Marketing Chapter 12: Distribution Channels

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Questions and Answers

What is the primary purpose of distribution channels?

To improve product manufacturing

To enhance marketing strategies

To create brand recognition

To transfer ownership of goods (correct)

Which aspect of distribution channels is closely related to supply chain management?

Advertising and brand management

Sales promotion techniques

Logistical transportation only

Inventory management strategies (correct)

How does a well-thought-out distribution strategy affect retailers?

It simplifies production processes.

It determines advertising budgets.

It reduces the need for stock management.

It helps convince them to carry products. (correct)

What does logistics management primarily influence in the context of distribution?

Distribution strategy effectiveness Signup and view all the answers

What is one of the goals of efficient supply chain management?

To ensure merchandise is produced in the right quantities Signup and view all the answers

What is a primary focus of logistics management?

Integrating activities to plan and control the flow of goods Signup and view all the answers

Which distribution strategy aims to place products in as many outlets as possible?

Intensive distribution Signup and view all the answers

In selective distribution, how are retailers chosen?

By selecting a few based on territory or area Signup and view all the answers

Which distribution strategy restricts sales to a few selected retailers in a specific geographic area?

Exclusive distribution Signup and view all the answers

What is a key characteristic of multichannel distribution?

Combines two or more distribution methods Signup and view all the answers

What role do distribution centers primarily serve in adding value?

Buying and selling products Signup and view all the answers

Which transactional function involves owning inventory that can become outdated?

Buying Signup and view all the answers

What is a function of intermediaries concerning physical distribution?

Transporting goods to the point of purchase Signup and view all the answers

What is a common characteristic of channel conflict?

Disagreement on goals, roles, or rewards Signup and view all the answers

Which function helps promote products to attract consumers?

Promotion Signup and view all the answers

In the context of intermediaries, what does the facilitating function involve?

Sharing competitive intelligence Signup and view all the answers

What is a significant risk faced by intermediaries?

Outdated inventory Signup and view all the answers

Which companies are mentioned as having a mutually beneficial partnership?

Home Depot and Stanley Tool Company Signup and view all the answers

What aspect of the selling function involves the actual transaction with customers?

Transacting Signup and view all the answers

What type of function is extending credit to consumers considered?

Facilitating Signup and view all the answers

Study Notes

Chapter 12: Distribution Channels

Nestlé ranks among the worst plastic polluters, according to Greenpeace.
Nestlé is pursuing a five-pillar approach to address plastic concerns.
By 2025, Nestlé wants all its plastic packaging to be recyclable or reusable.
Nestlé has developed a new meatless burger.

The Importance of Distribution

Good distribution is crucial for marketing success.
A well-structured distribution strategy is vital for convincing retailers to carry a product's goods.
The Instant Pot offers multiple meal-preparation functions.

Distribution channels are institutions that transfer goods' ownership and move them from production to consumption.

Supply Chain Management

Firms use approaches to integrate suppliers, manufacturers, warehouses, stores, and transportation intermediaries as a seamless value chain.
Merchandise is produced and distributed with the correct quantities, locations, and time.
System-wide costs are minimized while meeting customer service requirements.

Logistics Management

Logistics management involves planning, implementing, and controlling raw materials, in-process inventory, and finished goods flow from origin to consumption.

Distribution Components

Supply Chain: Suppliers and their networks.
Distribution Channels: Wholesalers and retailers.
Producers: Outbound flow of products.
Consumers.
Logistics Management: Flow of materials and information.

Designing Distribution Channels

Channel Structure: There are direct, indirect (using intermediaries), and multi-channel distributions.

Multichannel Distribution

Catalogues and direct marketing, are used to reach different consumer segments.
Distributors and sales forces are included in distribution processes.

Push vs. Pull Distribution Strategies

Push: Manufacturers use listing allowances & contests to retailers to move their products.
Pull: Manufacturers use advertising and social media to attract customers.

Distribution Intensity

Intensive: Products are available in as many outlets as possible (e.g., Walmart).
Selective: Products are distributed through a select number of outlets (e.g., Hudson's Bay).
Exclusive: Products are distributed through only a few retailers (e.g., Tiffany & Co.).

Distribution Centres Versus Direct Store Delivery

Retailers consider total cost and service levels when deciding between these two systems.

Getting Merchandise to Customers

Customers have several options for acquiring goods, such as in-store pickup or shipping.

Inventory Management Through Just-in-Time Systems

Just-in-Time (JIT) and Quick Response (QR) systems.

Benefits of JIT Systems

Reduced lead time
Increased product availability and lower inventory investment.

Data Warehouse and Electronic Data Interchange

Purchase data is stored in a data warehouse.
Electronic Data Interchange (EDI) facilitates computer-to-computer exchange of business documents which helps improve communication and reduce cycle time.

Vendor-Managed Inventory

Manufacturers are responsible for maintaining retailers' inventory levels.

Logistics Management: Making Merchandise Flow

Inbound transportation, receiving, checking, storing, and distribution to stores.
Just-in-time (JIT) systems are often used.
Distribution centers facilitate delivery of products to stores.

Distribution Channels Add Value

Distribution centers play a vital role in adding value.
Buying, selling, and facilitating exchange.
Home Depot and Stanley Tool Company have a mutually beneficial partnership.

Channel Conflict

Channels conflict when members disagree about common goals, roles, or rewards.
Amazon and Procter & Gamble recognize that profitable partnership interests are complementary.

Vertical Vs. Horizontal Channel Conflict

Vertical conflict occurs between different levels of the supply chain (e.g., manufacturer and retailer).
Horizontal conflict occurs between competing retailers at the same level of the supply chain (e.g., retailers).

Types or Phases of Vertical Marketing Systems

Administered
Contractual
Franchise
Corporate

Canada's Largest Franchises

(This section lists top franchises in Canada, indicating their types and number of outlets.)

Managing Supply Chains Through Strategic Relationships

Mutual trust
Open communication
Common goals
Credible commitments

Logistics Management: Making Merchandise Flow:

This section describes different steps in getting merchandise from production to the customer. (e.g., POS data)

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Description

Explore the fundamental concepts of distribution channels in marketing through this quiz. Delve into how companies like Nestlé address plastic pollution and the importance of an effective supply chain in delivering goods. Test your understanding of distribution strategies and logistics in the modern market.