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Chapter 17: Distribution: Delivering Customer Value

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Chapter 17: Distribution: Delivering Customer Value

30 problems · 0 figures

Knowledge Check 17.1.1 §17.1 source ↗

A(n) ________ is a group of people, organizations, processes, and activities that work together to deliver products and services to the consumer.
  1. a.
    wholesaler
  2. b.
    manufacturer
  3. c.
    intermediary
  4. d.
    marketing channel

Answer

D. marketing channel
A marketing channel is a collection of people, organizations, processes, and activities that work together to deliver products and services to the consumer.

Knowledge Check 17.1.2 §17.1 source ↗

A(n) ________ is someone who acts as an extension of the manufacturer. While they never take possession of the product or service they represent, they earn a commission or collect a fee for facilitating the transaction between the customer and the manufacturer.
  1. a.
    retailer
  2. b.
    wholesaler
  3. c.
    distributor
  4. d.
    agent

Answer

D. agent
Agents serve as representatives of manufacturers. While they never take possession of a product or service, they earn a commission or collect a fee for facilitating the transaction between the customers and the manufacturer.

Knowledge Check 17.1.3 §17.1 source ↗

Without intermediaries, the number of transactions between the total number of manufacturers and the total number of consumers would ________.
  1. a.
    decrease
  2. b.
    stay the same
  3. c.
    increase
  4. d.
    decrease temporarily

Answer

C. increase
When intermediaries are removed from the marketing channel, manufacturers must then be solely responsible for distributing products directly to all customers. Thus, the number of transactions would increase.

Knowledge Check 17.1.4 §17.1 source ↗

What do intermediaries do to add value in the marketing channel?
  1. a.
    They perform important activities that manufacturers are not experts at performing.
  2. b.
    They increase the price of products and services for customers.
  3. c.
    They increase the amount of time it takes for products and services to reach consumers.
  4. d.
    They make improvements to the product so that it functions better.

Answer

A. They perform important activities that manufacturers are not experts at performing.
Intermediaries add value by performing important activities that manufacturers are not expert at performing. This helps create efficiency in the marketing channel, which helps meet the wants and needs of targeted customers.

Knowledge Check 17.1.5 §17.1 source ↗

As intermediaries move products and services from manufacturers to consumers, what key services do they offer?
  1. a.
    Pricing and promoting across geographical areas
  2. b.
    Surveying customers to ensure they are satisfied with their product or service experience
  3. c.
    Competing with one another to reduce prices for consumers
  4. d.
    Accumulating, bulk-breaking, adjusting for assortment discrepancies, and providing financing

Answer

D. Accumulating, bulk-breaking, adjusting for assortment discrepancies, and providing financing
Accumulating, bulk-breaking, adjusting for assortment discrepancies, and providing financing are the valuable services that intermediaries provide.

Knowledge Check 17.2.1 §17.2 source ↗

A(n) ________ marketing channel does not use intermediaries but rather involves the manufacturer distributing its market offering directly to consumers.
  1. a.
    indirect
  2. b.
    direct
  3. c.
    omnichannel
  4. d.
    multichannel

Answer

B. direct
A direct marketing channel sells and distributes directly to the consumer without the use of intermediaries.

Knowledge Check 17.2.2 §17.2 source ↗

A(n) ________ marketing channel partners with intermediaries including distributors, wholesalers, agents, or retailers to sell and distribute its products.
  1. a.
    omnichannel
  2. b.
    indirect
  3. c.
    multichannel
  4. d.
    vertical channel

Answer

B. indirect
An indirect marketing channel relies on a partnership with intermediaries to sell and distribute its products.

Knowledge Check 17.2.3 §17.2 source ↗

In the B2B or industrial space, manufacturers or producers sell products and services aimed at reaching a(n) ________ end user.
  1. a.
    consumer
  2. b.
    agent
  3. c.
    business
  4. d.
    wholesaler

Answer

C. business
In the B2B or industrial space, manufacturers or producers sell products and services aimed at reaching a business end user.

Knowledge Check 17.2.4 §17.2 source ↗

In a(n) ________, one member of the distribution channel owns the other members.
  1. a.
    administered vertical marketing system
  2. b.
    corporate vertical marketing system
  3. c.
    horizontal marketing system
  4. d.
    multichannel marketing system

Answer

B. corporate vertical marketing system
In a corporate vertical marketing system, one channel member owns one or more other channel members.

Knowledge Check 17.2.5 §17.2 source ↗

What is the difference between multichannel and omnichannel marketing systems?
  1. a.
    Multichannel marketing systems are designed primarily for online distribution.
  2. b.
    Omnichannel marketing systems are designed primarily for in-store distribution.
  3. c.
    Omnichannel marketing systems are more flexible and seamless in how consumers can buy and receive products and services.
  4. d.
    Multichannel marketing systems are more flexible and seamless in how consumers can buy and receive products and services.

Answer

C. Omnichannel marketing systems are more flexible and seamless in how consumers can buy and receive products and services.
Omnichannel marketing systems allow consumers to buy and receive products and services seamlessly across a variety of channels, including online and in-store.

Knowledge Check 17.3.1 §17.3 source ↗

Which of the following overarching factors can impact channel choice in the distribution of products and services?
  1. a.
    Target market coverage, fulfillment of buyer requirements, and profitability
  2. b.
    Intensive, selective, and exclusive distribution
  3. c.
    The technical nature of the product and its fixed and variable costs
  4. d.
    The profitability of the channel and its members' abilities to meet consumer needs

Answer

A. Target market coverage, fulfillment of buyer requirements, and profitability
The three overarching factors that impact channel choice include target market coverage, fulfillment of buyer requirements, and profitability.

Knowledge Check 17.3.2 §17.3 source ↗

ABC Toys desires to distribute products across global markets. It is likely using what type of distribution strategy?
  1. a.
    Exclusive
  2. b.
    Selective
  3. c.
    Unlimited
  4. d.
    Intensive

Answer

D. Intensive
An intensive distribution strategy is used when a company wants to distribute through every possible retail outlet where a consumer might find its products.

Knowledge Check 17.3.3 §17.3 source ↗

Total Appliance offers buyers installation services for refrigerators, dishwashers, washers, and dryers for $50. In addition, it also offers buyers a free annual tune-up of any major appliance purchased through its retail outlet. Which buyer requirement does Total Appliance fulfill?
  1. a.
    Variety
  2. b.
    Post-sale service
  3. c.
    Pre-sale service
  4. d.
    Convenience

Answer

B. Post-sale service
A post-sale service is a buyer requirement that is fulfilled after the purchase of a product.

Knowledge Check 17.3.4 §17.3 source ↗

MilkyIce markets ice cream products through grocery retailers in the United States. Which of the following product-related factors would have the biggest impact on MilkyIce’s channel choice?
  1. a.
    Standardization
  2. b.
    Bulk and weight
  3. c.
    Perishability
  4. d.
    Unit value

Answer

C. Perishability
Perishability is an important factor in channel decisions for companies who sell products that have a short shelf life.

Knowledge Check 17.3.5 §17.3 source ↗

Which overarching factor involves analyzing the revenues and costs associated with a channel?
  1. a.
    Unit value
  2. b.
    Fixed costs
  3. c.
    Variable costs
  4. d.
    Profitability

Answer

D. Profitability
Profitability is a factor that companies consider when choosing a distribution channel. Companies are attracted to channels that help them maximize profits and operate more efficiently.

Knowledge Check 17.4.1 §17.4 source ↗

XYZ Appliance is evaluating wholesalers to determine which one would be the right match for its distribution strategy. Which of the following wholesalers would be the best match for XYZ Appliance?
  1. a.
    Wholesaler A is brand new to the large appliance market.
  2. b.
    Wholesaler B has 20 years of experience in wholesaling food products and is the most expensive.
  3. c.
    Wholesaler C has five years of experience in the large appliance market, has a solid reputation, and is profitable.
  4. d.
    Wholesaler D has two years of experience in the small appliance market and is the cheapest.

Answer

C. Wholesaler C has five years of experience in the large appliance market, has a solid reputation, and is profitable.
Manufacturers should select channel members based on years of experience, reputation, experience within the market, and profitability. In the scenario above, selecting a channel member based on experience, reputation, and profitability makes the most sense.

Knowledge Check 17.4.2 §17.4 source ↗

DirectDocumentaries is a streaming service that provides subscribers with access to documentaries. It currently works with three production companies that it continuously manages to ensure timely production and delivery of new documentaries. Which of the following scenarios is an example of good channel management?
  1. a.
    Production Company A distributes its documentaries through DirectDocumentaries but has also set up an additional domain on the web to distribute directly to viewers. DirectDocumentaries does not know about this additional streaming outlet.
  2. b.
    Production Company B has only been operating for one year. DirectDocumentaries is skeptical about Production Company B’s capabilities so shares limited information with it. DirectDocumentaries offers little to no support in Production Company B’s development.
  3. c.
    Production Company C is a powerhouse, producing 30 to 40 documentaries a year. DirectDocumentaries and Production Company C work closely together to ensure that documentary releases occur at strategic times. They also openly share information about what’s working and what’s not. They have a common goal in reaching customers with innovative ideas.
  4. d.
    Production Company D is rarely happy. It feels that DirectDocumentaries favors other producers and rarely features its productions on a subscriber’s homepage. Production Company D has complained several times.

Answer

C. Production Company C is a powerhouse, producing 30 to 40 documentaries a year. DirectDocumentaries and Production Company C work closely together to ensure that documentary releases occur at strategic times. They also openly share information about what’s working and what’s not. They have a common goal in reaching customers with innovative ideas.
Production Company C and DirectDocumentaries are involved in a well-managed relationship. There is cohesion and transparency, and they share common goals.

Knowledge Check 17.4.3 §17.4 source ↗

________ occurs when manufacturers cut out intermediaries and sell directly to end users or final buyers. It can also occur if a manufacturer pivots from its traditional distribution strategy to something completely different.
  1. a.
    Horizontal conflict
  2. b.
    Vertical conflict
  3. c.
    Intermediary conflict
  4. d.
    Disintermediation

Answer

D. Disintermediation
Disintermediation occurs when a channel member is removed from the distribution channel.

Knowledge Check 17.4.4 §17.4 source ↗

Which of the following is a key metric that assesses the percentage of orders that are processed, fulfilled, and shipped to consumers without any errors?
  1. a.
    Order accuracy rate
  2. b.
    Inventory turnover rate
  3. c.
    Total number of orders
  4. d.
    Average delivery days

Answer

A. Order accuracy rate
Order accuracy rate is the percentage of orders that are processed, fulfilled, and shipped to consumers without any errors.

Knowledge Check 17.4.5 §17.4 source ↗

________ measures the length of time from when a customer places an order to when it reaches them.
  1. a.
    Average delivery days
  2. b.
    Time to ship
  3. c.
    Inventory turnover rate
  4. d.
    Total number of orders

Answer

B. Time to ship
Time to ship is a metric that measures the length of time from when a customer places an order to when it reaches them.

Knowledge Check 17.5.1 §17.5 source ↗

________ entails managing all the members and activities from the procurement and transformation of raw materials into finished goods through their distribution to targeted consumers.
  1. a.
    Logistics
  2. b.
    Integrated logistics management
  3. c.
    Supply chain management
  4. d.
    Warehousing

Answer

C. Supply chain management
Supply chain management entails managing all the members and activities from the procurement and transformation of raw materials into finished goods through their distribution to targeted consumers.

Knowledge Check 17.5.2 §17.5 source ↗

Which of the following best demonstrates the role that marketing plays in supply chain management?
  1. a.
    In order for companies to deliver on their value proposition to consumers, they must ensure that the activities and members in the supply chain share the common goal of delivering value to consumers.
  2. b.
    Companies need to raise the price of their products with the supply chain in mind so that they earn a profit.
  3. c.
    Companies must market their products to supply chain members in order to win partnership with them.
  4. d.
    Companies should only work with supply chain members who can save time and money in the distribution of products. Savings are most important to customers.

Answer

A. In order for companies to deliver on their value proposition to consumers, they must ensure that the activities and members in the supply chain share the common goal of delivering value to consumers.

Knowledge Check 17.5.3 §17.5 source ↗

Companies that manufacture goods rely on raw materials to produce the products they sell. This describes the function of ________.
  1. a.
    inventory management
  2. b.
    supply chain management
  3. c.
    transportation
  4. d.
    purchasing

Answer

D. purchasing
Companies that manufacture goods rely on raw materials to produce the products they sell. They purchase the required materials from suppliers, who must be able to deliver them in accordance with the manufacturer’s timeline.

Knowledge Check 17.5.4 §17.5 source ↗

________ include(s) the labor, the raw materials, and the technology that are required to move products from their raw material phase to finished goods available for consumption.
  1. a.
    Purchasing
  2. b.
    Logistics
  3. c.
    Forecasting
  4. d.
    Resources

Answer

D. Resources
Resources include the labor, the raw materials, and the technology that are required to move products from their raw material phase to finished goods available for consumption.

Knowledge Check 17.5.5 §17.5 source ↗

________ is a supply chain management function that relates to what and how information moves between members of the supply chain.
  1. a.
    Information workflow
  2. b.
    Forecasting
  3. c.
    Logistics
  4. d.
    Resource management

Answer

A. Information workflow
Information workflow is a supply chain management function that relates to what and how information moves between members of the supply chain.

Knowledge Check 17.6.1 §17.6 source ↗

________ makes the most sense for companies who need to transport products quickly.
  1. a.
    Trucking
  2. b.
    Air transportation
  3. c.
    Rail transportation
  4. d.
    Water transportation

Answer

B. Air transportation
Air transportation provides the fastest delivery speed over trucking, rail, and water transportation.

Knowledge Check 17.6.2 §17.6 source ↗

________ is the planning, organizing, and controlling of the movement of raw materials and ultimately finished goods to end consumers.
  1. a.
    Supply chain management
  2. b.
    Logistics
  3. c.
    A marketing channel
  4. d.
    Transportation

Answer

B. Logistics
Logistics is the planning, organizing, and controlling the movement of raw materials and ultimately finished goods to end consumers

Knowledge Check 17.6.3 §17.6 source ↗

Which of the following best explains the importance and use of logistics information?
  1. a.
    Companies use logistics information to sell to other companies that target similar consumers.
  2. b.
    Companies use logistics information to market additional products to consumers.
  3. c.
    Companies use logistics information to develop demand forecasts, conduct supply planning, and optimize supply chain effectiveness.
  4. d.
    Companies rarely use logistics information to guide decision-making.

Answer

C. Companies use logistics information to develop demand forecasts, conduct supply planning, and optimize supply chain effectiveness.
Companies use logistics information to develop demand forecasts and conduct supply planning. It can also be used to analyze and assess the effectiveness and efficiency of the supply chain to ensure optimization.

Knowledge Check 17.6.4 §17.6 source ↗

________ ensures that every element of logistics as part of the entire supply chain is part of a system that works cohesively to ensure that the wants and needs of final customers are met.
  1. a.
    A marketing channel
  2. b.
    Information management
  3. c.
    Integrated marketing communication
  4. d.
    Integrated logistics management

Answer

D. Integrated logistics management
Integrated logistics management ensures that every element of logistics as part of the entire supply chain is part of a system that works cohesively to ensure that the wants and needs of final customers are met.

Knowledge Check 17.6.5 §17.6 source ↗

Which of the following explains why companies would use a third-party logistics (3PL) provider to distribute products?
  1. a.
    3PL providers have the expertise, flexibility, and cost efficiencies that manufacturers do not possess in logistics.
  2. b.
    3PL providers understand how to promote a product more effectively than a company does.
  3. c.
    3PL providers own warehouses to help store and manage inventory.
  4. d.
    3 PL providers own and operate their own transportation system.

Answer

A. 3PL providers have the expertise, flexibility, and cost efficiencies that manufacturers do not possess in logistics.
3PL providers have the expertise, flexibility, and cost efficiencies in logistics that manufacturers don’t possess.

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Problems and answers are adapted from Principles of Marketing by Maria Gomez Albrecht, Mark Green and Linda Hoffman, OpenStax, and are used under the CC BY-NC-SA 4.0 licence. Access for free at https://openstax.org/books/principles-marketing/pages/1-unit-introduction. Illustrations: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license. This adaptation is released under the same licence, is non-commercial, and is neither affiliated with nor endorsed by OpenStax or Rice University.