Marketing Distribution Channel and Supply Chain Management

Flashcards covering Chapter 7.0 on Marketing Distribution Channels, Supply Chain Management, channel levels, retailing, and wholesaling.

What is a marketing distribution channel?

The path or route used by a business to deliver products from the producer to the final customer.

According to the core rule of distribution management, what causes an otherwise great product to fail?

A great product fails if it isn't at the right place, at the right time, and in the right quantity.

What is direct distribution, and what are its primary pros and cons?

Direct distribution is when a producer sells directly to consumers without intermediaries (Producer -> Consumer). Pros include complete brand control, higher profit margins, and direct customer data; cons include higher operating costs and limited market reach.

What is indirect distribution, and what is its primary operational advantage?

Indirect distribution uses middlemen (such as wholesalers, retailers, and agents) to move goods from Producer -> Intermediary -> Consumer. Its primary advantage is reaching a massive market quickly without managing individual deliveries.

How is a one-level indirect channel structured, and in what product contexts is it typically found?

It is structured as Producer -> Retailer -> Consumer. It is commonly found in electronics, clothing, and beauty products (e.g., Samsung selling to Harvey Norman, who sells to the consumer).

What is the structure of a two-level indirect channel, and what is a typical example?

The structure is Producer -> Wholesaler -> Retailer -> Consumer. A typical example is a snack factory selling bulk potato chips to a wholesaler, who supplies small mini-markets that sell individual packets to consumers.

In what business context is a three-level indirect channel typically used, and what is its sequence of intermediaries?

It is typically used for imported products. Its sequence is Producer -> Agent -> Wholesaler -> Retailer -> Consumer (e.g., an overseas cosmetics brand appointing a Malaysian agent to manage local wholesalers).

What is the primary operational difference between a multi-channel and an omni-channel retail strategy?

Multi-channel uses multiple sales channels that operate separately with disconnected inventory systems, whereas omni-channel provides an integrated approach where all channels are connected to create a seamless experience.

How is Supply Chain Management (SCM) defined, and what is its ultimate goal?

SCM is the planning, coordination, and control of all activities involved in sourcing raw materials, producing goods, storing inventory, transporting products, and delivering them. Its ultimate goal is delivering the right product to the right customer at the right place, right time, and lowest cost.

What is the fundamental difference in core question and scope between a Distribution Channel and Supply Chain Management (SCM)?

A Distribution Channel has a marketing focus that asks 'How are products sold?' and covers moving finished goods to customers. SCM has an operations focus that asks 'How are products made and delivered?' and covers the complete journey from raw materials to final delivery.

What two costly conditions does inventory management seek to balance and prevent?

Overstocking (which leads to high storage costs and expired goods) and Stockouts (which lead to lost sales and angry customers).

What are the four primary modes of transportation used in supply chain logistics and their typical use cases?

Road (trucks for local transport), Rail (for heavy goods), Sea (for international bulk cargo), and Air (for urgent or high-value shipments).

What is the Just-In-Time (JIT) inventory concept, and what is its main operational risk?

JIT involves keeping minimum inventory and receiving parts only when needed to lower storage costs (e.g., Toyota manufacturing). Its main risk is that supply delays can stop production entirely.

How does retailing differ from wholesaling regarding target audience, transaction volume, and price per unit?

Retailing is B2C (selling directly to final consumers in small quantities at a higher price per unit to cover the shopping experience), whereas wholesaling is B2B (selling to retailers or businesses in large bulk quantities at a lower price per unit).

What are the five core functions performed by wholesalers in the supply chain?

1. Bulk-Breaking, 2. Warehousing, 3. Transportation, 4. Financing (such as offering 30-day credit terms), and 5. Providing Market Info to manufacturers.