After listening to all of the challenges and issues, Rhea said she wanted to propose a more sweeping change. "Mark has already suggested doing some of the retailer's job for them. I say go even further-let's just do away with all of the intermediaries. We can perform all of their functions ourselves," she said. She went on to explain that, "Since we won't have to deal with intermediaries, my suggestion is bound to simplify the distribution process and cut costs dramatically." What do you think of Rhea's suggestion?
A) It is truly radical because it calls for the elimination of the entire supply chain.
B) It is an example of an administered and contractual distribution system.
C) It should be viewed with some skepticism, because it ignores the fact that intermediaries usually create enough value to justify their inclusion in the distribution process.
D) It is not really very radical, since most manufacturing firms in recent years have used this approach to bring about dramatic reductions in their costs of distribution.

Question

Quizplus · Accepted Answer

Rhea could be correct, but her argument is shaky. If Lite Bite eliminates intermediaries from its channel of distribution, it will have to perform all of the functions they have been providing. Intermediaries specialize in performing certain types of marketing functions, so they often can perform them more efficiently and at lower cost than the producer. Thus, Lite Bite could find that Rhea's proposal would result in higher costs.

After Listening to All of the Challenges and Issues, Rhea