Chapter 9 - Place Decisions and Customer Convenience

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Questions and Answers

What primarily defines industrial supply chains?

The retail of finished goods to consumers.

The return of defective merchandise from consumers.

The companies involved in acquiring raw materials. (correct)

The distribution of goods through marketing intermediaries.

What is the main function of wholesalers in retail supply chains?

To produce goods directly for consumers.

To acquire goods from producers and distribute them. (correct)

To handle the return of defective merchandise.

To conduct marketing for the final consumers.

Which term describes the flow of goods and information in supply chains?

Logistics network.

Demand chain.

Supply chain. (correct)

Production flow.

What is a characteristic of drop shipping?

Orders are fulfilled directly from suppliers. Signup and view all the answers

What is one purpose of reverse supply chains?

To manage the return of merchandise to producers. Signup and view all the answers

Which statement is true regarding the restocking fees charged by retailers?

They typically average between 15% and 20% of the price of an item. Signup and view all the answers

How do intermediaries enhance value in supply chains for consumers?

Through their specialized expertise in distribution logistics. Signup and view all the answers

What resource flows back up the supply chain similar to the flow of goods?

Money. Signup and view all the answers

What characterizes drop servicing within supply chains?

It involves the resale of services performed by another company. Signup and view all the answers

What typically complicates the return process for retailers?

Returns without original packaging. Signup and view all the answers

What is a disadvantage of direct supply chains for consumers?

They do not provide savings through intermediaries. Signup and view all the answers

What purpose do promotional efforts serve within supply chains?

To assist supply chain members in selling more effectively. Signup and view all the answers

Which intermediary in retail supply chains directly sells to the final consumer?

Retailers. Signup and view all the answers

What is a common issue faced by retailers regarding merchandise returns?

Excessive returns complicate inventory management. Signup and view all the answers

Which of the following is a direct supply chain method?

Owning and operating retail outlets. Signup and view all the answers

What does the retailer fit concept primarily depend on?

Retailer reach, retailer type, and retailer image Signup and view all the answers

What is a primary advantage of catalog or online sales for producers?

It can be less expensive than running physical stores. Signup and view all the answers

When would using wholesalers in a retail supply chain be most beneficial?

When wholesalers provide a better access to retailers. Signup and view all the answers

Which strategy attempts to create demand directly among consumers to influence retailers?

Pull strategy Signup and view all the answers

Which of the following best defines distribution intensity?

The level of availability and accessibility of a product. Signup and view all the answers

What has the shift in power within supply chains primarily favored in recent decades?

Retailers Signup and view all the answers

What characterizes an exclusive distribution strategy?

Only few outlets are selected to sell the products. Signup and view all the answers

What is a source of conflict in supply chains?

Conflicting marketplace perceptions Signup and view all the answers

What is retailer reach primarily concerned with?

Attracting consumers in the producer's target market. Signup and view all the answers

What approach is anchored at one end of the continuum of exchanges in supply chains?

Discrete transaction approach Signup and view all the answers

How do mass merchandisers primarily attract consumers?

Through their wide range of products and low prices. Signup and view all the answers

Which type of vertical marketing system is characterized by formal agreements between members?

Contractual VMS Signup and view all the answers

What is a drawback of a direct supply chain using retail outlets?

Higher operational and investment costs. Signup and view all the answers

What is a push strategy focused on in terms of retailing?

Convincing retailers to carry a product Signup and view all the answers

Which situation would likely favor using an indirect supply chain?

Producers with limited funds for retail growth. Signup and view all the answers

Which of the following is NOT a dimension of retailer fit?

Retailer loyalty Signup and view all the answers

What is a crucial factor for retailers in attracting target consumers?

Retailers' geographical location. Signup and view all the answers

What constitutes a disadvantage of selective distribution?

It limits product availability to many consumers. Signup and view all the answers

What drives the need for a producer to invest in online sales technology?

To effectively attract consumers to purchase from them. Signup and view all the answers

What role do wholesalers play in retail supply chains?

They provide access to a larger pool of retailers. Signup and view all the answers

What is a supply chain?

The total series of companies, exchanges, and transactions that produce and deliver goods to consumers. Signup and view all the answers

What is the primary distinction between industrial and retail supply chains?

Industrial supply chains involve getting materials to the producer, whereas retail supply chains handle the distribution to consumers. Signup and view all the answers

Which term describes the practice of placing a brand in as many retail outlets as possible?

Intensive Distribution Signup and view all the answers

What characterizes a convenience store?

They offer narrow assortments of common items with convenience as a priority. Signup and view all the answers

What is the main focus of relationship marketing?

Customer satisfaction, loyalty, and engagement over time. Signup and view all the answers

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

Indirect VMS Signup and view all the answers

What does a drop shipping model typically involve?

Utilizing e-commerce retailers to fulfill customer orders via suppliers. Signup and view all the answers

What is coercive power in the context of supply chains?

Threatening one party to enforce compliance. Signup and view all the answers

What does selective distribution mean?

Available in many but not all possible retail outlets. Signup and view all the answers

Which of the following describes a category killer?

A large retailer that specializes in a specific product category. Signup and view all the answers

How does a pull strategy operate?

By generating consumer demand, prompting retailers to stock products. Signup and view all the answers

Which of the following is an example of reverse supply chains?

Products returning from consumers to producers. Signup and view all the answers

What are distribution logistics concerned with?

The efficient movement and storage of merchandise. Signup and view all the answers

What is a franchise agreement within a vertical marketing system?

An arrangement where independent retailers follow brand guidelines. Signup and view all the answers

What does restocking fees relate to?

Fees associated with consumers returning products to producers. Signup and view all the answers

Which type of retailer typically emphasizes convenience over price?

Convenience stores Signup and view all the answers

What distinguishes mass merchandisers from department stores?

Department stores carry a broader assortment of products. Signup and view all the answers

What strategy involves convincing retailers to carry a producer's products through sales force efforts?

Push strategy Signup and view all the answers

Which of the following is an example of a category killer?

Home Depot Signup and view all the answers

Which type of store would likely carry narrow and deep inventories with high levels of customer service?

Specialty stores Signup and view all the answers

In the context of power in supply chains, what is coercive power?

Gaining compliance through threats Signup and view all the answers

What is a key reason why retailers have gained power in modern supply chains?

They possess well-known, respected brands. Signup and view all the answers

What common conflict arises between supply chain members?

Differing goals for profit maximization Signup and view all the answers

Which of the following captures the essence of a pull strategy in retailing?

Consumers requesting products from retailers Signup and view all the answers

What factor primarily determines how conflicts are resolved among supply chain members?

Power dynamics Signup and view all the answers

Retailers assert their power by using which of the following capabilities?

Analyzing consumer data Signup and view all the answers

Which of the following is NOT typically a characteristic of warehouse clubs?

High-priced products Signup and view all the answers

What defines the conflict between supply chain members regarding responsibilities?

Different perspectives on market strategies Signup and view all the answers

Which option best describes the product focus of grocery stores like Kroger?

Primarily grocery items Signup and view all the answers

What is the primary focus of relationship marketing in supply chains?

Customer satisfaction and long-term engagement Signup and view all the answers

Which type of Vertical Marketing System (VMS) involves formal agreements binding the parties together?

Contractual VMS Signup and view all the answers

What can minimize uncertainty and reduce costs in supply chains?

Trustworthy business relationships Signup and view all the answers

What are the two key questions managers should ask when analyzing supply chain conflict?

How important is the outcome and the relationship? Signup and view all the answers

Which approach is preferable for building long-term relationships with supply chain partners?

Engaging in relational exchanges Signup and view all the answers

What type of supply chain provides full control over product marketing to consumers?

Direct supply chain Signup and view all the answers

How can effective supply chains benefit consumers?

By optimizing product selection and marketplace information Signup and view all the answers

Which of these is an example of an Administered VMS?

An informal collaboration between suppliers and retailers without formal contracts Signup and view all the answers

What is a potential outcome of not sharing information within a supply chain?

Missed opportunities for profitable products Signup and view all the answers

What might make searching for new suppliers or retailers expensive for a business?

The time and money required for establishing new relationships Signup and view all the answers

What characterizes a reverse supply chain?

Flow of products back from consumers to suppliers Signup and view all the answers

What is one benefit of cooperative supply chain relationships?

Reduced oversight and management needs Signup and view all the answers

What distinguishes relational exchanges from discrete transactions?

Information sharing versus limited communication Signup and view all the answers

Which statement about supply chains is true?

Supply chains consist of companies and transactions that deliver goods to consumers. Signup and view all the answers

What is the primary downside of conflict in supply chains?

Lost opportunities and increased costs Signup and view all the answers

Study Notes

Supply Chain Decisions and Customer Convenience

Supply Chains: The series of companies, exchanges, and transactions that produce and make goods available to consumers.
Reverse Supply Chains: Supply chains where merchandise flows backward from consumers to producers (e.g., returns, repairs).
Industrial Supply Chains: Companies involved in getting materials to producers (raw materials suppliers, component makers).
Retail Supply Chains: Companies involved in getting goods from producers to consumers (wholesalers, retailers).
Marketing Intermediaries: Companies facilitating connections between client companies and customers (wholesalers, retailers).
Wholesalers: Intermediaries who buy from producers and sell to retailers.
Retailers: Intermediaries who buy from producers or wholesalers and sell to consumers.
Indirect Supply Chains: Use marketing intermediaries.
Drop Shipping: An indirect model where e-commerce retailers don't handle inventory.
Drop Servicing: When online retailers sell services performed by suppliers.
Direct Retail Supply Chains: No separate intermediaries; consumers buy directly from producers (e.g., online, catalogs).
Restocking Fees: Fees charged for returned merchandise (typically 15-20% of the cost).

Designing Retail Supply Chains

Supply Chain Length: The number of intermediaries.
- Direct Supply Chains: Producers own retail stores or sell directly online.
- Indirect Supply Chains: Use wholesalers and retailers.
Distribution Intensity: How widely available a product is.
- Intensive Distribution: Place brands in many retail outlets.
- Selective Distribution: Place brands in many but not all outlets.
- Exclusive Distribution: Place brands in few outlets.
Retailer Selection: Criteria to choose retailers.
- Retailer Reach: Ability to attract consumers in target markets.
Retailer Type: Types of retailers (mass merchandisers, discount, specialty, convenience).
Retailer Image: Retailers' perceived image and reputation.
Push Strategy: Producers persuade wholesalers and retailers to carry their products.
Pull Strategy: Producers try to build consumer demand, encouraging retailers to stock their products.

Power and Conflict in Supply Chains

Power: One party's ability to influence another party's actions.
Coercive Power: The ability to threaten another party to gain compliance.
Reward Power: The ability to offer incentives to gain compliance.
Power Shift: In recent decades, retailers have gained more power than producers.
Conflict: Disagreements among supply chain members.
Conflict Management: Cooperative relationships lead to better outcomes.

Relationship Marketing and Vertical Marketing Systems

Relationship Marketing: Focus on customer satisfaction, loyalty, and long-term customer engagement
Discrete Transactions: One-time business with no future expectations.
Relational Exchanges: Long-term relationships based on trust and information exchange.
Vertical Marketing Systems (VMS): Producers, wholesalers, and retailers work cooperatively.
- Administered VMS: Cooperative relationships without formal agreements.
- Contractual VMS: Relationships with contracts specifying responsibilities.
- Franchise Agreement: A type of contractual VMS.
- Corporate VMS: All supply chain levels under common ownership.

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Chapter 9 - Place Decisions and Customer Convenience

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Questions and Answers

What primarily defines industrial supply chains?

What is the main function of wholesalers in retail supply chains?

Which term describes the flow of goods and information in supply chains?

What is a characteristic of drop shipping?

What is one purpose of reverse supply chains?

Which statement is true regarding the restocking fees charged by retailers?

How do intermediaries enhance value in supply chains for consumers?

What resource flows back up the supply chain similar to the flow of goods?

What characterizes drop servicing within supply chains?

What typically complicates the return process for retailers?

What is a disadvantage of direct supply chains for consumers?

What purpose do promotional efforts serve within supply chains?

Which intermediary in retail supply chains directly sells to the final consumer?

What is a common issue faced by retailers regarding merchandise returns?

Which of the following is a direct supply chain method?

What does the retailer fit concept primarily depend on?

What is a primary advantage of catalog or online sales for producers?

When would using wholesalers in a retail supply chain be most beneficial?

Which strategy attempts to create demand directly among consumers to influence retailers?

Which of the following best defines distribution intensity?

What has the shift in power within supply chains primarily favored in recent decades?

What characterizes an exclusive distribution strategy?

What is a source of conflict in supply chains?

What is retailer reach primarily concerned with?

What approach is anchored at one end of the continuum of exchanges in supply chains?

How do mass merchandisers primarily attract consumers?

Which type of vertical marketing system is characterized by formal agreements between members?

What is a drawback of a direct supply chain using retail outlets?

What is a push strategy focused on in terms of retailing?

Which situation would likely favor using an indirect supply chain?

Which of the following is NOT a dimension of retailer fit?

What is a crucial factor for retailers in attracting target consumers?

What constitutes a disadvantage of selective distribution?

What drives the need for a producer to invest in online sales technology?

What role do wholesalers play in retail supply chains?

What is a supply chain?

What is the primary distinction between industrial and retail supply chains?

Which term describes the practice of placing a brand in as many retail outlets as possible?

What characterizes a convenience store?

What is the main focus of relationship marketing?

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

What does a drop shipping model typically involve?

What is coercive power in the context of supply chains?

What does selective distribution mean?

Which of the following describes a category killer?

How does a pull strategy operate?

Which of the following is an example of reverse supply chains?

What are distribution logistics concerned with?

What is a franchise agreement within a vertical marketing system?

What does restocking fees relate to?

Which type of retailer typically emphasizes convenience over price?

What distinguishes mass merchandisers from department stores?

What strategy involves convincing retailers to carry a producer's products through sales force efforts?

Which of the following is an example of a category killer?

Which type of store would likely carry narrow and deep inventories with high levels of customer service?

In the context of power in supply chains, what is coercive power?

What is a key reason why retailers have gained power in modern supply chains?

What common conflict arises between supply chain members?

Which of the following captures the essence of a pull strategy in retailing?

What factor primarily determines how conflicts are resolved among supply chain members?

Retailers assert their power by using which of the following capabilities?

Which of the following is NOT typically a characteristic of warehouse clubs?

What defines the conflict between supply chain members regarding responsibilities?

Which option best describes the product focus of grocery stores like Kroger?

What is the primary focus of relationship marketing in supply chains?

Which type of Vertical Marketing System (VMS) involves formal agreements binding the parties together?

What can minimize uncertainty and reduce costs in supply chains?

What are the two key questions managers should ask when analyzing supply chain conflict?

Which approach is preferable for building long-term relationships with supply chain partners?

What type of supply chain provides full control over product marketing to consumers?

How can effective supply chains benefit consumers?

Which of these is an example of an Administered VMS?

What is a potential outcome of not sharing information within a supply chain?

What might make searching for new suppliers or retailers expensive for a business?

What characterizes a reverse supply chain?

What is one benefit of cooperative supply chain relationships?