Bangalore University Semester-1 (Module-4) 2014

1) Define pull strategy.

When the company uses advertisements, promotions to make the consumer aware
about the product so that they get attached to the retailers and ask for the product
themselves it is called as pull strategy.

2) What is RFID?
Radio Frequency Identification has improved the efficiencies of data and information
sharing throughout the distribution channels.

3) Channel Power means?

It is the ability to alter channel members behavior so that they take actions they would
have taken otherwise.

4) What do you mean by push strategy?

The Company uses the sales force, trade promotions, money etc., to sell its product. In
this the company pushes the product to the market through sales representatives,
wholesalers, retailers to sell to the end consumer.

5) What is marketing channel system?

It is particular set of marketing channels a firm employs and decisions about it are
among the most critical ones management faces.

6) Explain Hybrid Channel.

Today the companies use varied types of channels to distribute their product/service.
When the company uses more than one distribution channel simultaneously it is called
Hybrid channel.
E.g.: HP uses sales force for large a/c, out bound telemarketing for medium size a/c, and
direct mails for small a/c.

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 Bangalore University Semester-1 (Module-4) 2014
7) Value Network means?
In this type of network the company first think about the target market and then design
the supply chain backward from that point. It is planned on the basis of the demand
chain. It is also called demand chain planning.

8) State the four categories of buyers.

a. Habitual Shoppers: purchase from same places in the same manner over time
b. High-Value Deal seekers: “Channel Surf” for lowest possible price
c. Variety Loving Shoppers: Gather information in many channels then buy in
favorite channel regardless of price
d. High-Involvement Shoppers: Gather information in all channels, make their
purchase in a low-cost channel but take the advantage of customer support from
a high-touch channel.

9) State the classification of Shoppers.

a. Service/quality customers: cared most about variety and performance
b. Price/value customers: cared most about spending their money wisely
c. Affinity customers: primarily sought stores that suited like themselves

10) Define marketing Channel. What consideration does the marketer need to keep in
mind before finalizing the channel member?
Channel management is an important aspect of marketing. It is an important decision all
the managers have to face. The Pepsi at the rending machine, the purchase of online
tickets for movies, online banking, and buying grocery from the store are some
examples of placement of products and services so as to reach the customer easily.
Product delivery has direct impact on customer evaluation of service quality and
satisfaction. E.g.: Flipkart.
Distributors perform an important intermediary role in matching supply with demand
through their interactions with suppliers, manufacturers and end customers.

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The elements important for considering before establishing the channels of marketing
are:
(a)Economics: The cost incurred and profits made by the company by selling through
the channels.
(b)Coverage: It includes aspects of product availability to the end customer.
(c) Control: It refers to the optimum distribution cost without losing decision making
authority over the product- how it is priced, promoted and delivered in the distribution
channel.

11) What does customer expect from channel integration?

 Ability to order a product online and pick it up at a convenient retail location
 Ability to return to return an online-ordered product to a nearby store of the
retailer
 Right to receive discounts and promotional offers based on total online and off-
line purchases

12) State the functions of Channel Members.

a. Gather information
b. Reach agreements on price and terms
c. Acquire funds to finance inventories
d. Assume risks
e. Provide for storage
f. Provide for buyers’ payment of their bills
g. Oversee actual transfer of ownership

13) Explain in detail the five marketing flows in Marketing Channel?

a) Physical Flow
b) Title Flow
c) Payment Flow

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d) Information Flow
e) Promotion Flow

14) Discuss on channel levels in Channel Management

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15) Explain the different types of intermediaries.
There are different types of intermediaries:
(a) Agents:
They are also called brokers. They bring together the seller of the product and
buyers. They do not take the owner ship of the products. They are legal sanctions to
act as agents. E.g.: Indian textile exporters to the US have agents sanctioned there.

(b) Merchant:
A merchant perform similar functions as that of an agent but takes the ownership of
the product.

(c) Distributors or dealers:

They distribute the products. E.g.: Automobile distributor.

(d) Franchise:
A franchise holds a contract to supply and market a product to the requirements of
the franchisor, the owner of the original product. E.g.: Mc Donald’s, KFC.

(e) Wholesalers:
A wholesalers stocks goods before the next level of distribution and both legal title
and physical possession of the goods.

(f) Retailers:
Intermediaries who sell directly to the end consumers and may purchase directly
from the manufacturer or the wholesalers. E.g.: Wal-Mart.

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16) Discuss the different strategies used by the marketer for establishing channels.

Importance of channels:

 Set of decisions are made by the company so as to reach the market.

 The distribution channel can use these strategies :
(a) Push strategy:
The Company uses the sales force, trade promotions, money etc., to sell its
product. In this the company pushes the product to the market through sales
representatives, wholesalers, retailers to sell to the end consumer.

(b) Pull strategy:

When the company uses advertisements, promotions to make the consumer

aware about the product so that they get attached to the retailers and ask for
the product themselves it is called pull strategy.

(c) Hybrid channels:

Today the companies use varied types of channels to distribute their
product/service. When the company uses more than one distribution channel
simultaneously it is called Hybrid channel.
E.g.: HP uses sales force for large a/c, out bound telemarketing for medium size
a/c, and direct mails for small a/c.

(d) Value networks:

In this type of network the company first think about the target market and then
design the supply chain backward from that point. It is planned on the basis of
the demand chain. It is also called demand chain planning.

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 Bangalore University Semester-1 (Module-4) 2014
17) Channel Design Decisions or Designing Channel Management System.
STEP-1:

Customer Desired Service Output Levels:

 Lot size: Depending on the lot size the channels can be formed, Wholesaler for bulk.
 Waiting and Delivery time: If the company wants to reduce the waiting time it can
have fewer channels.
 Spatial convenience: The companies want their product to be available at all the
location.
 Product variety: The Company can think of channels so as to face competition.
 Service backup: If the company wants to provide good service they can reduce the
number of channels
STEP-2:

Establish Objectives and constraints:

 Based on output
 Perishable
 Big machines and equipments, bulky products
 Franchised etc.,

STEP-3:
Identifying and Evaluating Major Channel Alternatives
a) Types of intermediaries
b) Terms and Responsibilities of Channel Members
 Pricing policy
 Distribution territorial rights
 Mutual services and responsibilities

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c) Number of Intermediaries

STEP-4:
Evaluating Major Alternatives

18) Explain briefly the channel-management decisions.

STEP-1:
Selecting channel Members
STEP-2:
Training and Motivating channel Members
Channel Power: It is the ability to alter channel members behavior so that they take
actions they would have taken otherwise.
Coercive Power: Threatens to withdraw or terminate relation if intermediary
fails to co-operate
Reward Power: Offering extra benefit for performing special acts or functions
Legitimate Power: Requests a behavior that is warranted under the contract
Expert Power: The manufacturer has special knowledge the intermediaries’
value.

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Referent Power: Manufacturer is highly respected that intermediaries’ are proud
to be associated with.

STEP-3
Evaluating channel members:
Based on
 Sales quota
 Average inventory levels
 Customer delivery time
 Treatment of damaged, lost goods
 Co-operation in promotional programs

STEP-4:
Modifying channel design and arrangements:
 Depending on innovation, distribution channel emerge, PLC cycle, Market expands
etc.,
 Project Sangam – Website marketing(2,50,000 website consultants) conflict with
marketing channels
 I-shakthi – Women self help group (SHG) in rural area. It has 39,000 women
members

19) Write a note on Channel Integration and Systems.

1. VMS: Producer, wholesaler and retailers acting as a unified system.
(a) Corporate VMS:
Stages of production under single ownership.
(b) Administered VMS:
Co-ordinates successive stages of production and distribution through the size and
power of the members.

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(c) Contractual VMS:
Consists of independent firms at different levels of production and distribution,
integrating their programs on a contractual basis to obtain more economics of sales
impact than they could achieve alone.

2. Horizontal Marketing Systems:

Two or more unrelated companies put together resources or programs to exploit an

emerging marketing opportunity. E.g.: HUL with Pepsi co; Post Office with mutual
fund co.

3. Integrating Multi channel Systems:

Selling through two or more marketing channels.

20) Discuss on Channel Conflicts.

Channel conflict occurs when one member’s actions prevent another channel from
achieving its goal.

Types of channel conflict:

• Vertical (Distributors and Company)
• Horizontal (Between Distributors/Under Cutting)
• Multichannel (Different Channels)

Causes of channel conflict:

 Goal incompatibility
 Difference in perception
 Unclear roles and rights (HP Laptop example)
 Intermediaries’ dependence on the manufacturer (exclusive
distribution)

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Managing of channel conflict:
 Co-optation-
Efforts by one organization to win the support of the leaders of another organization
by including them in the advisory council, BOD etc.
 Diplomacy
Each side of the party sends a person or a group to meet the counterparts to resolve
the conflict.
 Arbitration
The two parties agree to present their argument to one or more (third party)
arbitrators and accept arbitrator’s decision.
 Dilution and cannibalization:
Luxury brand image may face the above due to inappropriate channels. E.g.: Calvin
klien.

21) E-Commerce in Marketing. Elaborate.

E-commerce means that the company or site offers to transact or facilitate the selling
of products and services online.
E-purchasing means companies decide to purchasing goods, service and information
from various online suppliers.
Pure click co’s are those that have launched a web site without any previous existence
as a firm.
Brick and click: companies are existing companies that have added an online site for
information and e-commerce.
M-Commerce: Mobile Marketing through applications and other forms.
Online Retailers compete among themselves in terms of three key aspects:
 Customer Interaction with website
 Delivery of the product
 Ability to address problems when they occur.

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22) Discuss on Market Logistics.

Logistics management- Logistics includes the activities that relate to the flow of
products from the manufacturer to the customer or end consumer. Logistics
management is the coordination of activities of the entire distribution channel.

Outbound distribution: It is the activities of moving products from the factory to the
customer.

Inbound distribution: It involves moving products and materials from suppliers to the
factory.

Functions of logistics:

 Order processing: Good customer relationship depends upon accurate and

speedy billing.ICT is extensively used to process orders. In retailing it acts as
quick replenishment of products from suppliers.

EDI/extranet is used to transmit daily record, of products sales to suppliers, who

analyze the data and create an order and send back to the company.
Hospitality industry uses the order processing to improve its service deliveries;
Mc Donald’s, KFC.etc

 Warehousing & material handling: Many organizations solve the products

before they are sold to the final customer. Then the logistic function also
includes warehousing and material handling.

 Warehousing tangible goods: For storage of FMCG Company’s use storage

warehouses or distribution centers. Storage warehouses store goods for long
time but distribution centers move the products for fruits & vegetables
They use cold store distribution centers.

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 Warehousing digital products: Emerald-library.com, ABI inform, EBSCO store
vast data electronically to facilitate customers search information.

 Inventory management: IT or zero inventories is the ideal situation for any

organization. A balance has to be maintained between the stock and the
customer requirements inventory management is done to keep the levels of
stock so that the products is available when the customer needs.

 Transportation & delivery: physical movement of products using truck, rail, air,
pipeline, shipping so on. Internet or EDI (Electronic data interchange).

 Physical delivery: ICT has helped in a great way the product delivery. Various
system helping in the logistics are in vehicle navigation and route guidance
solution to help manage transport fleets, track shipments, etc.

 Electronics delivery- E-trade, music, books, is available on the net and can be
delivered electronically. Travel agents, banks and insurance companies are
providing services online.

23) Supply chain Management. Discuss.

A supply chain is a network of facilities & distribution that performs the functions of
procurement of materials transformation of these materials into intermediate &
finished products & distribution of these finished products to customers. A supply chain
is the system of organizations, people, activities, information and resources involved in
moving a product or service from supplier to customer.

Supply Chain Management is primarily concerned with the efficient integration of

suppliers, factories, warehouses and stores so that merchandise is produced and
distributed in the right quantities, to the right locations and at the right time, and so as

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to minimize total system cost subject to satisfying service requirements. It is the art of
management of providing the Right Product, At the Right Time, Right Place and at the
Right Cost to the Customer.

Key aspects in SCM:

 To maximize overall value generated

 To look for Sources of Revenue and Cost
 Improving the visibility of the demand
 Improving the quality
 Minimizing the time
 Integration of business processes
 Responsible for multiple flows (Information /Physical/Financial)
 Linkages with suppliers, customers and business process
 Encompasses all activities involved in flow of raw material, information, cash and
goods

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