TEST YOURSELF

Chapter 15: Channel and Distribution Strategy

Essay Questions

1. The direct channel of distribution is not always the best for consumer goods, as evidenced by the relatively small percentage of dollar sales that move directly from the producer to the consumer at this point in time. However, as the use of the Internet increases, the direct channel will likely become a powerful additional channel for many products. Which of the following products should consider taking advantage of the Internet as a means of direct distribution? Rationalize your recommendations based on how feasible it is for producers of these types of products to handle the six distribution channel functions (facilitating the exchange process, sorting, standardizing, holding inventories, assisting in the search process, and transporting) on their own.
   a. Mercury outboard motors
   b. Dove soap
   c. Cuisinart food processors
   d. Kawasaki motorcycles
   e. Waterford crystal

2. The text notes that service channels tend to be shorter for consumer services than for consumer goods because of the intangibility of services and the need to maintain personal relationships in the channels. Do the other characteristics of services – inseparability, heterogeneity, and perishability – also contribute to service channels being shorter? If so, how?

3. Packaged goods marketers such as Kellogg and Procter & Gamble are often accused of contributing to environmental problems around the world through their excessive use of packaging. In your opinion, what would be the impact or effectiveness of legislation that required packaged goods manufacturers to establish reverse channels of distribution, and in particular redemption centres, for their packaging materials?

4. Facilitating agencies provide specialized assistance for regular channel members in moving products from the producer to its ultimate customers. Relate each of the following types of facilitating agency to both (1) the specific channel function or functions it helps to perform (facilitating the exchange process, sorting, standardizing, holding inventories, assisting in the search process, transporting), and (2) the regular channel member or member(s) (producers, wholesalers, retailers) it is likely that this type of facilitating agency typically works for.
   a. truckers
   b. warehousing firms
   c. banks
   d. insurance companies
   e. marketing research companies

5. What does “taking title” mean? What would a wholesaling intermediary who “takes title” do differently than one who doesn’t “take title” with regard to each of the seven functions provided by wholesaling intermediaries (buying, selling, transporting, storing, providing marketing information, risk taking, and financing)?

6. A generalization concerning marketing channels is that the lower the unit value of the product, the longer the channel. Explain, in product factor terms, why convenience goods and business supplies with typically low unit prices are frequently marketed through relatively long channels while installations and more expensive business and consumer goods go through shorter, more direct channels.

7. Further to question 6, are there market factors, producer factors, or competitive factors that also support the above generalization that the lower the unit value of the product, the longer the channel?

8. Selective distribution involves having a small number of retailers handle a firm’s product line. Typically, selective distribution is used for products that consumers are willing to shop around for. Name three product categories that you are willing to shop around for. Then determine whether or not the typical distribution approach for brands in these product categories is intensive, selective, or exclusive. If the typical distribution approach is intensive or exclusive, why might the marketer have used that approach rather than a selective one?
   
   

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