Preview Extract
Chapter 9 Distribution
1) ________ refers to the availability and number of locations, called outlets, which make the
product or service available for sale.
A) Economies of scale
B) Distribution intensity
C) Market share
D) All commodity volume
Answer: B
Rationale:
Distribution intensity, also known as distribution density or distribution breadth, focuses on
the extent of market coverage by a product or service through the number of outlets where it's
available for sale. This aligns with the definition provided in the question.
2) Which of the following is the objective of intensive distribution?
A) encouraging positive perceptions about a brand through advertising
B) highlighting the product's differentiation over competing products
C) maximizing sales by making the product available through a great number of outlets
D) attaining maximum possible control over the brand's equity
Answer: C
Rationale:
The objective of intensive distribution is to maximize sales by ensuring the product is
available through a large number of outlets, thereby reaching a broader customer base. This
objective is in line with option C.
3) Which of the following products would be most suitable for intensive distribution?
A) Heinz Ketchup
B) Apple iPhone
C) Adidas Predator
D) Volkswagen Polo
Answer: A
Rationale:
Products with high demand and relatively low differentiation, such as consumer packaged
goods like Heinz Ketchup, are most suitable for intensive distribution. These products benefit
from being widely available to consumers.
4) Intensive distribution is often used with ________.
A) industrial equipment
B) luxury goods
C) nonmass-market goods
D) consumer packaged goods
Answer: D
Rationale:
Intensive distribution is commonly employed for consumer packaged goods, which have high
demand, low differentiation, and benefit from widespread availability. Option D aligns with
this characteristic.
5) A firm adopting an intensive distribution strategy to sell its products would do so through
a(n) ________.
A) luxury-oriented retailer
B) supermarket
C) franchise store
D) company-owned outlet
Answer: B
Rationale:
Supermarkets typically offer a wide range of products, including consumer packaged goods,
and they focus on high volume sales. Therefore, they are a suitable outlet for firms employing
an intensive distribution strategy, as indicated in option B.
6) Which of the following is the objective of selective distribution?
A) achieving maximum efficiency through standardization of products
B) offering limited product differentiation through a moderate number of outlets
C) attaining maximum possible control over the brand's equity
D) maximizing sales by making the product available through a great number of outlets
Answer: B
Rationale:
Selective distribution aims to balance market coverage while maintaining some level of
control over the brand's positioning and image. Option B aligns with this objective by
emphasizing limited product differentiation through a moderate number of outlets.
7) Which of the following products would be most suitable for selective distribution?
A) Louis Vuitton handbags
B) Lamborghini luxury cars
C) Diet Coke
D) L'Oreal cosmetics
Answer: D
Rationale:
Selective distribution is often preferred for products like cosmetics, where maintaining brand
image and exclusivity is important, but wider market coverage is still desirable. L'Oreal
cosmetics fit this profile, making option D the most suitable choice.
8) Selective distribution is often used with ________.
A) nonmass-market goods
B) convenience goods
C) consumer packaged goods
D) luxury goods
Answer: A
Rationale:
Selective distribution is commonly applied to nonmass-market goods, where maintaining a
certain level of exclusivity or control over distribution channels is essential. Option A reflects
this characteristic.
9) A firm adopting a selective distribution strategy to sell its products would most likely do so
through a(n) ________.
A) grocery store
B) company-owned showroom
C) luxury-oriented retailer
D) supermarket
Answer: C
Rationale:
Selective distribution often involves selling products through specialized or exclusive outlets
to maintain brand image and control. Luxury-oriented retailers typically offer the
environment and customer base suitable for such products, making option C the most likely
choice.
10) Which of the following is the objective of exclusive distribution?
A) achieving maximum efficiency through standardization of products
B) offering limited product differentiation through a moderate number of outlets
C) attaining maximum possible control over the brand's equity
D) maximizing sales by making the product available through a great number of outlets
Answer: C
Rationale:
Exclusive distribution aims to tightly control distribution channels, limiting the number of
outlets that can sell a product. This control enhances the brand's perceived exclusivity and
allows for maximum control over the brand's equity, aligning with option C.
11) Which of the following products would be most suitable for exclusive distribution?
A) Gucci shoes
B) Vogue magazines
C) Nokia cell phones
D) Levi Strauss jeans
Answer: A
Rationale:
Exclusive distribution is often chosen for luxury or prestige products like Gucci shoes, where
maintaining brand exclusivity and control over distribution channels is crucial to preserving
the brand's image and perceived value.
12) A firm adopting an exclusive distribution strategy to sell its products would most likely
do so through a(n) ________.
A) supermarket
B) luxury-oriented retailer
C) convenience store
D) company-owned outlet
Answer: D
Rationale:
In exclusive distribution, the manufacturer tightly controls distribution channels, often selling
products through company-owned outlets to ensure maximum control over branding,
presentation, and customer experience.
13) Which of the following best explains why exclusive distribution outlets are often owned
by the manufacturer?
A) to reduce transport costs
B) to maximize control over brand equity
C) to protect market share
D) to achieve greater market penetration
Answer: B
Rationale:
Exclusive distribution outlets are often owned by the manufacturer to maintain tight control
over brand equity, presentation, and customer experience. This ensures consistency and
exclusivity in how the product is perceived and accessed by consumers.
14) At which of the following stages in the product/service life cycle is distribution most
intense?
A) introduction stage
B) growth stage
C) maturity stage
D) decline stage
Answer: C
Rationale:
Distribution tends to be most intense during the maturity stage of the product life cycle. At
this stage, the product has achieved widespread acceptance, and competition among brands is
high, leading to extensive distribution efforts to maintain market share and sales.
15) Which of the following is characteristic of distribution during the growth stage of the
product life cycle?
A) Distribution is at its most intense.
B) Distribution intensifies from selective to intensive.
C) Main channels are retained, while alternate channels are dropped.
D) Distribution is mostly selective, with the exception of exclusive distribution for luxury
goods.
Answer: B
Rationale:
During the growth stage, distribution tends to intensify as demand increases. Companies
often transition from selective distribution to more intensive distribution to meet growing
demand and expand market reach.
16) Which of the following is true of distribution at the introduction stage in the
product/service life cycle?
A) Distribution is at its most intense in this stage.
B) Distribution is mostly selective, with the exception of exclusive distribution for luxury
goods.
C) Distribution gradually moves from being mostly intensive to selective.
D) Main channels are retained, while alternate channels are dropped.
Answer: B
Rationale:
During the introduction stage, distribution tends to be selective, focusing on reaching specific
target markets or early adopters. However, exclusive distribution may be employed for luxury
goods to create a sense of exclusivity and prestige.
17) Which of the following factors justifies long-channel approaches to distribution during
the maturity stage in the product life cycle?
A) increased level of control over the brand equity
B) cost savings from reduced number of channel partners
C) high variety of available alternate channels
D) improved differentiation of the product from competing products
Answer: C
Rationale:
During the maturity stage, there is often a high variety of available alternate channels due to
market saturation and increased competition. This justifies long-channel approaches to
distribution to ensure products reach diverse customer segments effectively.
18) Which of the following is true of distribution at the decline stage of the product life
cycle?
A) Distribution is at its most intense in this stage.
B) Main distribution channels are used and alternative channels are dropped.
C) Distribution gradually moves from being mostly selective to intensive.
D) Long-channel approaches are facilitated by the high product volumes.
Answer: B
Rationale:
During the decline stage, companies often focus on maximizing efficiency and reducing
costs. Therefore, they typically streamline distribution channels, using main channels while
dropping alternative channels to reduce complexity and expenses.
19) The ________ is always at the top level of the distribution channel.
A) manufacturer
B) wholesaler
C) end consumer
D) retailer
Answer: A
Rationale:
The manufacturer sits at the top level of the distribution channel as they produce the product
and initiate its journey through the distribution process.
20) The ________ is always on the bottom level of the distribution channel.
A) manufacturer
B) wholesaler
C) retailer
D) end consumer
Answer: D
Rationale:
The end consumer is at the bottom level of the distribution channel as they are the final
destination of the product in the distribution process, where consumption occurs.
21) Which of the following is characteristic of the products/services that are best suited for
short distribution channels?
A) All customers get the same item.
B) The product is not susceptible to breakage or spoilage.
C) The products are configured to suit a particular purpose.
D) The products are sold to a mass market.
Answer: C
Rationale:
Products or services best suited for short distribution channels are often configured or
customized to suit a particular purpose or specific customer requirements, making option C
the most appropriate choice.
22) Which of the following is characteristic of short distribution channels?
A) The products distributed through short channels are typically not susceptible to breakage
and spoilage.
B) Short channels are preferred when manufacturers lack the resources to perform channel
functions.
C) The products distributed through short channels are generally standardized in nature and
are sold to mass markets.
D) Short channels are suited for geographically concentrated markets covering minimal
transportation distances.
Answer: D
Rationale:
Short distribution channels are characterized by serving geographically concentrated markets,
covering minimal transportation distances, which is reflected in option D.
23) Which of the following is characteristic of the products/services that are best suited for
long distribution channels?
A) The products are made to order or configured to suit a particular purpose.
B) The products are targeted to a niche, discriminating audience.
C) The products are susceptible to breakage or spoilage.
D) The products are sold to a mass market.
Answer: D
Rationale:
Products or services best suited for long distribution channels are typically sold to mass
markets, indicating option D as the correct choice.
24) Which of the following products is best suited for distribution through short channels?
A) snack foods
B) automobiles
C) textiles
D) lumber
Answer: B
Rationale:
Automobiles are best suited for distribution through short channels due to their high value,
customization options, and the need for close customer interaction and service, making option
B the most suitable choice.
25) Which of the following products is best suited for distribution through long channels?
A) textiles
B) automobiles
C) jewelry
D) high-end electronic goods
Answer: A
Rationale:
Textiles, being relatively lower in value compared to automobiles and requiring less
customization, are often distributed through long channels, making option A the most
appropriate choice.
26) Which of the following is the intermediary in a one-level distribution channel structure?
A) retailer
B) wholesaler
C) distributor
D) jobber
Answer: A
Rationale:
In a one-level distribution channel structure, the intermediary between the manufacturer and
the end consumer is typically the retailer, who sells products directly to consumers.
27) Which of the following is a manufacturer-related service offered by retailers in a onelevel distribution channel structure?
A) setting up new products and services
B) negotiation on final price, as well as loan preparation
C) gathering information from customers
D) advising customers on products and services
Answer: C
Rationale:
Gathering information from customers is a manufacturer-related service offered by retailers
in a one-level distribution channel structure, as it helps manufacturers understand consumer
preferences and market trends.
28) Which of the following is a customer-related service offered by retailers in a one-level
distribution channel structure?
A) gathering information from customers
B) placement and return of orders
C) setting up new products and services
D) creating communications with manufacturers to stimulate demand
Answer: C
Rationale:
Setting up new products and services is a customer-related service offered by retailers in a
one-level distribution channel structure, as it directly impacts the customer's shopping
experience and satisfaction.
29) Distribution channel members selling goods, generally in large quantities, to other
distribution channel members who in turn sell goods directly to the consumer, are called
________.
A) retailers
B) wholesalers
C) jobbers
D) manufacturer's representatives
Answer: B
Rationale:
Wholesalers are distribution channel members that sell goods in large quantities to other
channel members, such as retailers, who then sell goods directly to consumers.
30) Distribution channel members selling goods directly to the consumer, generally in small
quantities, are called ________.
A) retailers
B) wholesalers
C) distributors
D) jobbers
Answer: A
Rationale:
Retailers are distribution channel members that sell goods directly to consumers, typically in
small quantities and through various sales channels such as brick-and-mortar stores or online
platforms.
31) The two intermediary members of a two-level distribution channel structure are the
________ and the ________.
A) distributor; wholesaler
B) wholesaler; jobber
C) distributor; jobber
D) wholesaler; retailer
Answer: D
Rationale:
In a two-level distribution channel structure, the wholesaler serves as the intermediary
between the manufacturer and the retailer, who then sells the products directly to the end
consumer.
32) Which of the following product types is typically distributed by using wholesalers?
A) automobiles
B) watches
C) consumer packaged goods
D) jewelry
Answer: C
Rationale:
Consumer packaged goods, which are often sold in large quantities and require distribution to
various retail outlets, are typically distributed through wholesalers.
33) The percentage of sales price that goes to the distribution channel is known as the
________.
A) slotting fee
B) trade margin
C) carrying cost
D) franchise fee
Answer: B
Rationale:
The trade margin represents the percentage of the sales price that is retained by the
distribution channel as profit.
34) The intermediary in a one-level business distribution channel structure is the ________.
A) industrial distributor
B) wholesaler
C) manufacturer's representative
D) retailer
Answer: A
Rationale:
In a one-level business distribution channel structure, an industrial distributor serves as the
intermediary between the manufacturer and the end consumer, typically in industrial or B2B
contexts.
35) How are industrial distributors different from distributors for consumer markets?
A) Industrial distributors offer financing, market research, and order processing services,
which are not offered by distributors for consumer markets.
B) Industrial distributors sell directly to business customers, while distributors for consumer
markets generally only sell goods to retailers.
C) Industrial distributors carry a greater assortment of products than distributors for consumer
markets who carry large quantities of fewer items.
D) Industrial distributors are representatives of the manufacturer in the market, while
distributors for consumer markets are independent contractors.
Answer: B
Rationale:
Industrial distributors primarily sell products directly to business customers, often in large
quantities, whereas distributors for consumer markets typically sell goods to retailers who
then distribute them to end consumers.
36) Which of the following services are offered by manufacturer's representatives to assist in
sales of industrial products?
A) financing services
B) order processing services
C) personnel training services
D) consulting services
Answer: D
Rationale:
Manufacturer's representatives often provide consulting services to assist in the sales of
industrial products, offering expertise and guidance to potential buyers.
37) What is the role of a manufacturer's sales branch in the three-level business distribution
channel structure?
A) providing consulting services to assist in the sales of industrial products
B) collecting components from many manufacturers and resell them to business customers
C) providing installation services and training staff of customers in operation of sold products
D) facilitating sales through an indexed catalog of products
Answer: D
Rationale:
The role of a manufacturer's sales branch in a three-level business distribution channel
structure is to facilitate sales through an indexed catalog of products, acting as a direct sales
arm of the manufacturer.
38) Which of the following is characteristic of distribution channels for business markets at
the introduction stage of the product life cycle?
A) Business channels grow more receptive to carrying products due to increasing sales.
B) Businesses align themselves with distributors to expand distribution reach.
C) The manufacturing firm adds industry-specific channels and uses long channels to
distribute products.
D) The manufacturing firm provides spare parts for a period of time after the product is
discontinued.
Answer: B
Rationale:
During the introduction stage of the product life cycle, businesses often align themselves with
distributors to expand distribution reach and ensure wider market coverage as they introduce
new products.
39) The term ________ collectively refers to planning, delivering, and controlling the flow of
goods to markets to fulfill customer demand.
A) logistics
B) procurement
C) inventory turnover
D) vertical integration
Answer: A
Rationale:
Logistics encompasses the planning, delivering, and controlling of the flow of goods to
markets to fulfill customer demand efficiently.
40) Which of the following products is best suited for retail distribution through showroom
stores?
A) beverages
B) hygiene products
C) furniture
D) medicines
Answer: C
Rationale:
Furniture is best suited for retail distribution through showroom stores, as customers often
prefer to see and test furniture pieces in person before making a purchase decision.
Showroom stores provide an opportunity for customers to experience the products firsthand.
41) Which of the following is a characteristic of showroom products?
A) They demand special settings to stimulate sales.
B) They are frequently purchased.
C) They are inexpensively priced.
D) They should be made available near their areas of usage.
Answer: A
Rationale:
Showroom products often demand special settings to stimulate sales because their
presentation and environment play a crucial role in influencing consumer perceptions and
purchasing decisions.
42) Which of the following is true of logistics at the maturity stage of the product life cycle?
A) The order processing and fulfillment functions are cut or outsourced.
B) Logistics function is insufficient and needs to grow due to rise in orders.
C) Logistics must be flexible in order to accommodate new and alternative channel demands.
D) Customer support functions are performed by the research and development staff.
Answer: C
Rationale:
At the maturity stage of the product life cycle, logistics must be flexible to accommodate new
and alternative channel demands as market conditions change and competition increases. This
flexibility ensures that the distribution system can adapt to evolving needs and maintain
efficiency.
43) Intensive distribution uses a greater number of outlets for product sales than selective and
exclusive distribution.
Answer: True
Rationale:
Intensive distribution aims to maximize market coverage by making the product available
through a large number of outlets, which is more extensive than the distribution coverage in
selective or exclusive distribution strategies.
44) Intensive distribution offers greater brand control than selective distribution.
Answer: False
Rationale:
Selective distribution offers greater brand control compared to intensive distribution because
it allows companies to carefully choose which outlets will carry their products, ensuring they
align with the brand image and positioning.
45) Electric bulbs are better marketed through intensive distribution than exclusive
distribution.
Answer: True
Rationale:
Electric bulbs, being low-cost and non-differentiated products, are better suited for intensive
distribution, where wide availability and accessibility are key factors for consumers.
46) Premier luxury goods are distributed through a selective distribution strategy.
Answer: False
Rationale:
Premier luxury goods are often distributed through an exclusive distribution strategy to
maintain their exclusivity and prestige by limiting their availability to select high-end outlets.
47) Selective distribution offers a level of brand control and differentiation between that of
intensive distribution and exclusive distribution.
Answer: True
Rationale:
Selective distribution strikes a balance between intensive and exclusive distribution, offering
some degree of brand control and differentiation while still ensuring wider market coverage
compared to exclusive distribution.
48) During the decline stage of the product life cycle, alternative channels of distribution are
preferred over the main channels due to decreasing sales.
Answer: False
Rationale:
During the decline stage, companies often focus on streamlining their distribution channels
and may prioritize main channels over alternative ones to reduce costs and improve
efficiency.
49) Distribution is at its most intense during the growth stage of the product life cycle.
Answer: False
Rationale:
Distribution tends to intensify during the maturity stage of the product life cycle, when the
product has achieved widespread acceptance and competition among brands is high.
50) Distribution channels are structured into levels, with the manufacturer always being on
the top level and the end consumer always being on the bottom level.
Answer: True
Rationale:
Distribution channels are hierarchical in structure, with the manufacturer or producer at the
top level and the end consumer at the bottom level, with intermediaries such as wholesalers,
retailers, and distributors occupying intermediate levels.
51) Short distribution channels work well for standardized, inexpensive products.
Answer: False
Rationale:
Short distribution channels are often used for products that are customized, complex, or high
in value, as they require close interaction between the manufacturer and the end consumer to
ensure proper delivery and service.
52) Companies that utilize long distribution channels are usually unable or unwilling to
perform channel functions.
Answer: True
Rationale:
Long distribution channels often involve multiple intermediaries, such as wholesalers and
retailers, because the manufacturer may lack the resources, capabilities, or desire to perform
all channel functions themselves.
53) Short distribution channels are suited for geographically dispersed markets.
Answer: False
Rationale:
Short distribution channels are typically more suitable for geographically concentrated
markets, as they involve fewer intermediaries and less complex logistics, making them more
efficient for localized distribution.
54) Retailers offer value-added services to both manufacturers as well as customers.
Answer: True
Rationale:
Retailers often provide value-added services such as product display, promotion, after-sales
support, and customer service, benefiting both manufacturers by enhancing product visibility
and sales, and customers by improving their shopping experience.
55) Wholesalers are generally used for distribution of customized, low-volume products.
Answer: False
Rationale:
Wholesalers are typically used for distribution of standardized, high-volume products due to
their ability to purchase in bulk and distribute to retailers or other businesses in large
quantities.
56) Distributors carry large quantities of fewer items, in contrast to wholesalers who carry a
large assortment items.
Answer: False
Rationale:
Wholesalers typically carry large quantities of a wide assortment of products, while
distributors may carry fewer items but specialize in distributing those specific products to
targeted markets.
57) During the decline stage of the product life cycle, manufacturers employ longer
distribution channels in order to maximize sales and profits as much as possible.
Answer: False
Rationale:
During the decline stage, manufacturers often streamline distribution channels to reduce costs
and improve efficiency, focusing on core distribution channels rather than employing longer
ones.
58) A two-level business distribution channel structure includes two intermediary members: a
manufacturer's representative and a manufacturer's sales branch.
Answer: False
Rationale:
A two-level business distribution channel structure typically includes a manufacturer or
producer at one level and intermediaries such as wholesalers or retailers at the second level.
There is no specific mention of a manufacturer's representative or a manufacturer's sales
branch.
59) In a three-level distribution channel structure for business markets, sales are coordinated
through a manufacturer's representative.
Answer: False
Rationale:
In a three-level distribution channel structure for business markets, sales are typically
coordinated through a combination of wholesalers and retailers, with the manufacturer having
limited direct involvement in the sales process.
60) Reverse logistics manages the return of goods, including the return-to-vendor credit
process.
Answer: True
Rationale:
Reverse logistics involves managing the flow of products from the point of consumption back
to the manufacturer or point of origin, which includes processes such as product returns,
repairs, recycling, or disposal, as well as handling the return-to-vendor credit process.
61) Showroom stores should be located near similar other stores to attract relevant traffic.
Answer: True
Rationale:
Showroom stores benefit from being located near similar stores as they attract relevant traffic
interested in similar products or services, creating a shopping destination or cluster that
enhances customer convenience and increases foot traffic.
62) Support operations during the introduction stage of the product life cycle are often
performed by a specialized customer support system.
Answer: False
Rationale:
Support operations during the introduction stage of the product life cycle are typically
performed by the manufacturer or distributor, focusing on activities such as product
education, troubleshooting, and addressing customer inquiries directly rather than relying
solely on a specialized customer support system.
63) What is distribution intensity? What are the levels of distribution intensity?
Answer: Distribution intensity refers to the availability and number of locations, called
outlets, which make the product or service available for sale. Distribution intensity has three
levels: intensive distribution, selective distribution, and exclusive distribution.
64) What are the goals of the different levels of distribution intensity?
Answer: In intensive distribution, the goal is maximizing mass market sales. With selective
distribution, the goal is a mix of increasing sales and brand focus, with some brand control
being desired by the manufacturer. In exclusive distribution, brand control is paramount and
the goal is to maximize brand equity.
65) Briefly describe distribution channel structure for consumer markets.
Answer: Distribution channels are structured into levels, with the manufacturer always being
on the top level and the end consumer always being on the bottom level. The number of
levels between the two represents the number of intermediary marketing channel members
involved and depends on the consumption situation.
66) How are distributors different from wholesalers in consumer markets?
Answer: Distributors are sometimes used in conjunction with, or instead of wholesalers.
Distributors generally distribute goods for manufacturers, and carry a large assortment of
items. By comparison, wholesalers carry large quantities of fewer items. Both sell to retailers
in the consumer market.
67) How does the distribution channel structure for business markets compare with that of
consumer markets?
Answer: Business market distribution channels are structured like those for consumer
markets. Similar to the framework for consumer market channels, business market channels
are structured with the manufacturer at the top level and the business customer at the bottom.
Instead of wholesalers, jobbers, and retailers, business markets use manufacturer's
representatives, manufacturer's sales branches, and industrial distributors to distribute
products.
68) Describe the one-level distribution channel structure for business markets.
Answer: A one-level business distribution channel structure includes one intermediary, the
industrial distributor. Industrial distributors collect components from many manufacturers and
resell them to business customers. (By contrast, distributors for consumer markets generally
only sell goods to retailers, which resell the goods to consumers.)
69) What business decisions are suitable for the maturity stage of the product life cycle in
business markets?
Answer: Similar to consumer market distribution, business market organizations might
expand into new markets. Additionally, new product or service variants, such as industryspecific versions, can be introduced to capture additional market share through alternative
channels.
70) What is logistics? What functions does it serve?
Answer: From a marketing context, the field of logistics involves planning, delivering, and
controlling the flow of goods to markets to fulfill customer demands. Logistics decisions
include order processing (how should we handle orders?), warehousing (where should we
locate our stock?), inventory (how much stock should we hold?), transportation (how should
we ship our products?), and location (where shall we place our retail stores or service
centers?).
71) What location decisions serve showroom products well?
Answer: Showroom products, such as furniture and automobiles, are high priced and
purchased infrequently, and demand special settings to stimulate sales. Showroom stores
should be located near similar other stores (like other auto dealerships) to attract relevant
traffic.
72) What logistics issues does a manufacturer face at the introduction stage of the product life
cycle?
Answer: The introduction stage often turns out to be a "shaking-out" period, where
organizations must adjust their logistics systems to handle the new product or service. Order
processing can pose problems if order volume becomes much higher than forecast, swamping
the order processing infrastructure. Support operations are sometimes conducted by the
research and development staff, because the customer support system has not yet been
finalized.
73) Describe the three levels of distribution intensity with examples.
Answer:
• Intensive distribution: The objective of intensive distribution is to maximize sales by
making the product available through a great number of outlets. Because of the wide variety
of outlets, it is difficult to maintain brand control and differentiation. It is often used with
consumer packaged goods. For example, Frito-Lay maximizes sales of its corn chips by
selling them in hundreds of outlets, such as supermarkets, grocery stores, liquor stores, and
convenience stores.
• Selective distribution: This type of distribution uses a moderate number of outlets, with a
level of brand control and differentiation between that of intensive distribution and exclusive
distribution. It is often used for goods that, while not luxury goods, want to maintain their
distinction in the market. For example, cosmetic manufacturer Kiehl's sells its line of skin
and hair care formulas through only a limited number of luxury-oriented retailers, like
Bloomingdales.
• Exclusive distribution: In exclusive distribution, access to the product is limited to a few
selected outlets. The outlets are often owned by the manufacturer to give the maximum
possible control over the brand's equity. This type of distribution highlights the product's
differentiation over competing products. It is often used for premium luxury goods, like the
Gucci brand.
74) What approaches to distribution intensity are adopted by manufacturers at the different
stages of the product life cycle?
Answer:
• Introduction: Distribution in this stage is selective (or perhaps exclusive, in the case of a
luxury good or service) and scattered as the firm searches for channels that will carry the new
product.
• Growth: Distribution intensifies from selective to intensive. As the adoption rate of its
product or service grows, the organization should add new channels to increase its potential
distribution reach. Companies must acquire desirable channels at this stage or risk losing
them to competitors, shutting the organization out of key markets and hampering future
growth.
• Maturity: Distribution is at its most intense at this stage. Organizations might consider
expanding their channels geographically to target new markets. In general, the high volumes
and variety of alternative channels available during maturity often justify long-channel (many
channel partners) approaches.
• Decline: The number of channels will be severely curtailed, with only a very few number of
outlets making the product or service available for sale. Main channels will be used.
Alternative channels will be dropped.
75) Compare and contrast short distribution channels with long distribution channels.
Answer: "Short" distribution channels, those with few intermediaries like zero-level and onelevel channels, work well for products and services that are complex (made to order or
configured to suit a particular purpose), expensive (often targeted to a niche, discriminating
audience), and perishable (not able to withstand the rigors of long channels). Short channels
are suited for geographically concentrated markets (not requiring long transportation
distances), with companies that can take on some of the duties associated with channels (like
processing orders and returns, as well as providing financing).
For example, short channels are suitable to automobile sales, where autos are shipped directly
from the manufacturer to dealers' lots, bypassing other intermediaries.
By contrast, "long" distribution channels, those with many intermediaries, work well for
products and services that are standardized (all customers get the same item), cheap (sold to a
mass market), and durable (not susceptible to breakage or spoilage). Long channels are suited
for geographically dispersed markets (needing long-distance hauling), with manufacturers
that lack the resources to perform channel functions. For example, long channels are suitable
for consumer packaged goods, such as snack foods, where several intermediaries may be
involved.
76) What are the services offered to manufacturers and consumers by retailers in a one-level
distribution channel structure?
Answer: A one-level distribution channel structure includes one intermediary, the retailer.
Retailers offer value-added services to both the manufacturer and the customer.
Manufacturer-related services include tasks such as order processing (placement and returns
of orders), market research (gathering information from customers), and co-op advertising
(creating communications with manufacturers to stimulate demand). Customer-related
services include tasks such as consulting (advising customers on products and services),
financing (negotiation on final price, as well as loan preparation), and installation (setting up
new products and services).
77) What are the different intermediaries in business distribution channels? What roles do
they perform?
Answer: Business market distribution channels are structured like those for consumer
markets. Similar to the framework for consumer market channels, business market channels
are structured with the manufacturer at the top level and the business customer at the bottom.
Instead of wholesalers, jobbers, and retailers, business markets use manufacturer's
representatives, manufacturer's sales branches, and industrial distributors to distribute
products.
Industrial distributors collect components from many manufacturers and resell them to
business customers in contrast to distributors for consumer markets who generally only sell
goods to retailers, which resell the goods to consumers.
Manufacturer's representatives provide consulting services to assist in the sales of industrial
products, which are often complex and benefit from the technical expertise a manufacturer's
representative brings. Manufacturer's representatives often specialize in particular areas, such
as commercial lighting.
The manufacturer's sales branch facilitates sales through an indexed catalog of products and
coordinates sales.
Test Bank for Marketing Planning
Stephan Sorger
9780132544702
