Exam 15: Distributing Products

Mini-Case "We've got a number of important issues to discuss today," began Dee Stribyute as she opened the weekly marketing manager's meeting for Lite Bite Foods. Lite Bite is a producer of low fat, low calorie snack foods. The other managers attending the meeting were her two top assistants, Mark Etter and Rhea Taylor. "First, sales were hurt last year when we had to recall our almond chocolate bars because of concerns about contaminated ingredients. We've got our work cut out for us to recover from that setback. Many stores quit carrying our products, and even the ones that continued to do so put less emphasis on displaying and promoting them. We've got to get our products into as many stores as possible. Consumers shouldn't have to go all over town trying to find our snacks. We also need to make sure that our products are displayed and promoted in a way that attracts attention." Dee looked at her assistants, and saw that they seemed ready to make some proposals. However, she decided to get another important issue out on the table before stopping to discuss solutions, so she continued with her comments. "The other big concern is the cost of moving our goods. Distribution costs are a major part of the overall cost of selling our goods. What can we do to make the flow of products from our kitchens to our ultimate consumers more efficient?" Having laid out her concerns, Dee sat down at the head of the table, saying to her assistants, "O.K. guys, I'm ready for suggestions." -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 retail sale is a sale to a consumer of products for his or her own use.

Specialty stores use a wide variety of products in one product category as their key competitive tool.

Marshall Manufacturing has recently reached an agreement with an intermodal marketing company to significantly reduce the cost of shipping its finished goods to some major business customers. This agreement will help Marshall reduce the costs associated with outbound logistics.

Stores that remain open 24 hours, seven days a week are providing ________ utility to their customers.

A broker can expect to earn a fixed amount of profit for her efforts regardless of the dollar value of the contract she negotiated.

Epic Electronics has had to shut down its manufacturing plant for several hours twice in the past week. Some of its key suppliers have been late with their shipments of materials and parts. These difficulties indicate that Epic has done a poor job in managing its inbound logistics.

In a(n) ________ distribution system the producer manages all of the marketing functions at the retail level.

A(n) ________ sells general merchandise directly from the manufacturer at a discount; items may be discontinued or have certain product flaws.

________ put many small shipments together to create a single large shipment that can be transported more cost-efficiently to the final destination.

Wholesaler-sponsored chains consist of stores that are all owned by a single corporation.

Direct selling is a distribution strategy that makes extensive use of websites and phone sales.

The two main types of merchant wholesalers are storage wholesalers and distribution wholesalers.

Marshall Manufacturing wants to ship a large quantity of its goods across the country. They have contacted Get Gone, Inc., to find out what the shipment would cost. Get Gone has shown Marshall how a combination of barges, trains, and trucks could be used to complete the shipment at low cost. Get Gone's strategy is an example of intermodal shipping.

A large number of traditional retailers have developed online stores, giving customers a choice of shopping techniques.

Charmers is a small manufacturer of charm bracelets that include watches as well as other keepsake items. Rarely are Charmers' shipments large enough to be transported cost-efficiently by filling an entire truck or railcar. The company could benefit by relying on a freight forwarder to help it distribute its goods.

Logistics is concerned

What is a wholesaler? Describe the difference between merchant wholesalers and agents and brokers. Identify three types of limited-function wholesalers.

Corporate distribution systems consist of several independently owned intermediaries, all of them organized as multinational corporations.

A major advantage of direct marketing is that it is a very convenient way for consumers to shop.