question

True or False: Distribution and pricing strategies are linked together

answer

True. and with the product and promotional strategies of any successful brand

question

Distribution strategy

answer

A plan for delivering the right product to the right person at the right place at the right time

question

What two elements does the distribution strategy have?

answer

Channels of distribution and physical distribution

question

channel of distribution

answer

the network of organizations and processes that links producers to consumers

question

physical distribution

answer

the actual, physical movement of products along the distribution pathway

question

direct channel

answer

a distribution process that links the producer and the customer with no intermediates Ex. dell computers, local farmers

question

what do most producers use? Define

answer

Channel intermediaries: distribution organizations, informally called the "middlemen," that facilitate the movement of products rom the producer to the consumer

question

why do most producers use channel intermediaries?

answer

To help their products move more efficiently and effectively from their factories to their consumers. Ex. hershey's sells chocolate bars to sam's club, which is a channel intermediary, which may in turn, sell them to you

question

True or False: it's less expensive to buy directly from the producers

answer

False. Distributors add value, additional benefits, to products. They charge for adding that value, but the charge is less than it would cost for consumers or producers to add that value on their own

question

True or false: when distributors add to the cost of a product without providing comparable benefits, the middlemen don't stay in business

answer

true

question

What's one core role of the distributors?

answer

reduce the number of transactions, and the associated costs, for goods to flow from producers to consumers

question

how do distributors add value, or utility?

answer

form, time, place, ownership, information, and service

question

Sometimes the distributors deliver the value rather than adding it themselves, but often they do what?

answer

add new utility that wouldn't otherwise be present

question

Are the various types of utility interrelated?

answer

yes

question

What does form utility do?

answer

provides customer satisfaction by converting inputs into finished products. It's primarily a part of manufacturing

question

What does time utility do?

answer

Adds value by making products available at a convenient time for consumers. Instant gratification is something that distributors can more easily provide than producers.

question

What does place utility do?

answer

satisfies customer needs by providing the right products in the right place

question

What does ownership utility do?

answer

adds value by making it easier for customers to actually possess the goods and services that they purchase Ex. providing credit, delivering goods, installing products

question

what does information utility do?

answer

boosts customer satisfaction by providing helpful information. Ex. zappos.com hires customer service experts

question

What does service utility do?

answer

adds value by providing fast, friendly, personalized service Ex. customized order. Distributors that provide service utility typically create a loyal customer base

question

Who are the members of the channel

answer

retailers and wholesalers

question

Many producers sell their goods through ____ ___

answer

multiple channels

question

retailers

answer

- distributors that sell products directly to the ultimate users, typically in small quantities, that are stored and merchandized on the premises. - distributors that most of us know on a daily bases - Ex. starbucks, urban outfitters

question

wholesalers

answer

- distributors that buy products from producers and feel them to other businesses or nonfinal users such as hospitals, nonprofits, and the government - can be businesses, other wholesalers, or business users

question

True or False: some distributors act as both wholesalers and distributors

answer

True. Ex. costco

question

True or False: some wholesalers are owned by producers and some by retailers

answer

True. but the majority are independent wholesaling businesses

question

independent wholesaling businesses

answer

independent distributors that buy products from a range of different businesses and sell those products to a range of different customers

question

What two categories do independent wholesaling businesses fall in?

answer

merchant wholesalers and agents/brokers

question

merchant wholesalers

answer

independent distributors who take legal possession, or title, of the goods they distribute

question

agents/brokers

answer

independent distributors who do not take title of the goods they distribute. Even though they may take physical possession on a temporary basis before distribution

question

By merchant wholesalers taking legal title to the goods they distribute, they do what?

answer

reduce the risk of producers' products being damaged or stolen, or even that they won't sell. Taking title also allows them to develop their own marketing strategies, including pricing

question

Full service merchant wholesalers

answer

- provide a complete array of services to the retailers or business users who typically purchase their goods. - Ex. warehousing, shipping, promotional assistance, etc

question

Limited service merchant wholesalers

answer

provide fewer services to their customers. Some might warehouse products but not deliver them.

question

What are the three specific categories of limited-service merchant wholesalers

answer

1. drop shippers 2. cash and carry wholesalers 3. truck jobbers

question

drop shippers

answer

- take legal title of the merchandise, but never physically process it - organize product shipments directly from the producer to their customers - Ex. bulky products like coal or timber

question

cash and carry wholesalers

answer

- service customers who are too small to merit in person sales calls from wholesaler reps. - costco and staples are examples

question

truck jobbers

answer

- work with perishable goods like bread, they drive their products to their customers who are usually smaller grocery stores - check out stock, suggesting reorder quantities

question

Who do agents and brokers connect

answer

buyers and sellers and facilitate transactions in exchange for commissions

question

True or False: agents and brokers take legal ownership for the foods they distribute

answer

False. - insurance companies distribute via agents - brokers handle real estate, etc.

question

how do smart retailers gain a competitive edge?

answer

by providing more utility, or added value, than their counterparts - including low price, customer service, product selection, advertising, and location

question

what two categories does retailing fall in?

answer

store and nonstore

question

multichannel retailing

answer

- providing multiple distribution channels for consumers to buy a product - encouraging consumers to buy through different venues - online and on the ground

question

What are the three key strategic options for a distribution strategy?

answer

intensive, selective, and exclusive

question

Intensive distribution

answer

- placing your products in as many stores as possible, or placing stores in as many locations - makes most sense for low-cost convenience goods that consumers won't travel too far to find - Ex. mcdonalds, people magazine

question

Selective distribution

answer

- placing your products only with preferred retailers or limited locations - best for medium and higher-priced products or stores that consumers don't expect to find on every street corner. - nordstrom, in-n-out

question

exclusive distribution

answer

- establishing only one retail outlet in a given area - that one retailer has exclusive distribution rights and provides exceptional service and selection - luxury-good provides - lamborghini, versace

question

wheel of retailing

answer

- a classic distribution theory that suggests that retail firms and retail categories become more upscale as they go through their life cycles - doesn't apply to stores that launch at the high end market like whole foods or places with a niche like taco bell - does underscore the core principle that retailers must meet changing consumer needs in a relentlessly competitive cycle

question

What are the key players of nonstore retailers

answer

online retailing, direct-respone retailing, direct selling, and vending

question

Online retailing

answer

- great customer service can be a powerful differentiator - face two major hurdles: 1. the product must be deliver, and even the fastest delivery typically takes at least a couple of days. 2. the lack of security on the web

question

direct response retailing

answer

- catalogs, telemarking, and advertising, such as informercials, meant to elicit direct consumer sales - telemarketing both inbound and outbound also remains a potent distribution channel

question

direct selling

answer

- all methods of selling directly to customers in their homes or workplaces. - door-to-door sales - multilevel marketing (MLM) involves hiring independent contractors to sell products to their personal network of friends and colleagues and to recruit new salespeople in return for a percentage of their commission

question

Vending

answer

- selection has expanded - marketing recognize the value of providing products as conveniently as possible to their target consumers

question

Determining the best distribution channels for your product is only the first half of your distribution strategy. What is the second half?

answer

The physical distribution strategy, which is determining how your product will flow through the channel from the producer to the consumer

question

Supply chain

answer

all organizations, processes, and activities involved in the flow of goods from the raw materials to the final consumer

question

supply chain management

answer

planning and coordinating the movement of products along the supply chain, from the raw materials to the final consumers

question

logistics

answer

- subset of SCM that focuses more on tactics ( the actual movement of products) than on strategy - a subset of supply chain management that focuses largely on the tactics involved in moving products along the supply chain

question

Relationships among the members of a supply chain used to be contentious, but now they are what?

answer

- companies that foster collaboration, rather than competition, have typically experience more sucesses

question

What's vendor-managed inventory

answer

- pioneered by walmart - allows suppliers to determine buyer needs and automatically ship product

question

What are key management decisions in supply chain management?

answer

- warehousing: how many/where do we locate - materials handling: how should we move products? balance efficiency? - inventory control: how much, how should we store and distribute, etc. - order processing: manage incoming/outgoing orders - customer service: how should we serve our customers - transportation: how can we move products efficiently through the supply chain - security: how can we keep products safe from vandals, theft, etc.

question

modes of transportation

answer

- the various transportation options, such as planes, trains, and railroads, for moving products through a supply chain - must consider what each mode offers in terms of cost, speed, dependability, flexibility, availability, and frequency of shipments - right choice depends on the needs of the business and on the products itself

question

A growing number of ___ have turned to supply chain management to build a competitive edge through greater efficiency

answer

marketers

question

what affects spending choice at a more fundamental level than most other variables?

answer

- price, but it's one of the toughest variable for marketers to control - both legal constraints and marketing intermediaries, distributors, play roles in determining the final price of most products - they most consider cost, competitors, investors, taxes, and product strategies

question

What are common objectives and strategies?

answer

building profit, boosting volume, matching the competition, and creating prestige

question

What is the starting point for pricing strategies?

answer

- profitability targets - firms express these goals in terms of ROI (return on investment) or ROS (return on sales)

question

How do companies usually express volume goals?

answer

in terms of market share, the percentage of a market controlled by a company or a product

question

A volume objective usually leads to what four strategies

answer

- penetration pricing - everyday-low prices - high/low pricing - loss-leader pricing

question

penetration pricing

answer

- a new product pricing strategy that aims to capture as much of the market as possible through rock-bottom prices - discourage competitors, who may be scared off by the slim profit margins - only makes sense in categories that don't have significant group of consumers who would be willing to pay a premium - focused on controlling costs

question

everyday-low pricing

answer

- sustained discount pricing - long-term discount pricing, designed to achieve profitability through high sales volume

question

high/low pricing

answer

- a pricing strategy designed to drive traffic to retail stores by special sales on a limited number of products, and higher everyday prices on others - grocery stores, drug stores, department stores - it can alienate customers who feel cheated when a product they bought for full price goes on sale soon afterward - train customers to only buy products when they go on sale

question

loss-leader pricing

answer

- closely related to high/low pricing - loss-leader pricing means pricing a handful of items, or loss leaders, temporarily below cost to drive traffic - products placed in the back to drive customers to them

question

They key goal is to set prices based on...

answer

- What everyone else is doing - wipe out price to the point of comparison, forcing customers to choose their product based on other factors - Ex. pepsi and coke

question

What's the core goal of using price?

answer

to send consumers a message about the high quality and exclusivity of a product. the higher the price the better the product

question

skimming price

answer

- A new product pricing strategy that aims to maximize profitability by offering new products at a premium price - aimed for price insensitive consumers - once these people have made their purchases, marketers will often introduce lower-priced versions of the same product to capture the bottom of the market. - Ex. apple

question

breakeven analysis

answer

- the process of determining the number of units a firm must sell to cover all costs - the analysis helps marketers get a sense of where they stand and the hurdles they need to clear before actually introducing a product

question

what're the choses of things to do to reap of profit

answer

- raise prices - decrease variable costs: less ingredients, hire less people, etc. - decrease fixed costs: different location, cheaper equipment

question

profit margin

answer

- the gap between the cost and the price of an item on a per-product basis - expressed in dollar amount or percent

question

Two key ways to determine margins

answer

1. cost-based pricing: most popular method of establishing a fixed margin starts with determining the actual cost of each product. Once that's decided, the next step is to layer the margin on the cost to determine the price. 2. demand-based pricing: approach begins by deterring what price consumers would be willing to pay, and with that as a starting point, marketers subtract their desired margin, which yields their target costs. It's more market-focused than cost-based pricing, but it's also more risky, since profits depend on achieving those target costs.

question

True or false: consumers will use price as an indicator of quality

answer

True. Unless they have additional information to guide their decision.

question

odd pricing

answer

- the practice of ending price in numbers below even dollars and cents in order to create a perception of greater value - determine whether odd pricing would work for them by evaluating the strategy in light of the message it sends to the target market

BUSN Chapter 13 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards