SOLUTIONS

TO SELF STUDY QUESTIONS: LECTURE: 9

ANSWERS TO MATCHING QUESTIONS

BOX 1
C1

C 2: Explanation/Description (Distribution and Channels)

C 3: Descriptor

1.

Reduce the difference between the amount of product produced

and the amount an end user wants to buy. (Matches C)

2.

Transform the assortment of products made by producers into the

assortment wanted by consumers. (Matches A)

3.

Allowing customers to buy a product when the customer is not

ready to buy it. (Matches D)

4.

Allowing the customer to buy a product irrespective of the

location of production (widely scattered markets). (Matches B)

A. Discrepancy of
assortment
B. Spatial
discrepancy
C. Discrepancy of
quantity
D. Temporal
discrepancy
E. Reducing
discrepancy

BOX 2

6.
7.
8.
9

Consists of independent firms at different levels of production and

distribution. (Matches C)
Coordinates distribution by the power exerted by of one of its
members in the marketplace, not by contract or ownership
(Matches D)
Comprises producers, wholesalers and retailer acting in as a unified
system. (Matches A)
The corporate body combines and owns successive stages of
production and distribution. (Matches B)

C 3: Descriptors

A. Vertical Marketing
B.
C.
D.
E.

Networks (VMN)
Corporate VMN
Contractual VMN.
Administered VMN
Horizontal Marketing
Systems (HMS))

These are formed when two or more companies at one level

join to pursue a new marketing opportunity. (Matches E)

5.

C 2: Explanation (Distribution and channels)

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C1

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ANSWERS TO MCQs

1) Statement _________ below describes the essence of logistics.

A) tradeoffs between cost areas such as transport versus production lot quantity costs.
B) ensuring that least cost physical distribution is achieved.
C) making increased sales and then transporting them at optimal costs.
D) reducing the number of warehouses companies use.
E) all of the above.

Answer: A

2)
Effective marketing logistics network management can:

A) provide cost advantages.
B) provide delivery time advantages.
C) lower prices to the final customer.
D) improve profits for suppliers and manufacturers.
E) do everything stated above (i.e., in A, B, C & D).

Answer: E

3) As the members of the marketing channel move merchandise from one level to the next,
they typically perform _________

A) the creation of form utility.
B) activitiesbased cost accounting.
C) risk taking.
D) lengthening the channel so as to provide more specialised service.
E) eliminating unnecessary channel functions.

Answer: C

4)
The set of firms and individuals that take title, or assist in transferring title, to a good
or service as it moves from the producer to the final consumer or industrial user
constitutes a:

A) promotional channel.
B) selling channel.
C) product/service channel.
D) marketing channel.
E) wholesale channel.

Answer: D

A channel of distribution with no intermediaries is called a(n):

Answer: A

6) Dymock's online book store is likely to represent the consumer marketing channel
________

A) manufacturer to consumer.
B) wholesaler to consumer.
C) retailer to consumer.
D) manufacturer to retailer to consumer.
E) none of A, B, C, and D above.

Answer: D

7)
Disagreements among channel members regarding roles and goals generate:

A) healthy competition which improves channel efficiency.
B) channel conflict.
C) an increase in channel length.
D) improved communication.
E) greater cooperation.

Answer: B

8)
Conflict between channel members at the same level of the channel is called simply:

A) vertical conflict.
B) middlemen conflict.
C) horizontal conflict.
D) functional conflict.
E) oblique conflict.

Answer: C

9) In _________________, two or more unrelated companies at one channel level join together to
pursue a new marketing opportunity.

A) vertical marketing.
B) an administered VMN.
C) homogeneous marketing.
D) horizontal marketing.
E) partnership marketing.

Answer: D

A) direct marketing channel.

B) conventional marketing channel.
C) indirect marketing channel.
D) unconventional marketing channel.
E) direct retail channel.

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5)

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Read the scenario below and answer questions 10 and 11
At Consolidated Diversified, five new marketing managers had just been appointed to
concentrate on the distribution needs of their respective businesses. Evelyn's distribution
system consisted of independent firms at different levels of production and distribution who
joined together to obtain greater economies of scale. Louis's system was really a joint effort
with another manufacturer, World Global, created to take advantage of a new marketing
opportunity. Emma oversaw a new distribution channel that was wholly owned by
Consolidated. Sarah's division used several channels to reach more customer segments and
she spent a lot of time making sure that the channels' members weren't offended by the
competition Consolidated sometimes created for them. Meanwhile, Cordelia supervised the
channel in Consolidated's package goods business where the company's size and power
helped them obtain strong trade cooperation and support from the resellers.

10) According to the information in the above box, Louis's division uses which type of
distribution channel?

A) Multichannel marketing network
B) Corporate VMN
C) A contractual VMN
D) Horizontal marketing network
E) An administered VMN

Answer: D

11) According to the information in the above box, it is clear that Emma is using:

A) A horizontal marketing network
B) An administered VMN
C) A contractual VMN
D) A corporate VMN
E) A multichannel VMN

Answer: D

12) For many years, IBM computers sold their products only from selected, authorized
retailers. However, they have later changed the distribution strategy allowing
consumers to purchase IBM computers at several reputed department and discount
stores, including WalMart and KMart across USA. While IBM initially employed
__________ distribution by making its products available only through a single retail
outlet in specific locations, they have now adopted a __________ distribution strategy
broadening the degree of its distribution intensity.

A) intensive; exclusive
B) exclusive; intensive
C) intensive; selective
D) selective; exclusive
E) exclusive; selective

Answer: E


13) Channel members often seek control of a channel network to ________.

A)
B)
C)
D)
E)

ensure cooperation
limit the negative effect of conflict
achieve objectives
ensure consistency of service throughout the channel
all the functions stated in A, B, C and D above

Answer: E

SHORT ESSAY QUESTIONS FOR PRACTICE

1. What are the functions of channel intermediaries? Identify one product or service that
would use the services of channel intermediaries. Support your answer with a rationale
for this implementation.
Answer:
Channel intermediaries are firms or individuals such as wholesalers, agents, brokers,
and retailers who in some way help move the product to the consumer or business
user. An example would be the farmer who grows strawberries to then sell them to a
produce wholesaler that will in turn sell the berries to supermarkets and restaurants
that in turn will sell them to consumers.

2. Describe two ways that distribution channels create efficiencies and provide examples of
each.
Answer:
Breaking bulk is when wholesalers and retailers purchase large quantities of goods
from manufacturers but sell only one or a few at a time to many different customers.
Supermarkets purchase cases of canned peas and then break bulk allowing consumers
to purchase one can of peas at a time. Creating assortments reduces the number of
transactions by providing a variety of products in one location so that customers can
conveniently buy many different items from one seller at one time. Supermarkets
provide their customers with a large range of items in one spot.

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Answer:
The dealer is offering facilitating functions to its customers. These are functions of
channel intermediaries that make the purchase process easier for customers and
manufacturers. The services being offered by the dealer is making the purchasing

3. An appliance, television, stereo, or computer dealer may serve as an authorised repair

centre, provide maintenance contracts, and sell essential suppliers to customers. What
types of channel functions are being implemented by this dealer?

process easier for the customer by having so many added benefits available at one
location.
4. A local manufacturer makes several different flavours and package sizes of dog and cat
food treats. This company has a sales force that contacts retailers who sell their
products, they offer inhouse lines of credit to customers, and they do advertising for all
of the products. How would this type of intermediary be classified?
Answer:
This manufacturer is a merchant wholesaler. It is an independent intermediary that
takes title to good it purchases and provides a wide range of services for its customers
as well as having its own sales force.

5. The simplest channel of distribution is the direct channel. What are the three advantages
of a farmer selling strawberries grown on his/her farm directly to consumers?
Answer:
An advantage of the farmer selling his/her strawberries directly to consumers is that
the farmer will be able to directly serve the customer. The farmer may also be able to
sell the strawberries at a lower price than if an intermediary was involved. And, the
farmer has control of the product and the sale in making sure that the berries are sold
when they are still fresh.

6. At one time, IBM ThinkPads were available only from IBM salespeople. Today, IBM
ThinkPads are sold through dealers, catalogue operations, direct mail, and retail stores.
What marketing system is being implemented for the distribution of these ThinkPads?
Answer:
A hybrid marketing system uses a number of different channels and communication
methods to serve a target market. The IBM ThinkPad is available to the target market
through several different channels.

7. Qantas Airlines is a member of the Oneworld Alliance which includes airlines such as
British Airways and Cathay Pacific Airways. Air New Zealand is a member of the Star
Alliance, including airlines such as Air Canada. What type of marketing system are both
Qantas and Air New Zealand using?
Answer:
A horizontal marketing system is an arrangement within a channel of distribution in
which two or more firms at the same channel level work together for a common
purpose. These airlines are members of a horizontal alliance that allows them to
cooperate in providing passengers air service, sharing reservation systems, aircraft
and airport lounges.

Answer:

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8. Contrast intensive, selective and exclusive distribution. Provide two examples of

products that would logically be distributed in each of these ways.

Intensive distribution aims at maximising market coverage by selling a product

through all wholesalers or retailers that will stock and sell the product. Examples
include almost any convenience good such as bread or milk. Exclusive distribution
means limiting distribution to a single outlet in a particular region. Examples include
many specialty goods and any brand for which there is a strong demand and no
perceived substitutes available such as Holden or Ford cars. Selective distribution is
used when demand is so large that exclusive distribution is inadequate, but selling
costs, service requirements, or other factors make intensive distribution a poor
strategy. Examples include most shopping goods such as household appliances.

9. What is the concept of nonstore retailing? Give one example of a well known product
that has been marketed this way for many years.
Answer:
Nonstore retailing is any method a firm uses to complete an exchange that does not
require a customer to visit a store. Avon is the classic example as they have primarily
relied on catalogues and inhome selling

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