CHAPTER 15 - DISTRIBUTION, WHOLESALING, AND RETAILING
CHAPTER 10 – MARKETING: PLACE AND PROMOTION
ANSWERS
LEARNING THE LANGUAGE
|1. Agents and brokers |11. Supply chain management |21. Merchant wholesalers |
|2. Telemarketing |12. Exclusive distribution |22. Direct selling |
|3. Drop shippers |13. Personal selling |23. Channel of distribution |
|4. Prospecting |14. Sales promotion |24. Wholesaler |
|5. Place |15. Retailer |25. Integrated Marketing Communication system |
| | |(IMC) |
|6. Category killers |16. Logistics |26. Product placement |
|7. Intensive distribution |17. Selective distribution |27. Publicity |
|8. Sampling |18. Promotion mix |28. Viral marketing |
|9. Word of mouth promotion |19. Rack jobbers |29. Public relations |
|10. Marketing intermediaries |20. Cash and carry wholesalers |31. Event marketing |
ASSESSMENT CHECK
Learning Goal 1
The 4 Ps of Marketing: Place
1. The other term for “place” is “distribution.”
2. The “players” in the place variable are:
a. Marketing intermediaries – that assist in moving goods from producers to their users.
b. Channel of distribution – agents, brokers, wholesalers, and retailers that join to transport and store goods.
c. Agents/brokers – bring buyers and sellers together and assist in negotiating an exchange, but don’t take title to the goods.
d. Wholesaler – sells to other organizations, such as retailers, manufacturers but not consumers.
e. Retailer – sells to consumers.
3. Channels of distribution ensure communication flows and the flow of money and title to goods. They also help ensure that the right quantity and assortment of goods will be available when and where needed.
4. a. Full-service wholesalers perform all distribution functions.
b. Limited function wholesalers perform only selected functions
5. Rack jobbers are limited function wholesalers. They furnish racks or shelves full of merchandise to retailers, display products and sell on consignment. They keep title to goods until they are sold and share the profits with the retailers.
6. A cash-and-carry wholesaler is a limited function wholesaler that serves mostly smaller retailers with a limited assortment of products. Traditionally, retailers went to such wholesalers, paid cash, and carried the goods back to their stores. Today, some stores allow retailers and others to use credit cards for purchases.
7. A drop shipper solicits orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer. They own the merchandise but don’t handle, stock or deliver it. That is handled by the producer.
8. Agents and brokers never own the products they distribute. Usually they do not carry inventory, provide credit, or assume risks. While merchant wholesalers earn a profit from the sale of goods, agents and brokers earn commissions or fees based upon a percentage of the sales revenue.
9. An agent maintains long-term relationships with the people they represent, whereas a broker is usually hired on a temporary basis. Once a broker negotiates a contract between a buyer and a seller, the relationship ends.
10. A manufacturer’s agent may represent one or several manufacturers in a specific territory, as long as the suppliers are not competitors. A sales agent represents a single producer in a larger territory.
11. A broker has no continuous relationship with a buyer or seller. Once the broker negotiates a contract between a buyer and a seller, their relationship ends.
Learning Goal 2
Logistics and Transportation
12. A supply chain is longer than a channel of distribution because it includes suppliers to manufacturers whereas the channel of distribution begins with manufacturers. Channels of distribution are part of the supply chain.
13. Six criteria used to evaluate transportation modes are:
a. Cost. d. Flexibility in handling products.
b. Speed. e. Frequency of shipments.
c. On-time dependability. f. Reach.
14. Intermodal shipping is the use of multiple forms of transportation to complete a single shipment of freight.
15. Five transportation modes used in transporting products, listed by volume are:
a. Railroad. d. Water transportation.
b. Trucks. e. Air.
c. Pipeline.
Learning Goal 3
Retailing
16. The various types of retailers are:
a. Department stores – sell a wide variety of products in separate departments.
b. Discount stores – sell many different products at prices below department stores.
c. Supermarkets - sell mostly food with other nonfood items like paper products.
d. Warehouse clubs – sell food and general merchandise in very large facilities; may require membership.
e. Convenience stores – sell food and other often needed items at convenient locations.
f. Category killers – sell a huge variety of one type of product; dominates a category of goods.
g. Outlet stores – sell general merchandise directly from the manufacturer at a discount.
h. Specialty stores – sell a wide selection of goods in one category.
17. Five ways retailers compete are:
a. price. d. selection.
b. service. e. entertainment.
c. location.
18. Price competition is getting fiercer as Internet firms help shoppers find the best prices on many items. Because of that, retailers have to turn to other strategies to compete.
19. Retail service means:
a. Putting the customer first.
b. On-time delivery.
c. Guarantees.
d. Fast installation.
20. Services compete by having good locations, conveniently located in places such as supermarkets, college campuses. Others pick up and deliver.
21. Category killer stores are so competitive in their category that they usually overpower smaller competitors that don’t offer comparable selection or price, and drive them out of business.
22. Many category killers are in turn being “killed” by discount stores because consumers are finding it more convenient to shop for multiple items at stores like Costco rather than go out of their way to find stores selling only certain types of items.
23 Entertainment competition is all about making it fun to shop at stores and malls.
24. Intensive distribution is used for convenience goods such as candy and magazines.
Selective distribution is used for appliances, furniture and clothing.
Exclusive distribution is used for products such as luxury autos and fine jewelry.
Other Types of Retailing
25. Four other types of retailing are:
a. Electronic retailing.
b. Telemarketing.
c. Vending.
d. Direct selling.
26. The major challenges of e-tailing are:
a. Getting customers to visit the website.
b. Delivering the goods on time.
c. Providing helpful service.
d. Keeping customers.
27. Electronic retailers have had problems with handling complaints, taking back goods that customers don’t like, and providing personal help. Some sites are trying to improve customer service by adding help buttons that you can click on to get almost instant assistance from a real person.
28. Two types of telemarketing are:
a. outbound call centers where an employee calls people from a list and tries to sell a product.
b. inbound call center where the customer calls a toll-free number and inquires about a product.
29. The challenges facing companies using outbound telemarketing are:
a. Do Not Call Registry.
b. Caller identification services.
c. Screening methods to avoid potential telemarketer calls.
30. Major users of direct selling include cosmetics, and vacuum cleaner manufacturers. Other businesses are using direct selling for lingerie, artwork, plants and other goods. Because so many buyers work outside the home during the day, many of the sellers are sponsoring parties at workplaces or in the evenings and on weekends.
Learning Goal 4
The 4 P’s of Marketing: Promotion
31. The tools of the promotion mix are:
a. Advertising. c. Sales promotion.
b. Personal selling. d. Public relations.
32. The steps to be taken in developing a promotion mix are:
a. Identify a target market.
b. Define the objectives for each element of the promotion mix.
c. Determine a promotional budget.
d. Implement the plan.
e. Evaluate effectiveness.
33. The public benefits from advertising because:
a. ads are informative.
b. it provides us with free TV and radio because advertisers pay for the production costs.
c. advertising also covers the major costs of producing newspapers and magazines.
34. Product placement is when advertisers pay to have their products appear on television where they will be seen by the viewing audience.
35. Effective selling is a matter of helping others to satisfy their wants and needs. Sales people can use the Internet, portable computers, pagers, and other technology to help customers search the Internet, design custom-made products, look over prices, and generally do everything it takes to complete the order.
36. The steps in the personal selling process are:
a. Prospect and qualify. e. Answer objections.
b. Preapproach. f. Close sale.
c. Approach. g. Follow-up.
d. Make presentation.
37. Prospecting involves researching potential buyers and choosing those most likely to buy.
To qualify people means to make sure that they have a need for the product, the authority to buy, and the willingness to listen to a sales message. People who meet these criteria are called prospects.
38. Sales people find prospects at trade shows, the company website, and people at companies who were recommended to you by others who use your company’s product.
39. The sales representative must do research before the sales call. This is done during the preapproach. As much as possible should be learned about customer’s wants and needs. All that information should be stored in a database.
40. When salespeople call on a customer for the first time, the salesperson must:
a. project an impression of professionalism,
b. create rapport,
c. build credibility.
41. During the sales presentation salespeople need to match the benefits of his or her value package to the client’s needs.
42. A sales person should anticipate objections the prospect may raise and determine proper responses. Think of questions as opportunities for creating better relationships. You are there to resolve the doubts the customer has.
43. A trial close consists of a question or statement that moves the selling process toward the actual close. The final step is asking for the order and showing the client where to sign.
44. The follow-up includes:
a. handling customer complaints.
b. making sure that the customer’s questions are answered.
c. supplying what the customer wants.
45. The three steps in creating a good public relations campaign are:
a. Listen to the public.
b. Change policies and procedures.
c. Inform people that you’re being responsive to their needs.
46. It is the responsibility of the public relations department to maintain close relationships with the media, community leaders, government officials, and other corporate stakeholders.
47. The advantages of publicity over other promotional tools are:
a. it may reach people who would not read an advertisement.
b. it's more believable than advertising.
48. Three drawbacks of publicity are:
a. The company has no control over how, when, or if the media will use the story.
b. The story may be altered, and could end up not as positive as the original.
c. Once a story has run, it won't be repeated.
49. Sales promotion programs are designed to supplement the other promotion mix variables by creating enthusiasm for the overall promotional program.
50. The most important internal sales promotion efforts are directed at salespeople and other customer-contact people.
51. Internal sales promotion efforts include:
a. sales training.
b. development of sales aids like flip charts, audiovisual displays and videotapes.
c. participation in trade shows where sales people can get leads.
52. A virtual trade show is a trade show on the Internet. This allows customers to see many products without leaving the office, and the information is available 24 hours a day.
53. Sampling is a quick effective way of demonstrating a product’s superiority at the time when consumers are making a purchase decision.
54. The terms used to describe promotion that is designed to get people talking about something are:
a. viral marketing b. word-of-mouth
55. Companies use testimonials to:
a. promote to new customers.
b. confirm customer’s belief that they chose the right company.
Learning Goal 5
IMC: Putting Promotions Together
56. An integrated marketing communication promotional approach is a formal method for uniting all the promotional efforts of an organization to make them consistent with each other and responsive to the organizations stakeholders.
57. IMC includes all public relations and promotional efforts, including everything from jingles in ads and packaging to the latest in Internet communications and interactive tools. The result is a unified image of the company in the public’s mind.
CRITICAL THINKING EXERCISES
Learning Goal 1
1. The type of product will determine what kind of transportation and storage will be called for, and what kinds of stores (retailers) will carry the product. The type of transportation mode and the kind of storage will be a part of the final price of the product, as well as the kind of store - i.e. the image of the store where it’s sold and its pricing policies.
2. If Sun-2-Shade targets primarily the auto industry, the company will not necessarily need a wholesaling middleman, unless it uses some kind of a broker in lieu of employing a sales force. The channel of distribution will look like one of these two suggestions:
Sun-2-Shade Sun-2-Shade
Manufacturer’s Agent
Auto manufacturer
Auto manufacturer
Our classification of Sun-2-Shade as either a shopping good or specialty good or a business good will determine the kind of store we will choose, as shopping goods may be found in several kinds of stores and specialty goods will be found in fewer, different kinds of stores.
Note: This is a suggested answer. If you choose to classify this product as a consumer good, the channel of distribution will be longer, for example, and may include a wholesaler that sells to automotive supply stores. This would be classified most likely as a shopping good, so it would entail selective distribution.
Learning Goal 2
3. A.
1. Air 4. Pipeline
2. Truck 5. Railroad
3. Water
B. The best transportation mode for Sun-2-Shade would probably be by truck to both the auto manufacturers and the retailers. For auto manufacturers, which are located a considerable distance from Sun-2-Shade’s production facility, a combination of rail and truck could be used for flexibility, number of deliveries, and speed. The major problem with trucks is the cost, but it serves the other needs best.
4. Possible answer: Eddy’s gimmick of using sales associates on roller skates may actually be the key he is looking for! He apparently already knows that service is important to his customers, and that is one way in which retailers compete. He may just need another way approaching the idea! Retailers compete based on price, service, selection, location and entertainment. Eddy needs to decide what is most important to his customers, what may draw new customers in, and what his strengths and weaknesses are. As a small retailer, he may be better able to specialize in a market, and compete with the larger retailers by offering more selection within a smaller category of items. It is difficult for smaller retailers to compete with “category killers,” based on price, but outstanding service may allow Eddy to charge a price that will allow him to stay in business and make a profit. Eddy’s also has some entertainment value with sales associates on roller skates and the way he may be able to compete with other general merchandise stores coming into the area. He may want to expand the entertainment value of his store to draw in new customers, and make the store a fun place to visit.
5. Your response to this question will really depend upon whom you have selected as your primary target market. Let’s assume you have decided to go after the luxury automotive manufacturers as your primary market. In that event, most likely your promotion mix will include lots of personal selling, some advertising in the form of brochures, perhaps, aimed at the car dealerships who will be selling the cars with your product installed. It should also include a well-designed Web site, with interactive features. If your research has been done, and a need for this kind of product has been established, you could design a public relations campaign for the auto manufacturer, indicating that the company listened to your need for a product like Sun-2-Shade, then made the product in response.
However, reaching the consumer will also be important, as you want the customer to be familiar with your product, and to ask for the product at the dealership. As mentioned earlier, you should have your own web site, with attractive graphics and interactive sales techniques. You may be able to advertise on-line, on Web sites that appeal to an affluent market, for example, which may be more likely to purchase your product for their car. You may also consider direct marketing, such as order forms in upscale magazines. Again to create awareness, Sun-2-Shade could give away sunglasses which use the technology the company is using for the windshield film, along with information indicating that with their product, there is no need to take sunglasses on and off all the time.
An important part of your advertising strategy may be to place your product on cars that are shown in feature movies. With this kind of promotion, the customer will see the product “in action.”
You could use viral marketing by finding current customers and paying them to go into automotive chat rooms to make positive remarks about Sun-2-Shade’s products. These same consumers could be involved in creating their own blog and talking about the benefits they have gained by using your product.
Keep in mind that all of these activities need to be consistent with their message – for example, an upscale, “must-have” product for car owners who know about the “good things in life.”
PRACTICE TEST
MULTIPLE CHOICE TRUE-FALSE
1. d 1. T
2. c 2. F
3. a 3. T
4. c 4. T
5. a 5. T
6. d 6. F
7. b 7. T
8. d 8. F
9. d 9. T
10. b 10. F
11. c 11. T
12. c 12. T
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