Distribution Management

Q&A
1. Define Distribution Channels with example.

A. Distribution Channels are sets of interdependent organizations involved in the process of

making a product or service available for use or consumption, e.g. Reliance Fresh, Big
Bazaar, Croma, Flipkart.

2. State the types of Distribution Channels with example.

A. i. Sales Channel e.g. Nestle, Pepsi

ii. Delivery Channel e.g. Indian Railways
iii. Service Channel e.g. Maruti Service Station

3. What is Intensive Distribution with an example?

A. Distribution through every reasonable outlet available e.g. ITC, HUL, P&G

4. State the Marketing Channel Flows.

A. Product Flow, Negotiation Flow, Ownership Flow, Information Flow, Promotion Flow

5. What is Logistics? Give an example of a company into Logistics Business.

A. It is the efficient transfer of goods from the source of supply through the place of
manufacture to the point of consumption in a cost-effective way whilst providing an
acceptable service to the customer e.g. GATI, FedEx, Crystal Logistics

6. State the utilities that can be offered through distribution channels.

A. Place Utility, Time Utility & Possession Utility.

7. Explain any 4 functions of Distribution Channels.

A. i. Facilitation – Bringing the buyers & sellers together & facilitating both the parties in

closing the deal.

ii. Information – Giving the Information about the products/services to the customers.

iii. Promotion – Promoting the products/services, i.e., building & promoting the

producer’s brands

iv. Negotiation – Negotiations on behalf of the manufacturer with customers on the

prices, terms of delivery, etc.

8. What do you mean by temporal discrepancy in distribution with an example?

A. It helps to speed up in meeting the requirement of the consumers e.g. Delivering Pizza

within 30 mins. by mobile deliverymen from Dominos

9. What do you mean by Vertical Marketing System (VMS)?

A. When the producer, distributor & retailer act together as one team to provide service to

the end-user, it would be called a VMS.

10. What do you mean by Corporate VMS with an example?

A. When there is a high degree of control over the channel for the company, this is known as
Corporate VMS. VMS here, combines successive stages of production and distribution
under single ownership, e.g., Goodyear, Bata having own retail stores; Shoppers’ Stop is
increasing its own products & brands in their stores to get this kind of leverage.

11. What do you mean by Administered VMS with an example?

A. This channel co-ordinates distribution activities through market & gain economic power
from one channel member or from the shared power of two channel members, i.e. the co-
ordination is through the size and power of one of the members, e.g., Gillette, Coke &
HUL are able to command high level of co-operation from their intermediaries in terms
of displays, shelf space, pricing policies & promotion strategies.

12. What are the different patterns of distribution with an example?

A. Intensive – ITC, HUL, P&G

Selective – General Electric, Magnum Ice Cream, Venky’s Frozen Food

Exclusive – Maruti, Toyota, Ford

13. Who is a C&FA? Give an example.

A. Channel partner who stocks goods & distributes to downstream channel partners e.g.
Cadbury Chocolates are delivered to the retail stores through C&FA.

14. What do you mean by Contractual VMS with an example?

A. Under this system, independent producers, wholesalers and retailers operate on

contractual basis specifying how they will try to improve effectiveness and efficiency of
their distribution, e.g., Car Dealers of Maruti, Hyundai; Café Coffee Day, McDonalds.
15. What do you understand by Horizontal Marketing Systems (HMS) with an example?

A. This system operates between two or more totally unrelated companies but the
arrangement of working together provides benefits to both, e.g., supermarkets having
ATMs of leading banks on their premises or Café Coffee Day outlets in airports.

16. What do you mean by Selective Distribution with an example?

A. Multiple, but not all outlets in the market e.g., Magnum Ice Cream

17. What is Exclusive Distribution with an example?

A. Only one outlet in a market may keep the product e.g. Harley Davidson Motorcycles

18. State the importance of Negotiation Flow in marketing channel.

A. The negotiation flow represents the interplay of the buying & selling functions associated
with the transfer of title (right of ownership) among the intermediaries.

19. State the significance of Ownership Flow in marketing channel.

A. The ownership flow shows the movement of the title to the product as it is passed along
from the manufacturer to final consumers. It is only involved in the transportation of the
physical product itself.

20. What is a Multi-Channel Strategy with an example?

A. The strategy to reach the customers through more than one channel e.g., Sony Music
Entertainment, Polo

21. What do you mean by Channel Structure?

A. The group of channel members to which a set of distribution tasks has been allocated.

22. State the intermediaries sequentially in a 5-level Channel Structure?

A. Manufacturer→Agent→Wholesaler→Retailer→Consumer

23. State the importance of Promotion Flow in marketing channel.

A. It is a flow where persuasive communication in the form of advertising, personal selling,

sales promotion, and publicity, e.g., Dettol promoting through Havas Worldwide, Clinic Plus
through Lowe Lintas, Lifebuoy through Lowe Lintas, Colgate through Red Fuse, Maggi through
Publicis Capital, Maaza through Leo Burnett, Closeup through Ogilvy & Mather.
24. State atleast 4 factors that influence the choice of distribution channels.

A. i. No. of Potential Customers

ii. Perishability
iii. Services provided by the intermediaries
iv. Financial Resources

25. Who are Cash and Carry Wholesalers with an example?

A. This is a kind of channel partner who stocks a limited line of fast moving products. This
wholesaler provides merchandise at a reduced cost to the retailer by reducing service
offers & eliminating credit risk, e.g., Metro Cash & Carry.

26. Who is a Merchant Wholesaler with an example?

A. A merchant wholesaler or a distributor is an independent commercial establishment that

purchases products from various manufacturers for stock and offers complete assortments
of specified merchandise for resale to the retail store, e.g., wholesalers of
pharmaceuticals, toiletries, dairy products.

27. Who is a Jobber?

A. A commercial establishment that buys from various sources for resale to retail stores.
Jobber offer flexibility of servicing small retailers and odd-lot requirements.

28. Who are Industrial Distributors?

A. The wholesalers who sell their products exclusively to other manufacturers e.g.
Maintenance, Repair & Operating Supplies (MRO Items), Original Equipment
Manufacturers (OEMs).

29. State any 4 characteristics of Wholesaling.

A. i. Operate on large volumes but with closed group of products

ii. Mostly B2B – caters to trade & institutions
iii. Maximise service (effectiveness) and minimize operating costs (efficiency)
iv. Buy goods for resale, keep inventory, take risks of price changes, negotiate terms,
procure orders, deliver & extend credit

30. State the types of Wholesalers.

A. Full Service Wholesalers, Limited Service Wholesalers, Merchant Wholesalers, Brokers,

Agents, and Others (Agri-Business, Auction Companies).
31. Explain Retailing Mix.

A. Retailing Mix is the appropriate combination of product, price, place & promotion. These
includes Positioning (novelty offered in the process to the shopper, novelty in the
product/product assortment offered to the shopper), Store Location (Convenience,
coverage, catchment area, target market), Product Assortment & Services (Decision
about breadth & depth), Price (High or low prices, promotions or EDLP), Promotion
(Advertising, store display, events, PR, sales promotions), Store Atmosphere (design,
colour & layout of store).

32. Differentiate between Specialty & Department Store.

A. Specialty Store is a store with narrow product lines with deep assortment – apparel,
furniture, books whereas Department Store is having several product lines in different
departments. Example of Specialty Store is Home Shop, Staples, Next. Departmental
stores are Shoppers Stop, Westside, More.

33. Differentiate between Supermarket & Hypermarket.

A. Supermarket is a large, departmentalized, self-service store that specializes in food and

some non-food items. They are large, low-cost, low-margin, high volume, self-service
operation with a wide offering e.g. Big Bazaar in India. Whereas, Hypermarket has
resulted in wider & deeper product assortments for customers. These retail outlets are
characterized by larger retail spaces as compared to Supermarkets that are leased out to
various brands e.g. Wal-Mart in USA.

34. State the Retail formats in India.

A. i. Mom-and-Pop Stores
ii. Category Killers
iii. Department Stores
iv. Malls
v. Specialty Stores
vi. Discount Stores
vii. Hypermarkets/ Supermarkets
viii. Convenience Stores
ix. E-Tailers
x. Vending
35. State the Positioning Strategies in Retailing.

A. i. Wide range with a high value add – Lifestyle brand of stores

ii. Limited range but a high value add – Tanisq Jewellery Stores
iii. Limited range with a limited value add – Bata stores
iv. Wide range of goods but a limited value add – Food World Outlet

36. How would you create Product Differentiation in retailing?

A. Refer to the Retailing PPT.

37. How do you measure Customer Value?

A. Customer Value = Product Value + Service Value + Image Value

38. What do mean by the term threetailing?

A. Threetailing is the convergence of in-store, catalog, and online channels, e.g., JCPenney
are inviting customers to come in (store), call in (catalog), or log on (online) to shop.

39. State the role of Franchising in India.

A. Refer to the PPT & Notes for Role, Merits, Demerits & Levels of Franchising.

40. State the Process of Channel Design.

A. Refer to the PPT on Channel Design & Page 187-216 of Marketing Channels, Bert
Rosenbloom.

41. What is the relation between Channel Length & Degree of Standardization?

A. Refer to Page 202-203 of Marketing Channels, Bert Rosenbloom.

42. What are the alternative distribution channels to be considered while channel design?

A. i. Present Distributors

ii. New Distributors

iii. Acquisition

iv. Private Brand

v. Direct Mail

Refer to Page 213-214 of Marketing Channels, Bert Rosenbloom.

43. State the “Characteristics of Goods & Parallel Systems” Approach.

A. i. Replacement Rate
ii. Gross Margin
iii. Adjustment
iv. Time of Consumption
v. Searching Time

Refer to Page 206-208 of Marketing Channels, Bert Rosenbloom.

44. Differentiate between Market Size & Density.

A. Market Size is the no. of customers in the market whereas Market Density is the no. of
customers per unit of land area.

45. State the merits & demerits of Multi-Level Marketing (MLM) with relevant examples.

A. Refer to the PPT of Multi Level Direct Selling Organizations.

46. State the three key Phenomena of Electronic Marketing Channels.

A. i. Disintermediation versus Reintermediation

ii. Information Flow versus Product Flow
iii.Virtual Channel Structure versus Physical Channel Structure

47. Identify the sources of finding channel partners.

A. Refer to the PPT on Channel Selection.

48. State the criteria for a selecting channel members.

A. Refer to the PPT on Channel Selection.

49. What factors/guidelines would you consider while remunerating a Channel Partner?

A. Refer to the PPT on Channel Pricing.

50. What are the types of Programmes for supporting Channel Partners?

A. i. Co-operative
ii. Partnership or Strategic Alliance
iii. Distribution Programming

Refer to Page 280-292 of Marketing Channels, Bert Rosenbloom.

51. State the Key Criteria for Performance Audit in evaluating channel members.

A. Refer to the PPT on Performance Evaluation of Channel Partners.

52. State the types of Channel Conflict.

A. Refer to the PPT on Channel Conflict.

53. Differentiate between Conflict & Competition.

A. Refer to the PPT on Channel Conflict.

54. State the various causes of Channel Conflict.

A. Refer to the PPT on Channel Conflict.

55. How Channel Conflict influences Channel Efficiency?

A. Refer to Page 116-119 of Marketing Channels, Bert Rosenbloom.

56. What are the bases of power for Channel Control?

A. Refer to the PPT on Channel Conflict.

57. What measures are essential for resolving/avoiding conflict?

A. Refer to the PPT on Channel Conflict.

58. Differentiate between Intra-Channel & Inter-Channel Competition.

A. In case of Intra-channel competition, from the upstream viewpoint, the problem of

domain clash occurs when a supplier sees its downstream partners representing its
competitors, e.g., California Medical Supply firm won almost $5 mullion in damages
from a distributor for breach of contract. An arbitration panel found that its downstream
channel partner, in violation of contract, promoted a competitor’s products. Inter-channel
competition happens when there is a domain conflict between multiple types of channels
representing the supplier’s products to the same geographical market.

59. Differentiate between 3PL and 4PL.

A. Refer to the PPT on Logistics & Channel Management.

60. State the major channel management decisions.

A. i. Selection
ii. Motivation
iii. Training
iv. Evaluation

61. Differentiate between Logistics & Supply Chain.

A. Refer to the PPT on Logistics & Channel Management.

62. What is Economic Order Quantity (EOQ)?

A. EOQ is a useful way to approach the inventory decisions of how much to order & when?