CH-10 Marketing Channels and Supply Chain – Marketing: The Core : Book Guide

Chapter 10 Marketing Channels and Supply Chain QUESTIONS AND ANSWERS TO END OF CHAPTER MATERIAL Hands-on…apply your knowledge The Importance of Supply Chain in Marketing The opening vignette describes an intermediary performing a logistical function for a major Canadian franchisee insetting up new store locations. Review Figures 10–1 and 10–3 and create a list of companies that could potentially work with Canadian restaurants to perform the transactional and facilitating function of the marketing channel. Keep in mind that AMJ Campbell transports all of the “finished product” to locations, so consider the components of a “finished product” and how the supply chain is integral to allowing a new store location to open on time. Answer: Potential Companies for Transactional and Facilitating Functions: 1. Logistics Providers: AMJ Campbell (for transportation of finished products). 2. Suppliers: Restaurant Depot (for bulk ingredients and equipment). 3. Distribution Centers: Sysco Canada (for foodservice distribution). 4. IT Solutions: Oracle Food & Beverage (for POS systems and operational software). These companies support the supply chain by ensuring timely delivery and operational efficiency for new restaurant locations. Note: These assignments give students the opportunity to apply chapter material to a real-life example, using the chapter’s opening vignette as a foundation. There are no specific answers. Video Clip...Questions The idea behind Amazon.com was to use the Internet to transform book buying in the fastest, easiest, and most enjoyable shopping experience possible. What consumers take for granted is the amount of work and planning needed for Amazon to execute its logistics and supply chain management strategies. Review the CONNECT video and answer the following questions: - How do Amazon.com’s logistics and supply chain management activities help the company create value for its customers? Answer: Value Creation: Amazon.com’s logistics and supply chain management streamline operations to ensure fast delivery, accurate inventory, and a seamless shopping experience, enhancing customer satisfaction and convenience. - What systems did Amazon develop to improve the flow of products from suppliers to Amazon distribution centres? What systems improved the flow of orders from the distribution centres to customers? Answer: Systems Developed: Amazon created an advanced inventory management system to track and replenish stock efficiently. Its order fulfillment systems, including automated warehouses and sophisticated algorithms, speed up the processing and shipping of orders from distribution centers to customers. - How will the Internet play an important role in the future success of Amazon.com? Answer: Future Role of the Internet: The Internet will continue to be crucial by enabling real-time data sharing, supporting advanced analytics for demand forecasting, and enhancing personalized customer experiences through targeted recommendations and improved service efficiency. Infographic ... data analysis Review the infographic providing a snapshot of the Canadian restaurant industry provided by Restaurants Canada (previously known as the Canadian Restaurant and Foodservices Association). Consider the number of individuals directly employed by the industry. Now consider the different components of the restaurant supply chain. How many other jobs do you think are reliant on the success of the Canadian restaurant industry? Answer: This exercise will encourage students to use reputable sources to validate and build upon research shown to create the infographic. The success of the Canadian restaurant industry extends beyond direct employment, influencing numerous related sectors. For every restaurant job, additional roles in agriculture, food production, logistics, and equipment manufacturing are impacted. Considering that the restaurant industry employs hundreds of thousands directly, it likely supports a similar number of indirect jobs, highlighting its extensive economic ripple effect across the supply chain. QUESTIONS AND ANSWERS TO ONLINE ACTIVITIES: APPLYING MARKETING CONCEPTS AND PERSPECTIVES 1. A distributor for Celanese Chemical Company stores large quantities of chemicals, blends these chemicals to satisfy requests of customers, and delivers the blends to a customer’s warehouse within 24 hours of receiving an order. What utilities does this distributor provide? Answer: The distributor for Celanese Chemical Company provides time utility because it delivers blends to a customer’s warehouse within 24 hours of receiving an order. Each time a product is delivered to a customer’s warehouse, the distributor provides possession utility. Finally, the distributor provides form utility each time it blends chemicals to meet a customer’s specifications. 2. Suppose the president of a carpet manufacturing firm has asked you to look into the possibility of bypassing the firm’s wholesalers (who sell to carpet, department, and furniture stores) and selling directly to these stores. What caution would you voice on this matter, and what type of information would you gather before making this decision? Answer: Before making a decision to bypass the firm’s distributors, a firm should consider all the functions the distributors perform. Information on the costs incurred by distributors should be gathered and compared with a system where the distributor is bypassed. Additionally, functions performed by distributors such as maintaining sensitive relationships with customers are difficult to put a monetary value on. Therefore, qualitative factors must enter into the decision as well. 3. How does the channel captain idea differ among corporate, administered, and contractual vertical marketing systems. Answer: Corporate, administered, and contractual systems achieve influence largely through size resulting from combining firms or stages. Channel captains, on the other hand, generate influence from their financial position, expertise in a given area, identification with a particular channel member, or from a legitimate right resulting from a contractual agreement. 4. A digital camera manufacturer tells you that the firm has been selling its cameras through large camera and electronics retailers for the past 10 years, but now wants to expand distribution. The manufacturer plans to work with the distributor who will provide access to many smaller retailers as well as sell cameras direct to the consumer through an online store. What type of channel conflict is likely to be caused by this dual distribution? How can conflict be reduced? What would you advise the manufacturer? Answer: Vertical channels conflicts could arise between the manufacturer and the distributor. The distributor may see it as unfair that the manufacturer is still dealing with the retailers directly. The problem can be resolved through a channel captain. 5. At a telecommunications conference, you hear some service providers talking about the need for them to set up online stores so that consumers can purchase directly from their websites, but they are concerned about this dual distribution and what it may do to their business. How would you respond to their concerns? Answer: The issues of satisfying the buyer’s requirements have to be addressed. In setting up online stores the service providers are simply addressing the consumers growing technological savviness and the increased need for convenience. In so doing, they are also increasing their target market coverage and moving from an exclusive distribution to a selective one. QUESTIONS AND ANSWERS TO ONLINE ACTIVITIES: DISCUSSION FORUM You are a distribution consultant in a large strategic marketing firm serving clients from all over the world. Here are the projects on your desk for this week. Using a flow-chart similar to Figure 10–8, outline a distribution strategy for each of these projects and determine the players and the activities to take place at each step. 1. A flower grower in Ecuador who ships her flowers all over North and South America Answer: Flower Grower in Ecuador: • Players: Flower grower, local freight forwarder, international shipping company, customs brokers, regional distributors, florists/retailers. • Activities: Harvesting → Packaging → Local transportation to port → International shipping → Customs clearance → Regional distribution → Retail delivery. 2. A medical supplies firm that manufactures heart pacemakers, and sells them to the European, Asian, and North American medical market Answer: Medical Supplies Firm: • Players: Manufacturer, international logistics provider, customs brokers, regional distributors, medical facilities. • Activities: Production → Packaging → Local transportation to port → International shipping → Customs clearance → Regional distribution → Delivery to medical facilities. 3. A mining equipment producer that makes machinery to be used in copper and silver mines around the world Answer: Mining Equipment Producer: • Players: Manufacturer, international shipping company, customs brokers, regional distributors, mining companies. • Activities: Production → Packaging → Local transportation to port → International shipping → Customs clearance → Regional distribution → Delivery to mining sites. 4. A Taiwanese shoe manufacturer that produces women's high-fashion shoes for the Canadian and Australian markets Answer: Taiwanese Shoe Manufacturer: • Players: Manufacturer, international freight forwarder, customs brokers, regional distributors, retailers in Canada and Australia. • Activities: Production → Packaging → Local transportation to port → International shipping → Customs clearance → Regional distribution → Retail delivery. Note: These discussions are meant to generate class discussion and a lively debate of issues raised, as well as a general review of the opening case or concepts discussed within the chapter. There are no correct or incorrect answers. QUESTIONS AND ANSWERS TO ONLINE ACTIVITIES: INTERNET EXERCISE Franchising is a large and growing industry. For many individuals, franchising offers an opportunity to operate one’s own business. The Canadian Franchise Association website (www.cfa.ca) shows franchise opportunities for the aspiring franchisee. Visit www.cfa.ca. Click on Looking for a Franchise.” What are some of the more interesting opportunities available to Canadians? Answer: Instructors are advised to access the site in advance of this assignment to determine the current information available. Of course, each student will have his or her own opinion about which opportunity suits them. Instructors may want to inquire why the student chose the particular opportunity. On the Canadian Franchise Association website, some interesting franchise opportunities available to Canadians include: 1. Healthy Snack Bars: Franchise options focusing on nutritious snacks and health-conscious products. 2. Coffee Shops: Established brands offering specialty coffee and café experiences. 3. Home Improvement Services: Franchises specializing in renovations and home repairs. 4. Fitness Centers: Opportunities in the rapidly growing health and fitness industry. BRING IT TO LIFE: VIDEO SYNOPSIS & TEACHING SUGGESTIONS AMAZON: DELIVERING THE GOODS … MILLIONS OF TIMES A DAY Synopsis Jeff Bezos started Amazon.com with a simple idea: to use the Internet to transform book buying into the fastest, easiest, and most enjoyable shopping experience possible. The company was incorporated in 1994 and opened its virtual doors in July 1995. At the forefront of a huge growth of dot-com businesses, Amazon pursued a get-big-fast business strategy. Sales grew rapidly and Amazon began adding products and services other than books. In fact, Amazon soon set its goal on being the world’s most customer-centric company, where customers can find and discover anything they might want to buy online. Today Amazon claims to have the “Earth’s Biggest Selection™” of products and services in the following categories: Books; Movies, Music & Games; Digital Downloads; Kindle; Computers & Office; Electronics; Home & Garden; Grocery, Health & Beauty; Toys, Kids & Baby; Clothing, Shoes & Jewelry; Sports & Outdoors; and Tools, Auto & Industrial. Teaching Suggestions When reviewing the video, ask students to consider the Amazon’s approach to marketing channels from both a business AND consumer perspective. BRING IT TO LIFE: VIDEO CASE – PRINTOUT AMAZON: DELIVERING THE GOODS … MILLIONS OF TIMES A DAY “The new economy means that the balance of power has shifted toward the consumer,” explains Jeff Bezos, CEO of Amazon.com, Inc. The global online retailer is a pioneer of fast, convenient, low-cost virtual shopping that has attracted millions of consumers. Of course, while Amazon has changed the way many people shop, the company still faces the traditional and daunting task of creating a seamless flow of deliveries to its customers—often millions of times each day. THE COMPANY Jeff Bezos started Amazon.com with a simple idea: to use the Internet to transform book buying into the fastest, easiest, and most enjoyable shopping experience possible. The company was incorporated in 1994 and opened its virtual doors in July 1995. At the forefront of a huge growth of dot-com businesses, Amazon pursued a get-big-fast business strategy. Sales grew rapidly and Amazon began adding products and services other than books. In fact, Amazon soon set its goal on being the world’s most customer-centric company, where customers can find and discover anything they might want to buy online. Today Amazon claims to have the “Earth’s Biggest Selection™” of products and services in the following categories: Books; Movies, Music & Games; Digital Downloads; Kindle; Computers & Office; Electronics; Home & Garden; Grocery, Health & Beauty; Toys, Kids & Baby; Clothing, Shoes & Jewelry; Sports & Outdoors; and Tools, Auto & Industrial. Other services allow customers to: ● Search for a product or brand using all or part of its name. ● Place orders with one click using the “Buy Now with 1-Click” button. ● Receive personalized recommendations based on past purchases through opt-in e-mails. These products and services have attracted millions of people around the globe. This has made Amazon.com, along with its international sites in Austria, Canada, the United Kingdom, Germany, Japan, France, and China, the leading online retailer. SUPPLY CHAIN AND LOGISTICS MANAGEMENT AT AMAZON.COM What happens after an order is submitted on Amazon’s website but before it arrives at the customer’s door? A lot. Amazon.com maintains huge distribution, or “fulfillment,” centers where it keeps inventory of millions of products. This is one of the key differences between Amazon.com and some of its competitors—it actually stocks products. So Amazon must manage the flow of products from its 15 million suppliers to its distribution and customer service centers with the flow of customer orders from the distribution centers to individuals’ homes or offices. The process begins with the suppliers. “Amazon’s goal is to collaborate with our suppliers to increase efficiencies and improve inventory turnover,” explains Amazon’s vice president of supply chain. “We want to bring to suppliers the kind of interactive relationship that has inspired customers to shop with us.” For example, Amazon is using software to more accurately forecast purchasing patterns by region, which allows it to give its suppliers better information about delivery dates and volumes. Before the development of this software, 12 percent of incoming inventory was sent to the wrong location, leading to lost time and delayed orders. Now only 4 percent of the incoming inventory is mishandled. At the same time, Amazon has been improving the part of the process that sorts the products into the individual orders. Amazon’s senior vice president of operations says, “We spent the whole year really focused on increasing productivity.” Again, technology has been essential. According to the senior vice president of operations, “The speed at which telecommunications networks allow us to pass information back and forth has enabled us to do the real-time work that we keep talking about. In the past, it would have taken too long to get this many items through a system.” Once the order is in the system, computers ensure that all items are included in the box before it is taped and labeled. A network of trucks and regional postal hubs then concludes the process with delivery of the order. The success of Amazon’s logistics and supply chain management activities may be most evident during the year-end holiday shopping season. Amazon received orders for 37.9 million items between November 9 and December 21 one year, including orders for 450,000 Harry Potter books and products, and orders for 36,000 items placed just before the holiday delivery deadline. Well over 99 percent of the orders were shipped and delivered on time. AMAZON’S CHALLENGES Several sales growth options are possible for Amazon. First, it can continue to pursue growth through sales of hundreds of thousands of electronic books, magazines, and newspapers through its new Kindle devices and store. Second, Amazon can continue its expansion into new product and service categories. Recently, it launched its Outdoor Recreation store—the latest in over a dozen such categories. This approach would prevent Amazon from becoming a niche merchant and position it as a true online retail department store. Third, Amazon can increase the availability of products from other retailers through its Amazon WebStore. These retailers can create a customized, branded website that uses Amazon eCommerce technology. Finally, Amazon can pursue a strategy of providing access to its existing operations for other retailers through its Fulfillment by Amazon (FBA) service. Online retailers store their products at Amazon’s distribution centers and when they sell a product—Amazon ships it! Amazon.com has come a long way toward proving that online retailing can work. Its logistics and supply chain management activities have provided Amazon with a cost-effective and efficient distribution system that combines automation and communication technology with superior customer service. To continue its drive to increase future sales, profits, and customer service, Amazon acquired Zappos.com in mid-2009. According to Bezos, “We see great opportunities for both companies to learn from each other and create even better experiences for our customers.” Questions 1. How do Amazon.com’s logistics and supply chain management activities help the company create value for its customers? Answer: Value Creation: Amazon's logistics and supply chain management ensure quick, reliable delivery, extensive product selection, and competitive pricing, enhancing customer satisfaction and loyalty. 2. What systems did Amazon develop to improve the flow of products from suppliers to Amazon distribution centers? What systems improved the flow of orders from the distribution centers to customers? Answer: Product Flow Systems: Amazon uses advanced inventory management systems and automation for efficient product storage and handling. For order fulfillment, its systems include real-time tracking, optimized routing, and rapid dispatch from distribution centers. 3. Why will logistics and supply chain management play an important role in the future success of Amazon.com? Answer: Future Importance: As Amazon expands, efficient logistics and supply chain management will be crucial for scaling operations, maintaining customer service standards, and managing costs, ensuring continued growth and market leadership. BRING IT TO LIFE: VIDEO CASE WORKSHEET AMAZON: DELIVERING THE GOODS … MILLIONS OF TIMES A DAY Name: Section: Although Amazon has changed the way many people shop, the company still faces the traditional and daunting task of creating a seamless flow of deliveries to its customers—often millions of times each day. Please answer the following questions once you have watched the video and read the case: 1. How do Amazon.com’s logistics and supply chain management activities help the company create value for its customers? Answer: Value Creation: Amazon’s logistics and supply chain management ensure rapid, accurate deliveries and extensive product availability, enhancing customer convenience and satisfaction through efficient order fulfillment. 2. What systems did Amazon develop to improve the flow of products from suppliers to Amazon distribution centers? What systems improved the flow of orders from the distribution centers to customers? Answer: Product Flow Systems: Amazon uses advanced inventory management and automated sorting systems to streamline product movement from suppliers to distribution centers. For order fulfillment, systems include real-time tracking, predictive analytics for demand forecasting, and optimized routing. 3. Why will logistics and supply chain management play an important role in the future success of Amazon.com? Answer: Logistics and supply chain management are crucial for Amazon’s future success because they ensure fast, reliable deliveries that meet growing customer expectations. Efficient supply chain operations reduce costs and support Amazon's expansive product range. Advanced logistics enable scalability, allowing Amazon to handle increased order volumes and maintain its competitive edge in the e-commerce market. BRING IT TO LIFE: VIDEO CASE – ANSWERS TO QUESTIONS AMAZON: DELIVERING THE GOODS … MILLIONS OF TIMES A DAY 1. How do Amazon.com’s logistics and supply chain management activities help the company create value for its customers? Answer: Amazon.com’s logistics and supply chain management activities helps deliver products and create possession utility for a growing number of consumers. This allows for an infinite amount of “shelf space” making more items available. Computers are able to integrate with warehousing and distribution in order to deliver value for its customers. 2. What systems did Amazon develop to improve the flow of products from suppliers to Amazon distribution centers? What systems improved the flow of orders from the distribution centers to customers? Answer: By focusing on product rather than consumer, Amazon can use economies of sales to improve the flow of orders to consumers. Barcodes can then get connected to orders for consumers. 3. Why will logistics and supply chain management play an important role in the future success of Amazon.com? Answer: Costs associated with logistics and supply chain will impact the profitability of the organization. Streamlining these processes is critical to the organization’s success. Logistics and supply chain management are crucial for Amazon’s future success because they ensure fast, reliable deliveries that meet growing customer expectations. Efficient supply chain operations reduce costs and support Amazon's expansive product range. Advanced logistics enable scalability, allowing Amazon to handle increased order volumes and maintain its competitive edge in the e-commerce market. BRING IT TO LIFE: NEWSFLASHES and FOCUS ON ETHICS SYNOPSIS AND DISCUSSION QUESTIONS Two interesting NewsFlashes and a Focus on Ethics are included in this chapter. Discussing these NewsFlashes in class can bring the material to life for the students in an interesting, relevant, and timely fashion. They can be used as ice-breakers to launch into a relevant subject. Many of the topics are interesting to students and may be familiar. A. OMNICHANNEL MARKETING AT BEST BUY CANADA Omni-channel retailing evolved from the concept of multichannel retailing. Technology has given consumers the choice to acquire objects in store, over the phone, via mail, and online. Omni-channel retailing creates a seamless process and consistent experiences to the consumer across all these channels. In Canada, Best Buy is preparing for the competitive landscape with a price beat guarantee. It has extended its lowest price guarantee to match any Canadian online retailer’s price and address potential showrooming. Questions 1. How will the success of omni-channel retailing affect Best Buy’s supply chain? Answer: Omni-channel retailing will enhance Best Buy’s supply chain by integrating online and offline inventory, improving stock accuracy, and enabling real-time updates. This coordination helps streamline order fulfillment and delivery, reducing costs and increasing customer satisfaction. 2. What other companies could implement omni-channel retailing to help address showrooming? Answer: Companies like Walmart and Canadian Tire could implement omni-channel retailing to tackle showrooming. By aligning their in-store and online experiences, they can offer price matching and improve convenience, thereby capturing customers who compare prices online before purchasing in-store. Note: These discussion questions are meant to generate lively in-class discussion and critical thinking on the chapter material. There are no correct or incorrect answers. B. MAXED OUT AT MCDONALD’S Franchising is a popular method for businesses to expand internationally, and Canada has historically been the most popular country for U.S. companies to expand in. More recently, with changing markets and ever-evolving opportunities, franchise growth has expanded to South America, Asia, and Mexico. Questions 1. What are some of the challenges McDonald’s franchisees face in their contractual vertical marketing system? Answer: McDonald’s franchisees face challenges such as adhering to strict brand standards and operational guidelines, managing supply chain constraints, and dealing with high initial investment and ongoing royalty fees. Additionally, franchisees may have limited control over local marketing and product offerings. 2. What are some of the key benefits of being part of a franchising arrangement? Answer: Key benefits of franchising include access to an established brand, proven business model, and ongoing support and training from the franchisor. Franchisees also benefit from collective buying power and shared marketing resources, which can enhance profitability and reduce operational risks. Note: These discussion questions are meant to generate lively in-class discussion and critical thinking on the chapter material. There are no correct or incorrect answers. C. THE SMART WAY The SmartWay program boasts a tool that allows its members to benchmark supply chain fleets. It then measures its progress with respect to various emissions categories. This year-over-year analysis provides feedback to transportation companies and elicits accountability of each company’s carbon footprint. Now, program members that can potentially have a negative impact on our environment can work together to create greener process within the supply chain. Questions 1. What are the main benefits that organizations receive from being members of SmartWay? Answer: Organizations benefit from SmartWay membership through improved efficiency in their supply chain fleets, reduced fuel consumption, and lower emissions. They gain access to benchmarking tools to track progress, enhance their environmental credentials, and potentially reduce operational costs through greener practices. 2. What Canadian companies do you believe need to join SmartWay if they have not already? Answer: Canadian companies in high-emission industries such as transportation and logistics, like CN Rail or large retail chains with extensive delivery networks, could benefit from joining SmartWay. Membership would help them improve sustainability practices and align with environmental goals. Note: These discussion questions are meant to generate lively in-class discussion and critical thinking on the chapter material. There are no correct or incorrect answers. BRING IT TO LIFE: NEWSFLASH PRINTOUT AND WORKSHEET Name: Section: OMNICHANNEL MARKETING AT BEST BUY CANADA Just as Walmart has been a technology leader in logistics, Best Buy is at the front of the line with its omni-channel strategy. As Canada’s fastest-growing specialty retailer and e-tailer of consumer electronics, Best Buy offers a unique shopping experience for its customers. Although many smaller businesses may be concerned about how to execute an omni-channel marketing strategy for themselves, Best Buy’s size and resources allows it to take bold steps in this frontier. Omni-channel retailing evolved from the concept of multichannel retailing. Technology has given consumers the choice to acquire objects in store, over the phone, via mail, and online. Omni-channel retailing creates a seamless process and consistent experiences to the consumer across all these channels. By allowing information found online to match the offering in store, retailers avoid the concerns of showrooming (the practice of using mobile devices in store to check competitive online product reviews and prices and to then purchase the cheaper product online) and facilitate the completion of more sales. Although omni-channel retailing is a technology-enabled evolution, it is not limited to technology companies. For example, Canadian Tire is working toward improving its connections among its mobile, in-store, and online technologies to provide consistency. The move toward omni-channel marketing seems inevitable for most retailers, given the competitive landscape. In Canada, Best Buy is preparing for the competitive landscape with a price beat guarantee. It has extended its lowest price guarantee to match any Canadian online retailer’s price and address potential showrooming. Best Buy’s chief operating officer, Mike Pratt, believes that this strategy changes the showrooms from the Best Buy or Future Shop stores to the websites of its competitors. With price eliminated from its competitive advantage, Best Buy believes it will stay number one. Furthermore, with increased sales on the horizon and multiple marketing channels being managed, Best Buy needs to ensure that it has a good understanding of the value of its supply chain. Questions 1. How will the success of omni-channel retailing affect Best Buy’s supply chain Answer: Success in omni-channel retailing will streamline Best Buy’s supply chain by integrating inventory management across all channels, ensuring real-time stock visibility and improving logistics efficiency. This integration helps meet customer expectations for consistent experiences and rapid fulfillment. 2. What other companies could implement omni-channel retailing to help address showrooming? Answer: Companies like Canadian Tire and Walmart could implement omni-channel retailing to combat showrooming. By aligning their in-store, online, and mobile offerings and using price matching strategies, they can enhance customer satisfaction and capture more sales. BRING IT TO LIFE: NEWSFLASH PRINTOUT AND WORKSHEET Name: Section: MAXED OUT AT MCDONALD’S McDonald’s has more than 1,400 restaurants with over 80,000 employees in Canada—a fraction of its 33,000 restaurants and 1.7 million employees worldwide. With franchising being a key to its success, McDonald’s has expanded over six continents into almost 120 countries. Franchising is a popular method for businesses to expand internationally, and Canada has historically been the most popular country for U.S. companies to expand in. More recently, with changing markets and ever-evolving opportunities, franchise growth has expanded to South America, Asia, and Mexico. Franchising has many benefits to a business as it facilitates the entry into consumer segments where there is demand. As a franchisee, the key to success is to follow direction from the corporate offices and leverage support of their resources and the company brand. For Canadian McDonald’s franchises, a great example of leveraging resources was the national launch of the Signature McWrap in 2013. This new menu item was specifically designed for Canadian tastes, but modified the recipe of a similar, successful global menu item in McDonald’s Europe. Keeping in mind that business-model benefits are usually balanced with challenges, McDonald’s franchisees faced increased store fees and raised concerns with their corporate parent. Franchisees were impacted by rent, training fees, and software. The concern among franchisees is that the business model is no longer as profitable as it has been in the past. To help address this rising channel conflict, McDonald’s spokespeople have commented that “We are continuing to work together with McDonald’s owner/operators and our supplier partners to ensure that our restaurants are providing a great experience to our customers, which involves investments in training and technology.” Being part of the marketing channels and supply chains, a number of Canadian companies have a vested interest in the success of McDonald’s in Canada. McDonald’s is considered a channel captain in Canada with the ability to influence the behaviour of its partners and support success for all parties concerned. Questions 1. What are some of the challenges McDonald’s franchisees face in their contractual vertical marketing system? Answer: McDonald’s franchisees face challenges such as increased store fees, higher rent, training fees, and software costs. These factors contribute to rising operational expenses and can reduce profitability, creating friction between franchisees and the corporate parent. 2. What are some of the key benefits of being part of a franchising arrangement? Answer: Key benefits of franchising include leveraging the established brand and resources, accessing corporate support, and benefiting from proven business models. This arrangement facilitates entry into new markets with reduced risk and provides a framework for consistent operational standards. BRING IT TO LIFE: NEWSFLASH PRINTOUT AND WORKSHEET Name: Section: THE SMART WAY For decades, the impact of vehicle emissions on our environment has been a concern. Many businesses have used the reduction of greenhouse emissions in their business as a key focus of their corporate social responsibility. In 2013, the SmartWay program was introduced in Canada. Natural Resources Canada and Supply Chain & Logistics Association Canada partnered to bring this program across the border from the U.S. The U.S. Environmental Protection Agency originally launched the program, which shares industry best practices on supply chain transportation with its members. The SmartWay program boasts a tool that allows its members to benchmark supply chain fleets. It then measures its progress with respect to various emissions categories. This year-over-year analysis provides feedback to transportation companies and elicits accountability of each company’s carbon footprint. Now, program members that can potentially have a negative impact on our environment can work together to create greener process within the supply chain. Questions 1. What are the main benefits that organizations receive from being members of SmartWay? Answer: The main benefits organizations receive from SmartWay include benchmarking their supply chain fleets against industry standards, tracking progress in emissions reduction, and receiving feedback to enhance their environmental performance. This helps companies adopt greener practices and improve their overall sustainability. 2. What Canadian companies do you believe need to join SmartWay if they have not already? Answer: Canadian companies that would benefit from joining SmartWay include major transportation and logistics firms such as Canadian National Railway (CN) and Purolator. Joining SmartWay can help these companies improve their environmental impact and align with growing sustainability expectations. BRING IT TO LIFE: IN-CLASS ACTIVITY MARKETING CHANNELS FOR APPLE INC. – INSTRUCTIONS Learning Objective To have students learn about the marketing channels currently used by Apple to sell its computers, digital devices, and software products to consumers. Description of In-Class Activity Have students identify those channel members that sell Apple products and classify the channel strategies used by Apple. Estimated class time: 15 minutes. Preparation before Class Read the section on Channel Structure and Organization in chapter 10. In-Class Implementation • Relevant Chapter Content – Prior to conducting this in-class activity, review the following terms that are referred to in this in-class activity: Direct Channel: A marketing channel where a producer and ultimate consumers deal directly with each other. Indirect Channel: A marketing channels where intermediaries are inserted between the producer and consumers and perform numerous channel functions. Marketing Channel: Individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users. ○ To determine how familiar students are with Apple’s marketing channel structure, ask them the following question: Question 1: Within the last year, have any of you purchased a product (computer, iPod, software, etc.) manufactured or sold by Apple? If yes, where did you purchase it? Answer: If yes, several channels exist that will be discussed below. o Ask students the following questions regarding Apple’s marketing channel structure: Question 2: Since the late 1990s, Apple has allowed consumers to purchase its products online via its Apple Store. If you were to purchase an Apple product from the online Apple Store, (a) identify the channels members as a producer, wholesaler, and/or retailer and b) classify the channel strategy used by Apple and its channel members as direct or indirect. Answer: (a) Channel members are “Producer (Apple)  Consumer.” (b) Channel strategy is “Direct Channel.” The rationale for this answer is that Apple and consumers interact directly with each other through its Internet website. There is no intermediary; therefore, Apple must perform all channel functions. The online Apple store can be found at http://store.apple.com/ca/ Question 3: As of 2012, there are over 300 Apple stores worldwide. Apple also has opened several “mini” stores in strip malls. If you were to purchase an Apple product from an Apple Retail Store, (a) identify the channels members as a producer, wholesaler, and/or retailer and (b) classify the channel strategy used by Apple and its channel members as direct or indirect. Answer: (a) Channel members are “Producer (Apple)  Consumer.” (b) Channel strategy is “Direct Channel.” The rationale for this answer is that Apple and consumers interact directly with each other through its retail stores, so there is no intermediary; therefore, Apple must perform all channel functions. Information about Apple stores can be found at http://www.apple.com/retail/ Question 4: Under its Authorized Apple Reseller program, Apple has established relationships with independent retailers to sell Apple products. These retailers are located in major metropolitan markets. If you were to purchase an Apple product from this kind of store, (a) identify the channels members as a producer, wholesaler, and/or retailer and (b) classify the channel strategy used by Apple and its channel members as direct or indirect. Answer: (a) Channel members are “Producer (Apple)  Independent Retailer  Consumer.” (b) Channel strategy is “Indirect Channel. The rationale for the above answer is that Apple and consumers interact indirectly with each other through independent retail stores that perform facilitating channel functions, such as sales, transactional, technical support, financing, etc. Question 5: Under its Authorized Apple Reseller program, Apple has also established a relationship with Best Buy, the #1 retail electronics chain in the U.S. and Canada, with over 780 stores across the North America. Each store’s layout is organized into departments. The computer department contains Apple computers and software products and is staffed by Best Buy employees. Assume that Best Buy obtains its entire inventory from Ingram Micro, the nation’s largest technology product distributor. If you were to purchase an Apple product from Best Buy, (a) identify the channels members as a producer, wholesaler, and/or retailer (b) classify the channel strategy used by Apple and its channel members as direct or indirect. Answer: (a) Channel members are “Producer (Apple)  Wholesaler (Ingram Micro)  Retailer (Best Buy)  Consumer.” (b) Channel strategy is “Indirect Channel.” The rationale for this answer is that Ingram Micro (wholesaler) takes delivery of computers, digital devices, and software from Apple in bulk (logistical function), and then breaks it down in smaller units for retailers, such as Best Buy. Best Buy, in turn, performs other facilitating channel functions, such as sales, transactional, technical support, financing, etc. • In-Class Instructions – This activity can be done by asking students the above questions or the activity can be a written exercise. Hand out the enclosed worksheet to make it a written activity. • Handout – Distribute the worksheet for students to complete. • Evaluation – Collect the worksheets from this activity for evaluation purposes BRING IT TO LIFE: IN-CLASS ACTIVITY MARKETING CHANNELS FOR APPLE INC. – WORKSHEET Name: Section: 1. Within the last year, have any of you purchased a product (computer, iPod, software, etc.) manufactured or sold by Apple? If yes, where did you purchase it? Answer: Yes, I purchased an Apple product (e.g., an iPhone) from the Apple Store at a local mall. 2. Since the late 1990s, Apple has allowed consumers to purchase its products online via its Apple Store. If you were to purchase an Apple product from the online Apple Store, (a) identify the channels members as a producer, wholesaler, and/or retailer and (b) classify the channel strategy used by Apple and its channel members as direct or indirect. Answer: (a) For the online Apple Store, the channel members are Apple as the producer and retailer. There is no wholesaler involved. (b) The channel strategy used is direct since Apple sells directly to consumers. 3. As of 2012, there are over 300 Apple stores worldwide. Apple also has opened several “mini” stores in strip malls. If you were to purchase an Apple product from an Apple Retail Store, (a) identify the channels members as a producer, wholesaler, and/or retailer; and (b) classify the channel strategy used by Apple and its channel members as direct or indirect. Answer: (a) At an Apple Retail Store, Apple is both the producer and retailer. There is no wholesaler involved. (b) The channel strategy is direct because Apple sells directly to consumers through its own stores. 4. Under its Authorized Apple Reseller program, Apple has established relationships with independent retailers to sell Apple products. These retailers are located in major metropolitan markets. If you were to purchase an Apple product from this kind of store, (a) identify the channels members as a producer, wholesaler, and/or retailer; and (b) classify the channel strategy used by Apple and its channel members as direct or indirect. Answer: (a) For an Authorized Apple Reseller, Apple is the producer and the independent retailer is the retailer. There is no wholesaler involved. (b) The channel strategy is indirect since Apple uses independent retailers to reach consumers. 5. Under its Authorized Apple Reseller program, Apple has also established a relationship with Best Buy, the #1 retail electronics chain in the U.S. and Canada, with over 780 stores across the North America. Each store’s layout is organized into departments. The computer department contains Apple computers and software products and is staffed by Best Buy employees. Assume that Best Buy obtains its entire inventory from Ingram Micro, the nation’s largest technology product distributor. If you were to purchase an Apple product from Best Buy, (a) identify the channels members as a producer, wholesaler, and/or retailer; and (b) classify the channel strategy used by Apple and its channel members as direct or indirect. Answer: (a) At Best Buy, Apple is the producer, Ingram Micro is the wholesaler, and Best Buy is the retailer. (b) The channel strategy is indirect as Apple sells through a retailer (Best Buy) who sources products from a wholesaler (Ingram Micro). BRING IT TO LIFE: METRICS ASSIGNMENT CALCULATING GROWTH RATES – WORKSHEET Name: Section: The Data Box, “Where Do You Go for Coffee?” looks at the number of locations of Tim Horton’s, Second Cup, Starbucks and McDonald’s in Canada. Assume that you are trying to analyze the growth rate of two fictitious restaurants, A and B. In the chart below, you are given the number of new restaurants built each year for restaurants A and B. 1. For each restaurant, calculate the rate of growth for that particular year. For example, in the year 2015, there were 20 A restaurants built, whereas in 2016 there were 25 A restaurants built. Calculate the relative growth rate from 2016 to 2015 of restaurant A. Next, calculate the growth rate from 2017 to 2016 of restaurant A. Continue calculating up to year 2020. Answer: Year Restaurant A Growth Rate Restaurant B Growth Rate 2015 20 50 2016 25 25% 65 30% 2017 30 20% 88 35.4% 2018 35 16.6% 123 39.8% 2019 43 22.9% 178 44.7% 2020 50 16.3% 267 50% For restaurant A, 20 restaurants were built in 2015. In 2016, 25 restaurants were built. The growth rate is calculated by dividing 25 by 20. This works out to 1.25 and means that the relative growth rate from 2016 to 2015 is thus 25%. Let’s do another calculation for the growth rate for restaurant A from 2017 to 2016. For restaurant A, 25 restaurants were built in 2016. In 2017, 30 restaurants were built. The growth rate is calculated by dividing 30 by 25. This works out to 1.20 and means that the relative growth rate from 2017 to 2016 is thus 20%. All other growth rate calculations are done the same way as the two above examples. Hint: For restaurant A, 20 restaurants were built in 2015. In 2016, 25 restaurants were built. The growth rate is calculated by dividing 25 by 20. This works out to 1.25 and means that the relative growth rate from 2016 to 2015 is 25%. 2. Perform the same calculations for restaurant B. That is, calculate the growth rates for restaurant B. Answer: Year Restaurant A Growth Rate Restaurant B Growth Rate 2015 20 50 2016 25 25% 65 30% 2017 30 20% 88 35.4% 2018 35 16.6% 123 39.8% 2019 43 22.9% 178 44.7% 2020 50 16.3% 267 50% For restaurant A, 20 restaurants were built in 2015. In 2016, 25 restaurants were built. The growth rate is calculated by dividing 25 by 20. This works out to 1.25 and means that the relative growth rate from 2016 to 2015 is thus 25%. Let’s do another calculation for the growth rate for restaurant A from 2017 to 2016. For restaurant A, 25 restaurants were built in 2016. In 2017, 30 restaurants were built. The growth rate is calculated by dividing 30 by 25. This works out to 1.20 and means that the relative growth rate from 2017 to 2016 is thus 20%. All other growth rate calculations are done the same way as the two above examples. 3. Comment on the growth rates for restaurant A and B. Year Restaurant A Growth Rate Restaurant B Growth Rate 2015 20 50 2016 25 ? 65 ? 2017 30 ? 88 ? 2018 35 ? 123 ? 2019 43 ? 178 ? 2020 50 ? 267 ? Answer: One can observe from the table that restaurants A’s growth rate declines from 2015 to 2018, going down from 25% to 20% to 16.6%. It increases from 2019 to 2018 going to 22.9% and then decreases again from 2020 to 2019, going to 16.3%. Restaurant B on the other hand shows relative growth rates that increase from year to year. Restaurant A shows a steady increase in growth rates, peaking at 16.67% in 2019, indicating consistent expansion. Restaurant B, on the other hand, experiences fluctuating growth rates with a notable surge to 20% in 2016 and a dramatic rise to 12% in 2020, suggesting accelerating growth and strong performance. Commentary: • Restaurant A: Exhibits steady growth with some fluctuations, peaking in 2019 at a 22.86% growth rate. Overall, the growth is consistent but with decreasing rates over time. • Restaurant B: Shows stronger and accelerating growth rates, especially noticeable from 2016 onwards. The growth rate increases significantly each year, indicating robust expansion and market capture. Solution Manual for Marketing: The Core Roger A. Kerin, Steven W. Hartley, William Rudelius, Christina Clements, Harvey Skolnick, Arsenio Bonifacio 9781259030703, 9781259269264, 9781259107108