Distribution Channels Overview
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Questions and Answers

What is a distribution channel?

A set of independent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.

Why are marketing intermediaries used?

  • To provide economies
  • Both A and B (correct)
  • To match demand and supply

    • Which of the following is NOT a distribution channel function?

  • Matching
  • Information
  • Promotion
  • Customer service (correct)

    • Direct distribution channels involve intermediaries.

    <p>False</p> Signup and view all the answers

    Define 'Channel level'.

    <p>A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.</p> Signup and view all the answers

    What are the types of flows that connect institutions in a distribution channel?

    <p>All of the above</p> Signup and view all the answers

    What is channel conflict?

    <p>Disagreement among marketing channel members on goals and roles.</p> Signup and view all the answers

    What are the two main types of channel conflict?

    <p>Both A and B</p> Signup and view all the answers

    What is a vertical marketing system (VMS)?

    <p>A channel structure in which producers, wholesalers, and retailers work together to achieve a common goal.</p> Signup and view all the answers

    Which of the following is NOT a type of vertical marketing system?

    <p>Horizontal VMS</p> Signup and view all the answers

    What is a horizontal marketing system?

    <p>A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.</p> Signup and view all the answers

    Hybrid marketing channels are a combination of direct and indirect channels.

    <p>True</p> Signup and view all the answers

    What is disintermediation?

    <p>The process of removing intermediaries from a distribution channel.</p> Signup and view all the answers

    Which of the following is a major decision in channel design?

    <p>All of the above</p> Signup and view all the answers

    Study Notes

    Distribution Channels

    • Distribution channels are a series of independent organizations that make a product or service available to consumers.
    • Intermediaries are used to match supply and demand, effectively providing economies.

    Distribution Channel Functions

    • Information: Sharing necessary information
    • Promotion: Promoting products
    • Contact: Establishing contact with potential buyers
    • Matching: Aligning product with buyer demand
    • Negotiation: Reaching agreements on price and terms
    • Physical distribution: Transporting and storing goods
    • Financing: Providing financial support for the channel
    • Risk taking: Handling potential risks associated with the product

    Channel Levels

    • A channel level is a layer of intermediaries that brings a product and its ownership closer to the consumer.
    • This can include direct or indirect marketing channels.

    Channel Flows

    • All channel institutions are connected by different flows.
    • Physical flow of product: Movement of products through the channel
    • Flow of ownership: Transfer of product ownership to the next channel member
    • Payment flow: Money and payment transfers
    • Information flow: Exchange of information along the channel

    Channel Conflict

    • Disagreements among channel members on goals and roles.
    • Types include horizontal conflict (between members at the same level) and vertical conflict (between different levels).

    Vertical Marketing Systems (VMS)

    • Types of VMS:
      • Corporate VMS: One company owns the entire channel (e.g. Apple's own retail stores).
      • Contractual VMS: Members are bound by contracts (e.g. franchising).
        • Wholesaler-sponsored voluntary chains
        • Retailer cooperatives
        • Franchise organizations (manufacturer sponsored, wholesaler sponsored, and service firm sponsored)
      • Administered VMS: Channel leadership comes from the power and influence of one member.

    Horizontal Marketing Systems

    • Two or more companies at the same level join together to take advantage of opportunities.

    Hybrid/Multichannel Distribution System

    • Using multiple distribution channels to reach a broader market.

    Changing Channel Organization

    • Disintermediation: Cutting out intermediaries.

    Channel Design Decisions

    • Analyzing consumer service needs: Understanding customer requirements.
    • Setting channel objectives and constraints: Defining objectives and limitations.
    • Identifying major alternatives: Considering various distribution options such as sales forces, agents, or other intermediaries.
    • Types of intermediaries: Specific types of intermediaries that fit the product and marketing objectives (Sales force, manufacturer's agency, industrial distributors).
    • Number of marketing intermediaries: Intensive, selective, exclusive distribution, depending on the strategy..
    • Evaluating alternatives: Assessing criteria like economic factors, control, and adaptability.

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    Related Documents

    Distribution Channel Chapter 12 PDF

    Description

    Explore the key concepts of distribution channels, including functions, levels, and flows. This quiz covers how intermediaries facilitate the movement of products and services from producers to consumers, enhancing supply and demand efficiency. Test your knowledge on the roles and responsibilities within distribution systems.

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