Question 1

Mail-order wholesalers are wholesalers who

Accepted Answer

Mail-order wholesalers operate by sending catalogs to businesses, receiving orders, and then shipping the products directly to the business customers.

Question 2

Agents have all of the following characteristics except they

Accepted Answer

Agents typically do not take possession of goods; they facilitate transactions between buyers and sellers without holding the goods themselves.

Question 3

Brokers have all of the following characteristics except they

Accepted Answer

The answer of Brokers have all of the following characteristics...

Question 4

A selling agent

Accepted Answer

A selling agent has an exclusive arrangement with a company, representing all of its operations in a particular market, and acts as the sales and/or marketing department of the firm.

Question 5

A purchasing agent

Accepted Answer

A purchasing agent typically has a long-term relationship with a buyer, selects, receives, and ships goods to buyers, and is paid on a commission basis.

Question 6

A commission merchant

Accepted Answer

A commission merchant takes possession of goods on consignment from local markets and sells them at a central market location, earning a commission on the sales.

Question 7

Manufacturers use distributors rather than sell directly to retailers because distributors reduce the cost of distribution and can conveniently provide the desired assortment to consumers at a lower price.

Accepted Answer

The advantage of distributors to the manufacturer is that they reduce the cost of distribution and can conveniently provide the desired assortment to consumers at a lower price; consequently, manufacturers do not sell directly to distributors, as this would be a more costly proposition.

Question 8

An advantage to using intermediaries is that intermediaries help distribute products to locations that are convenient for customers.

Accepted Answer

Intermediaries, such as wholesalers and retailers, have established distribution networks that can efficiently deliver products to locations that are accessible and convenient for customers, enhancing the overall reach and availability of the products.

Question 9

An advantage to using intermediaries is that intermediaries distribute the product down the channel of distribution, and store it in warehouses until it is needed.

Accepted Answer

Intermediaries help manage the logistics of distribution by storing products and ensuring they are available when needed, thus facilitating efficient distribution.

Question 10

An indirect channel of distribution does not allow for direct customer contact by the producer, but increases sales opportunities and reduces expenses of moving products to the consumer.

Accepted Answer

Indirect channels involve intermediaries like wholesalers and retailers, which can increase sales opportunities by reaching more customers and reduce logistics costs for producers, but limit direct contact with consumers.

Question 11

The dominant member of a channel, known as the channel captain, is always either the manufacturer or the retailer.

Accepted Answer

The dominant member of a channel, known as the channel captain, can be at any level of the distribution channel. A manufacturer with a strong brand pull, such as Coca-Cola or Colgate-Palmolive, could be the channel administrator. Many powerful wholesalers, such as Supervalu, dealing with smaller manufacturers or retailers can act as channel captains. Influential retail chains, such as Wal-Mart and Home Depot, can take on the role of channel captain. Hybrid structures, such as Costco, a warehouse club that sells both to final consumers and resellers, also can administer the distribution channel.

Question 12

The largest and the best known trading companies are member of Keiretsus, which are families of firms with interlocking stakes in one another.

Accepted Answer

Keiretsus are networks of businesses in Japan that hold shares in each other, and many of the largest trading companies are part of these networks, benefiting from mutual support and stability.

Question 13

Horizontal marketing systems consist of intermediaries at the same level of the distribution channel.

Accepted Answer

Horizontal marketing systems consist of intermediaries at the same level of the distribution channel pooling resources and achieving economies of scale, thereby playing on their individual strengths.

Question 14

A manufacturer that uses a pull strategy will focus attention on intermediaries, providing the necessary incentives for them to cooperate in marketing the product to the final consumer.

Accepted Answer

When a manufacturer uses a pull strategy, the manufacturer first focuses on consumer demand through extensive promotion, expecting that consumers will request the brand through the channel.

Question 15

A manufacturer using a push strategy will focus on the consumer or buyer of the product with intensive advertising and promotion to build demand in the channel in an effort to push the product through the respective distribution channel.

Accepted Answer

A manufacturer that uses a push strategy will focus attention on intermediaries, providing the necessary incentives for them to cooperate in marketing the product to the final consumer.

Question 16

Developing successful channel relationships require an openness between the channel members, mutual trust, and a clear line of communication.

Accepted Answer

Successful channel relationships are built on openness, mutual trust, and clear communication, which help in aligning goals and resolving conflicts effectively.

Question 17

Inter-modal transportation entails the use of two or more different types of transportation within the same shipment, such as rail and truck.

Accepted Answer

Inter-modal transportation involves using multiple modes of transport, like rail and truck, to move goods from origin to destination efficiently.

Question 18

The two most common logistics facilitators are freight forwarders and inter-modal transports.

Accepted Answer

The two most common logistics facilitators are freight forwarders and the hub-and-spoke distribution center.

Question 19

Hub-and-spoke distribution centers are designed to speed up warehousing and delivery by channeling operations to one manufacturer that is particularly well equipped to handle the distribution of products to their various destinations.

Accepted Answer

Hub-and-spoke distribution centers are designed to speed up warehousing and delivery by channeling operations to one center (hub) that is particularly well equipped to handle the distribution of products to their destination. The idea of a hub location is to consolidate traffic from different origins and send it directly or via another hub to different destinations (nodes that are not destined as hubs are referred to as spokes), thus achieving economies of scale on hub-to-hub links.

Question 20

Hub-and-spoke network designs are used by shipping companies such as Federal Express and UPS.

Accepted Answer

Hub-and-spoke network designs are used by shipping companies such as Federal Express and UPS. Such designs have been popular with airlines as well (Northwest, United, etc.), but a clear advantage of using them in the distribution network of a supply chain versus a direct airline flight from source to destination is that products, unlike passengers, are insensitive to how many hub stops they need to make. This makes it easier to achieve the goal of making the distribution channel more flexible and responsive to customer needs.

Quiz 10: Distribution Strategies