Page 425 - Foundations of Marketing

392 Part 5 | Distribution Decisions

Issues for Discussion and Review

1. Define supply-chain management. Why is it important? 8. Identify and describe the factors that may influence
2. Describe the major functions of marketing channels. marketing channel selection decisions.
Why are these functions better accomplished through the 9. Explain the differences among intensive, selective, and
combined efforts of channel members? exclusive methods of distribution.
3. List several reasons consumers often blame intermediar- 10. “Channel cooperation requires that members support
ies for distribution inefficiencies. the overall channel goals to achieve individual goals.”
4. Compare and contrast the four major types of marketing Comment on this statement.
channels for consumer products. Through which type of 11. Explain the major characteristics of each of the three
channel is each of the following products most likely to types of vertical marketing systems (VMSs): corporate,
be distributed? administered, and contractual.
a. New automobiles 12. Discuss the cost and service trade-offs involved in
b. Saltine crackers developing a physical distribution system.
c. Cut-your-own Christmas trees 13. What are the main tasks involved in order processing?
d. New textbooks 14. Explain the trade-offs that inventory managers face
e. Sofas when they reorder products or supplies. How is the
f. Soft drinks reorder point computed?
5. Outline the four most common channels for business 15. Explain the major differences between private and
products. Describe the products or situations that lead public warehouses. How do they differ from a distribu-
marketers to choose each channel. tion center?
6. Describe an industrial distributor. What types of prod- 16. Compare and contrast the five major transportation
ucts are marketed through an industrial distributor? modes in terms of cost, speed, and dependability.
7. Under what conditions is a producer most likely to use 17. Under what conditions are tying agreements, exclusive
more than one marketing channel? dealing, and dual distribution judged illegal?

Marketing Applications

1. Keurig is the North American leader in single-cup Describe the different channels used to distribute
coffee brewing. Introduced in 1998, the Keurig system Keurig’s K-Cups in terms of customer characteristics,
uses self-contained coffee K-Cups, which allow users competition, and characteristics of the intermediaries.
to brew one cup of coffee or other hot beverage in How would you define the intensity of market cover-
about one minute. After the K-Cup is pierced with a age? Does it make sense? Are there any strategic issues in
nozzle, hot water is forced through its contents and managing these marketing channels?
filter and into a mug below. Because the K-Cup is 2. Supply-chain management involves long-term partner-
self-contained, disposal is easy and cleanup is almost ships among channel members that are working together
totally eliminated. Keurig was purchased by Green to reduce inefficiencies, costs, and redundancies and
Mountain Coffee Roasters in 2006 and today offers develop innovative approaches to satisfy customers.
more than 200 different beverages, including specialty Select one of the following companies and explain how
beverages from Dunkin’ Donuts, Wolfgang Puck, and supply-chain management could increase marketing
Caribou Coffee. productivity.
Keurig’s K-Cups are sold in many supermarkets, a. Dell
selected big-box stores, some specialty stores, and depart- b. FedEx
ment stores. Macy’s, for example, has a small selection of c. Nike
popular flavors displayed next to its coffee-maker aisle. d. Taco Bell
K-Cups also can be found online at specialty coffee web- 3. Marketers can select from three major levels of market-
sites as well as both the Keurig and Green Mountain ing coverage when determining the number and kinds of
Coffee Roasters e-commerce stores. outlets in which to sell a product: intensive, selective, or

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