Channel Lecture:

Question 1

Channel:

Answer 1

Path that enables products/services to flow from producers to end users. Also thought of as a value delivery network.

Question 2

Agent/Brokers:

Answer 2

Negotiates sales without taking title to the goods. Generally paid by commission or fees.

Question 3

Wholesaler:

Answer 3

Takes title to the goods and resells them.

Question 4

Retailer:

Answer 4

Sells to end user.

Question 5

Facilitating Agency:

Answer 5

Moves the goods (no title, no negotiating). Examples are postal service, railroad, storage warehouse, etc.

Question 6

What are the functions and value of channels?

Answer 6

• Transactional functions
• Logistical functions
• Facilitating functions

Question 7

Density of Coverage:

Answer 7

Intensive: Distribution through every reasonable outlet in a market.

Selective: Distribution through multiple, but not all, reasonable outlets in a market.

Exclusive: Distribution through a single wholesaling middleman and/or retailer in a market.

Question 8

Exclusive Density of Coverage Characteristics:

Answer 8

• High influence of reseller market activities
• High margins throughout the channel
• Stable level of distribution
• Less competition at the point of sale

Question 9

Selective Density of Coverage Characteristics:

Answer 9

• Resellers compete to carry product

- Less reseller loyalty

Question 10

Intensive Density of Coverage Characteristics:

Answer 10

• High coverage
• Convenient for end customers
• High conflict potential

Question 11

Disintermediation:

Answer 11

• Move toward direct to consumer marketing
• Hybrid systems
• E-commerce
• Channel conflict

Question 12

Vertical Integration:

Answer 12

Combines successive stages of production and distribution under single ownership.

Question 13

Administered VMS:

Answer 13

One member of the channel is large and powerful enough to coordinate the activities of the other members without an ownership stake.

Question 14

Corporate VMS:

Answer 14

One member of the distribution channel owns the other members but each continues to perform a separate task.

Question 15

Trends:

Answer 15

• Growth of direct marketing
• Major downstream power shifts in the channel (from producers and wholesalers to retailers to customers
• Greater use of hybrid systems to reach different consumers through distinct marketing channels.