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MKTG 3210

by: Carlyjones123
GPA 3.4

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About this Document

This study guide goes over material for Exam 2. Chapters 5-8.
Fundamentals Distribution
Study Guide
Marketing, distribution, Fundamentals, business
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This 5 page Study Guide was uploaded by Carlyjones123 on Thursday September 29, 2016. The Study Guide belongs to MKTG 3210 at East Tennessee State University taught by Whitmore in Fall 2016. Since its upload, it has received 5 views. For similar materials see Fundamentals Distribution in Business Marketing at East Tennessee State University.


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Date Created: 09/29/16
EXAM 2 STUDY GUIDE MKTG 3210 CHAPTER 5: 1. The relationship between channel strategy and marketing strategy: Marketing  Channel strategy can be viewed as a special case of the more general marketing strategy.  It is concerned with the place aspect of marketing strategy. It is the broad principles by  which the firm expects to achieve its distribution objectives for its target market(s).  Marketing strategy is the broad principles by which the business unit expects to achieve  its marketing objectives in a target market.  2. Basic Distribution Decisions: There are six of these. 1) What role should distribution  play in the firm’s overall objectives and strategies? 2) What role should distribution play  in the marketing mix? 3) How should the firm’s marketing channels be designed to  achieve its distribution objectives? 4) What kinds of channel members should be selected  to meet the firm’s distribution objectives? 5) How can the marketing channel be managed to implement the firm’s channel strategy and design effectively and efficiently on a  continuing basis? 6) How can channel member performance be evaluated? 3. Guiding principles basis: marketing channel strategy provides guiding principles for all  basic decisions in distribution. Management of distribution should be guided by channel  strategy. This leads to distribution decisions.  4. Channel Strategy definition: the broad principles by which the firm expects to achieve  its distribution objectives for its target market(s).  5. Marketing Mix: more firms nowadays are competing with marketing mixes. It is  becoming increasingly more difficult for a company to differentiate its marketing mix  from that of the competition. Marketing mixes based on promotion are short­thved  because ads or promotional messages quickly lose appeal. Distribution, the 4  variable of the marketing mix, can offer a favorable basis for developing competitive edge because  advantages achieved in distribution are not as easily copied by competitors as the other 3  variables.  6. Differential advantage: also called sustainable competitive advantage in more recent  years, refers to a firm’s attainment of an advantageous position in the market relative to  competitors­ a place that enables it to use its particular strengths to satisfy customer  demands better than its competitors on a long­term (sustainable) basis. Example­  Caterpillar’s key ingredient to their success is a well­designed marketing channel system  based on a superb dealer organization.  7. Broad coverage of the market: if a manufacturer’s products are “middle of the road” in  quality and aimed at the mass market, its distribution strategy should stress broad  coverage of the market. Rolex watches are not going to have a broad coverage of the  market, where as Bic ballpoint pens will select any intermediary who is capable of selling its products.  8. Distribution intensity, closeness of the channel relationship: there is a spectrum for  distribution intensity, from intensive (many channel members) to selective (relatively  few) to exclusive (one). There is also a different spectrum on page 167, figure 5.6.  9. Slotting allowance: paying channel members to provide shelf­space. 10. Synergy: the underlying strategic concept of developing synergy in the marketing mix by anticipating and incorporating interrelationships among the four Ps is still a worthwhile  approach to managing the mix.  CHAPTER 6: 1.   Channel design: refers to decisions associated with developing new marketing channels  where none had existed before, or to modifying existing channels. Decision faced by the  marketer.  2. Differential advantage: using channel design as a strategic tool for gaining a differential advantage should be uppermost in the channel manager’s thinking when designing  marketing channels.  3. Reasons for making channel design decisions: the firm’s distribution objectives are not explicitly formulated, particularly because the changed conditions that created the need  for channel design decisions might also have created the need for new or modified  distribution objectives.  4. Variables affecting channel design: Frito­Lay example, “right to the store door”  example puts them ahead with a competitive advantage because they used a channel  design that uses almost 13,000 drivers to deliver products directly to the grocery store.  5. Channel manager may choose more than one channel structure: channel managers  may do this to reach the target markets effectively and efficiently. For example, Kraft  Foods Inc. sells such products as its macaroni and cheese and Tombstone pizza through  supermarkets, wholesale food distributors, convenience stores, drugstore chains, mass  merchandisers, and through movie theaters via high­tech vending machines.  6. Market behavior variables: 1) how customers buy, 2) when customers buy, 3) where  customers buy, and 4) who does the buying.  7. Economics of scope: such products as convenience goods in the consumer market and  operating supplies in the industrial market typically use one or more intermediaries so  that the costs of distribution can be shared by many other products that the intermediaries handle, thus creating economics of scope and scale. Lower unit values, longer channels. 8. Direct Distribution: when the unit value is high relative to its size and weight (such as  jewelry, electronics, luxury apparel, cosmetics, etc.) direct distribution is feasible because the handing and transportation costs are low relative to the value of the products. This is  why amazon can sell products directly to consumers and even offer free shipping.  9. Shortening the channel: using a financial approach. It should shift performance of  marketing functions to intermediaries, unless a firm can earn more than the cost of capital and the return that can be earned on the use of its funds in manufacturing. CHAPTER 7: 1. Selection of channel members: last phase of channel design. One reason is to replace  channel members that have left the channel either voluntarily or otherwise. Selection  decisions re frequently necessary even when channel structure changes have not been  made.  2. Intensity of distribution: the greater the intensity of distribution, the less the emphasis  on selection. Firms that emphasize more selective distribution need a strong emphasis on  the selection of channel members. Pages 215 and 216 3. Most important source for finding prospective channel members: 1) field sales  organization, 2) trade sources, 3) reseller inquiries, 4) customers, 5) advertising, 6) trade  shows, 7) other sources 4. Best way for the manufacturer to obtain information about potential intermediaries  from customers: salespeople are in the best position to know potential channel members  in their own territory.  5. Problem with using the sales force to find prospective channel members: the  possibility that the manufacturer may not adequately reward salespeople for their efforts  in finding these potential channel members.  6. The producers and manufacturers receiving the highest number of inquiries from  prospective channel members: will be rewarded for their efforts.  7. Management succession: many intermediaries are managed by the firm’s owner or  founder who are usually independent small businesses. If the firm’s principal dies, the  continuity of management is left in doubt. Ex­ success is so important to Caterpillar Inc.  that they have special seminars to help persuade children of existing distributors to carry  on the business when their parents retire or pass away. 8. Inducement that manufacturers might offer prospective channel members: 1) good,  profitable product line, 2) advertising and promotional support; 3) management  assistance and 4) fair dealing policies and friendly relationships.  9. Partnerships or strategic alliances: partnerships or strategic alliances between  manufacturers and intermediaries at the wholesale and/or retail levels based on mutual  commitment and teamwork are not only popular, but have become the norm for  relationships in many channels of distribution.  10. Profit potential of the product: at the heart of what the manufacturer has to offer is a  good product line with strong sales and profit potential. Indeed, if manufacturers can  offer this, they may need to offer little else to secure all of the channel members they  want.  CHAPTER 8:  1.   Emphasis on channel design strategy: market channel design strategy should be  market­driven so as to meet as closely as possible the demands of the firm’s target market (its customers). Their channel design strategies need to reflect the demands of the  customers being targeted. Example­ if customers expect to have movies and shows  delivered via Hulu rather than conventional TV then they should be able to get this due to market channel design strategy in companies. Helps the firm gain a competitive  sustainable advantage.  2.   The most complex market dimension: market behavior is the most complex.  3.   The ____ that should drive channel design: needs and wants of the market being  targeted.  4.   Market geography: refers to the geographical extent of markets and where they are  located.  5.   Challenges for distribution channels when firms deal with distant markets by selling products on the internet: fulfillment logistics and customer service will present  challenges for both consumer and business markets even with the power of internet  technology. 6.   Market size: refers to the number of buyers or potential buyers (consumer or industrial)  in a given market.  7.   Market density: refers to the number of buyers or potential buyers per unit of  geographical area. It should also be considered in channel design strategy because of its  relationship to channel structure.  8.   Four sub­dimensions of market behavior: 1) when the market buys (daily, weekly,  seasonally), 2) where the market buys (determined by location and types of outlets), 3)  how the market buys, and 4) who buys (who decides to make the purchase?) (deciders) 9.   Seasonal variations in buyer behavior: they tend to create peaks and valleys in the  manufacturer’s production scheduling. One way to smooth these out is attempting to  product in the off­season and maintain the products in inventory for the heavy selling  season, however this is very difficult. A willingness to buy in the off­season (given price  inducements) should be used as a criterion for selecting channel members.  10. Trade­off behavior: forgoing some convenience for other factors offered by the more  distant retailers.  11. Threetailing: consumers have become “channel surfers” because they shop in multiple  channels­in a retailer’s stores, from its catalogs and from its web site. (in­store, catalogs,  online) 12. Changes in how customers make their purchases: more stores are adapting to help  customers shop easier. For example, many Walgreens shoppers are above 65 so they put  in call buttons near heavy merchandise, magnifying glasses on store shelves, changed  their signage, and made more manageable shopping carts and numerous other tweaks.  Who actually buys the product can affect the type of retailers chosen in the consumer  market. 


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