of Angry Birds?

a. logistics

b. facilitating

c. promoting

Chapter 4: Retailing

d. assorting

e. All of the above

PTS: 1 OBJ: 14-1 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level II Comprehension

4. Because the Angry Birds app is sold through _____, you will probably never see it sold

_____.

a. wholesale distributors/directly to consumers

b. virtual distributors/in a box

c. virtual distribution/in spinoff forms for non-phone platforms

d. retail channels/as a standalone product

e. app stores alone/at Game Stopper and the like

PTS: 1 OBJ: 13-5 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level II Comprehension

5. Given that Angry Birds is available for iPhones, Microsoft, and Android phones, it is fair to

say it enjoys _____.

a. multiple distribution

b. economies of scale in regard to marketing channels

c. high-profile placement

d. a price monopoly

e. market segmentation

PTS: 1 OBJ: 13-2 TOP: AACSB Reflective Thinking

Chapter 4: Retailing

KEY: CB&E Model Distribution MSC: BLOOMS Level II Comprehension

6. Which of the following nonstore outlets would best describe Microsoft’s mode of selling

Angry Birds?

a. automatic vending

b. online retailing

c. online vending machine

d. direct retailing

e. None of the above since an App Store is a store

PTS: 1 OBJ: 14-5 TOP: AACSB Reflective Thinking

KEY: CB&E Model Marketing Plan MSC: BLOOMS Level II Comprehension

Critical Thinking Case

CUTCO Cutlery Corporation: Direct to Consumers for Over 60 Years!

CUTCO Corporation, the largest manufacturer and marketer of high-quality kitchen cutlery and

accessories in the United States and Canada, celebrated its 60th anniversary in 2009. With the

design and manufacture of the highest-quality product as its primary objective, over 100 kitchen

cutlery products are sold under the CUTCO name. The company also carries a line of cookware,

sporting/pocket knives, and garden tools. The CUTCO corporate family consists of several

companies.

CUTCO Corporation—parent company

CUTCO Cutlery Corporation—manufacturer of CUTCO products since 1949

All businesses within the corporate family, except for Schilling Forge, are located in Olean, New

York (USA), where the company has over 700 manufacturing and administrative employees.

Schilling Forge is located in Syracuse, New York. Only a very small percentage of the

Chapter 4: Retailing

The Producer

CUTCO’s commitment to quality and innovation is evident throughout every step of the

manufacturing process—from the selection of steel to final inspection. The company stands

behind each and every product with a FOREVER satisfaction guarantee. The guarantee has four

components:

1 FOREVER Performance Guarantee

CUTCO Cutlery’s American-made products and the hard-working craftsmen and women

dedicated to creating this high-quality kitchen cutlery were featured on the Travel Channel’s

The Consumer

CUTCO Cutlery Corporation has approximately 18 million satisfied consumers in North

America. The customer response to CUTCO research directs the development of new products

and services, and the sharing of personal stories about special times with family and friends

Product to Consumer Direct Channel via Vector Marketing Corporation

Unlike many competitive cutlery products, CUTCO cutlery products are not available in mass

merchandise or specialty stores. Boasting annual sales of over $200 million, Vector Marketing

Chapter 4: Retailing

Divided into six regions (northeast, Midwest, eastern, central, southwest, and western), Vector

Marketing has over 300 offices across the United States and Canada. Regional headquarters are

From production through sales, CUTCO Corporation takes ownership of its products. Using this

direct-to-consumer channel enables the company to guarantee quality from production to

consumption.

Open-Ended Questions

1 Why would a company such as CUTCO Cutlery opt for the direct channel instead of

the retailer channel for its consumer products?

Direct selling is a method of marketing and retailing products and services directly to the

consumer via person-to-person or party plan selling and away from permanent retail

locations. Direct selling offers customers the opportunity to see, touch, and test a product at

their own leisure and frequently in their own home. CUTCO products are high quality and,

Chapter 4: Retailing

2 What other companies are similar to CUTCO Cutlery in its approach to direct

retailing?

Direct sales representatives are generally independent, self-employed individuals. They

earn commissions and pay their own expenses and taxes. Other companies that use a direct

Amway

Avon

The Fuller Brush Company

Herbalife

There are 202 companies that are members of the Direct Selling Association. Students

should be directed to the website to look at the types of products sold via direct selling

retailing.

Closed-Ended Questions

True/False

1. CUTCO’s college student sales force performs the role of channel members.

PTS: 1 OBJ: 14-1 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level I Knowledge

2. In a strict sense, only CUTCO enjoys economies of scale, not its direct sellers.

Chapter 4: Retailing

PTS: 1 OBJ: 13-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level I Knowledge

3. Students who work for Vector Marketing are a form of selective distribution.

PTS: 1 OBJ: 14-2 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level I Knowledge

4. CUTCO is the channel member with channel control and power over the student sales

force.

PTS: 1 OBJ: 14-3 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level I Knowledge

Multiple Choice

1. Vector Marketing is a(n) _____.

a. independent direct marketer for CUTCO

b. merchant wholesaler

c. CUTCO broker

d. corporate subsidiary of CUTCO

e. CUTCO agent

PTS: 1 OBJ: LO-13-2 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level II Comprehension

2. CUTCO is an example of a company that concentrates on _____ to achieve its economies

of scale in cutlery and related implements.

Chapter 4: Retailing

a. distribution

b. direct sales

c. franchising with college students

d. manufacturing

e. All of the above

PTS: 1 OBJ: 14-1 TOP: AACSB Reflective Thinking

KEY: CB&E Model ProductMSC: BLOOMS Level II Comprehension

3. “Products that are more complex, customized, and expensive” benefit from direct

marketing channels. Knives and scissors are fairly low-tech. Why does CUTCO use direct

sales?

a. Because it is located in New York State.

b. Because its products are difficult to find

c. CUTCO sells to an exclusive market—newlyweds, professional chefs, cooking

schools, and the like.

d. Direct sales forces can demonstrate CUTCO’s product factors over cheaper retail

and imported cutlery to justify its price.

e. Actually, the technology used to make high-quality CUTCO products at the factory

is customized and complex.

PTS: 1 OBJ: 14-5 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Level II Comprehension

4. Which of the following businesses does not use direct retailing?

a. Vector Marketing

b. Tupperware

c. Pampered Chef

d. Amway

e. CUTCO independent sales representatives

Chapter 4: Retailing

PTS: 1 OBJ: 14-5 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level II Comprehension

5. Why are CUTCO salespersons not small-scale franchisees?

a. They do not establish retail outlets.

b. They deal only with Vector Marketing for the only product they sell.

c. They do not pay a royalty.

d. They do not pay Vector Marketing for the right to sell CUTCO products.

e. All of the above

PTS: 1 OBJ: 14-5 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution MSC: BLOOMS Level II Comprehension

6. In the retailing mix, which one of the following applies to CUTCO’s success?

a. price

b. place

c. product

d. personnel

e. promotion

PTS: 1 OBJ: 14-6 TOP: AACSB Reflective Thinking

KEY: CB&E Model Marketing Plan MSC: BLOOMS Level II Comprehension