Distribution Channel Members are often criticized for being inefficient and for causing consumers to pay higher

prices than they would if there were no distribution channel members (eliminating middlemen, wholesalers, distributors, etc.). Do you agree or disagree? Support your position with marketing concepts and principals. This question is worth 25 points.

Distribution is the activities that make products available to the consumers when and where they want to purchase them. Distribution Channel Members are middlemen linking producers to other middlemen or to ultimate consumers through contractual arrangement or through the purchase and resale of products. Distribution Channel Members are intermediaries. Agents, wholesalers, retailers are all intermediaries. Together or separately they are responsible for getting products from the producer to the consumer in an efficient manner. Without middlemen even the best products and services could not reach consumers in a timely manner and will be less cost effective. Middlemen have access to and control over valuable resources which enables them to assist producers to efficiently get products to consumers. I disagree with the statement criticizing distribution channel members of being inefficient and causing consumers to pay higher prices than they would if there were no distribution channel members. Activities performed by middlemen that enable them to efficiently facilitate exchanges between the producer and the consumer are order processing, material handling, transportation, inventory management and warehousing. Order processing is the receipt and transmission of sales order information. Computerized order processing provides databases for all distribution channel members and will alert them to increase productivity. When order processing activities are carried out promptly and accurately it could lead to customer satisfaction, lower cost and cycle time, which will also Cycle time is the time needed to complete a process. Order processing consists of three main

tasks, order entry, order handing, and order delivery. Order entry begins when a customer or salesperson place a purchase order via e-mail, snail mail, website or telephone. Order entry can be completed manually or electronically. Manually a sales representative enters orders on paper, prepares progress reports and forwards sales information. Electronic ordering is less time consuming and reduces cost. Some companies use electronic data interchange (EDI), which utilize computer technology to integrate order processing with production, inventory, accounting and transportation. EDI technology helps to reduce paperwork for all distribution channel members; they all can share information on invoices, order payments, inquiries, and scheduling. This technology has helped to reduce cost and cycle time. When order handing information is sent to the warehouse, product availability is verified; price, terms, and customer credit rating is checked. Warehouse personnel will retrieve the product using automated technology and in some cases have it assembled. The product is shipped to customers via FedEx, UPS, and DHL. If customers pay for rush order they can receive their product overnight, which is convenient and can lead to customer satisfaction. Inventory management involves developing and maintaining enough supplies to satisfy customers needs. Control of inventory can greatly affect the cost of distribution channel members and the level of customer service. Stockouts or shortage is not having enough supplies on hand can, this lead to brand switching, low sales and loss of customers. On the other hand having too much inventory on hand can lead to product obsolescence, pilferage and damage. Having too much product can also lead to cost increases. The main objectives of marketers are to minimize inventory cost while having adequate supplies on hand to meet customers need. Marketers use a calculation called reorder point to signal them when its time to reorder products. Order lead time is the average time lapse between placing an order and receiving it.

The usage rate is the rate in which products inventory is used or sold during a specific time period. Safety stock is the amount of extra inventory a firm keeps to guard against stockouts resulting from above average usage rates and/or longer-than expected lead times. The reorder point formula is as such-Reorder point= (Order lead time x Usage rate) + Safety stock. Just-intime (JIT) is an efficient inventory management approach in which supplies arrives when needed for production or resale. Reorder points are crucial with JIT. Companies maintain inventory levels and buy products and material in small quantities when they need them. There is no safety stock with this approach, but suppliers are expected to consistently provide high quality product. Communication between producers and distribution channel members are important in eliminating waste and reducing inventory cost. This process helps to bring distribution channel members closer to customers. Material handling is the physical handling of tangible goods, supplies and resources. Producers and distribution channel members adopt efficient procedures and techniques for material handling to minimize inventory management cost. Reducing the number of times a product is handled improves customer service and increase customer satisfaction. Systems for packaging, labeling, loading, and movement must be coordinated to maximize cost reduction and customer satisfaction. Some firms utilize radio frequency identification (RFID) to assist with handling process. This system uses radio waves to track material tagged with RFID. RFID systems will alert distributors when supplies are low and need to be replenished. RFID systems also help distribution channel members identify high-volume shopping times and assist in managing promotions for new products. Unit loading and containerization are key methods used by distribution channel members in material handling. Unit loading is placing one or more boxes on skids or pallets, and then the

units can be efficiently loaded by forklift, trucks or conveyer systems. Containerization is consolidating large quantities of many different products in large containers. These containers can be conveniently stacked and shipped via train, barge or ship. With containerization individual products are not handled, so it greatly increases efficiency and security in shipping. Warehousing is very important to distribution channel members; it involves the design and operation of facilities for storing and moving goods. Some retailers like Sears and Radio Shack own private warehouses. However, owning your own warehouse comes with fixed cost such as insurances, taxes, maintenance fees, and dept expense. Some distribution channel members may choose to lease from a company like ODW, who owns many warehouses with a huge amount of space. Leasing warehouse space is more economical than owning warehouse space. Often there is a lower cost associated because users rent space and only purchase space when needed. Public warehousing is a cost effective way in which channel members can save money and pass the savings to customers. Distribution centers are large centralized warehouses that receive and regroup products and ship them to customers quickly. The focus is on moving goods rather than storing them. Distribution centers are usually highly automated with computerized robots, forklifts and hoist to move products to loading docks. Distribution centers are efficient because they assist channel members to keep up with high volume of merchandise moving through the center and also help them stay on top of the busy holiday season. Transportation is the most expensive function of channel members. Transportation is the movement products from where they are made to intermediaries and the end user. The modes of transportation used by channel members are railroads, trucks, water ways, airways and pipelines.

Railroads are more efficient at shipping large full loads at low prices, than smaller loads. Full railroad cars require less handling. Trucks are the most flexible form of shipping because they can go almost anywhere. They have the unique ability to move products from the producer straight to the consumer. Water ways is the cheapest method of shipping products. Tugboats and towboats pull barges full of products and can carry ten times as much product than railways. Some downsides to water way shipping are some markets are inaccessible by water; floods and droughts can affect transport. However the fuel efficiency of water transportation makes it a poplar transport mode used by middlemen. Air transportation is the fastest mode of shipping; however it is the most expensive mode. Air travel has the capacity to carry perishables goods, for high value, low bulk items and can get products to destination very fast. Air transit reduces warehousing, packing cost and losses from theft and damage. Overnight deliveries are provided by companies like FedEx, DHL, RPR Air, UPS, and Amazon.com. Pipelines are mode of transportation that carries petroleum products and chemicals for large fuel companies like BP-Amoco, Exxon Mobile via the Alaska Pipeline. Pipeline transit is the most automated form or transportation. On page 451, Wal-Mart Internet Exercise at the top of the page, answer the first two questions only. Each question is worth 10 points. (20 points). A. How does Wal-Mart attempt to position itself on its website? Wal-Mart is positioning itself as a cool, hip site to shop online. They have identified the underserved market segment of college students. Wal-Mart has a wide variety of brand named products that are a necessity for college students. Some products advertised are bedding, futons, lap tops, iPods, storage containers, appliances and televisions. Wal-Mart is promoting products

with cool hip colors like purple, red, yellow and orange, in an attempt to catch the eyes of college students. Wal-Mart is attempting to complete the sell by its everyday low prices. With the economy in a down turn, a lap top for $ 278 and a storage container for $19 are very economical and will bring many college students and parents to site and in stores to buy these products. B. Compare the atmosphere of Wal-Marts website to the atmosphere of a traditional Wal-Mart store. Are they consistent? If not, should they be? The current season is summer, which is associated with bright cool colors and fun times. Wal-Mart is appealing to the psychological pictures of colleges minds with bright colors to get them to purchase essential product for the upcoming school year. I believe the online Wal-Mart site is consistent with traditional Wal-Mart stores. Brightly colored name brand products for college students should be the focus of traditional Wal-Mart stores at this time. Even though the focus is on products for college students the functionality of the site allow for users to navigate through the site like they are walking through different departments in the store. A website should give the illusion that a person at actually is at the store. On page 486, Case 16.2, One Tough Mother at Columbia Sportswear, you are to answer the three questions presented in detail. I am looking for depth in your answers. Visit YouTube and search for Columbia Sportswear ads for more information. Each question is worth 10 points. (30 points) A. Identify the key objective of Columbia Sportswears promotion program. Are the objectives the same or different for its advertising and for its sponsorships? Columbia Sportswear key objectives for their promotion programs are creative awareness and stimulating a demand for products. Columbias Sportswear Chairman Gert Boyle uses extreme sports commercials to make the consumers aware of their products. Columbia is constantly developing new products and refining old ones. Columbia promotes its self through sponsorships, television advertising, and public relation programs with the focus on touch,

durable, high quality products. Columbia Sportswears marketers stimulate demand for products with commercials of beautiful models wearing a bikini and skiing in the frigid cold. The model is promoting a jacket by Columbia called the Omni-heat which warms you fast, if youre cold and prevents you from overheating with its new, little silver dot technology in the lining. Columbia uses selective demand when they talk about the strengths and benefits of their products. This form of promotions is what helps to separate them from their competitors, in the minds of potential buyers. I would say, Columbia Sportswear objectives are the same as their advertising and sponsorships. Gert Boyle and her son Tim has built a brand of active outdoor apparel and footwear. Gert and Tim are actors in many of their commercials, depicting Gert as ,one tough mother and often exposing Tim to some kind of extreme activity wearing Columbia Sportswear products. One commercial has Gert driving a SUV through a series of severe weather conditions with Tim strapped on top of the hood, symbolizing his clothes will protect him in any conditions. They are informing long term and potential buyers of durable, high quality products. They also sponsor many outdoor extreme sports like Jeeps King of the Mountain series a prestigious professional snow racing in the world. Top extreme sport professional all over the world showcase their products. B. Does Columbia Sportswear use integrated marketing communications? What suggestions, if any would you make to strengthen the coordination of Columbias promotions activities. Columbia Sportswear uses integrated marketing communications with its many commercials on the internet and television. Columbia also promotes itself and its products on prints, like Tshirts, apparels and also through their sponsorships of extreme sports activities and their strong public relations campaigns. Columbia Sportswear continuously send synergistic message of a

strong viable company with its tough, high quality products. In one internet commercial a man was skiing down a mountain and the screen freezes several times with the captions, This could be you. The man was wearing Columbia Sportswear apparel. I would suggest to Columbia to try and reach other segments of the market. They seem to appeal to young 18-20 somethings with focus on extreme sports like skiing, mountain climbing and snowboarding. Columbia has survived in a touch, saturated market for years; however, if they expand their marketing communication to other market segments they could greatly increase their market share. Average men and women in their late twenties, thirties and forties take part in recreations like, hiking, climbing, snowboarding and skiing. If Columbia can reach this segment they can forever etch their footprint in sports apparels and footwear. C. Describe the characteristics of Columbias target market. Are they the same for advertising and event sponsorships? Explain. The characteristics of Columbias target market are young males and females in their late teens to mid twenties. They are most likely college students that gather on weekends and spring breaks in different tourist locations like Utah, California, and Alaska. Their target market is very active individuals, usually involved in extreme sports, while indulging in alcohol, coffee, hot chocolate, or soda as their beverage of choices. Fast foods are their choice of meals; however, many may also choose healthier diet choices. Sports apparel is their choice of clothing. Music choices are most likely Rock and Hip Hop. Columbias advertising and sponsorship are the same as their target market. Many of their commercials depict young individual snowboarding or skiing down mountains. Though Gert Boyles and her son Tim are mature adults their commercial still depict them partaking in extreme activities to communicate the strength and durability of their products. Columbias advertising

Often have young people wearing their footwear and apparels. Columbia also sponsor events like the Mt. Baker Slalom snowboarding competition, the World Superpipe Championships; and the Ski Mountaineering Competition in Korea in which young extreme sport profession all over the world participate in. 4. On page 512, LEGO Internet Exercise, answer questions two and three only. Each question is worth 5 points. (10 points)

D. What target audience is LEGO attempting to reach through its website. LEGOs target audience are families with children ages 0-12 and older, which are sorted by age. The target audience is males and females age ranges from 0-2, 3-4, 5-6, 7-8, 9-11 and 12 years and older. These target audiences are in different developmental stages, some are just learning to walk, talk, read, write and some just learning social skills. Education and learning is very important to this audience. Creativity play and exploring are activities this audience takes part in. They come from lower class to upper class families. Cereal, milk, juice and soda are snacks of choice for this audience. Food choices will differ depending on age group. A. Identify the advertising objectives LEGO is attempting to achieve through its website? Lego is a global company with products in 131 countries. USA is the largest market of toys in the world. Legos advertising objectives are to increase market share in the US. In the past LEGO has increased its market share to five percent and believes it gain a larger percentage of the US market in the upcoming years. LEGO is also seeing an increased market share in Eastern Europe and plans to gain a stronger market position in China, Mexico, Brazil, and India.

5. On page 545, Fraud Forces Sub Club Closing, you are to answer the three questions presented in detail. I am looking for depth in your answers. Each question is worth 5 points. ((15point.) A. What is the major reason for Subway to have the Sub Club? The major reason for Subway to have the Sub Club is to increase sales, which in turns increases profits. Subways frequent-user incentive program is a sales promotion that is used to induce and encourage customers to buy the sub sandwiches. The Sub Club program adds extra value or an incentive for customers to keep purchasing sub sandwiches. Buy a six inch sub and receive a stamp, buy a foot long sub receive and two stamps. After eight stamps, receive a six inch sub for free. Subway uses this program to build loyal customers, but it also assist marketers to generate data that can be used to build desirable customer relationships. Research shows that families that make above $100,000 per year participate in frequent-user-program 93 percent of the time vs. families making $ 50,000 per year only participate only 58 percent of the time. This is relevant promotional data; Subway can use to guide its advertising, and personal selling decisions which are also very important in increasing sales and profits. A. Given that Subway is a large, well established organization with over 21,000 stores, does Sub way need a customer loyalty program like the Sub Club?

Subway has etched its brand of sub sandwiches into Americans lives over the last 25 years. It is very important for Subway to have a customer loyalty program like the Sub Club, because sales promotions can be used to facilitate personal selling, advertising, or both. Advertising through multiple media outlets is what informs customers of a promotion inside the store or online. It is difficult for a business to survive on onetime customers alone. The goal of personal selling is to find prospects, persuade them to buy, and keep customers satisfied. In sales

promotions for Subway, the target market is most likely adults who are concerned about a healthy lifestyle and want to consume a healthy diet. The persuasion to buy; would be the sales personnel at the register who explains the promotion in detail. The satisfaction component of the personal selling process is the great taste of the sandwich; consuming a healthy diet and the incentive to get something for free if they keep patronizing the business. This can lead to word of mouth advertising and keep people coming back to buy subs. This form of sales promotion can lead to increased sale and profits. A. If Subway wanted to restart the Sub Club, what recommendation would you make to avoid the problem that led to the club being closed? The Sub Club program can be restarted and have greater success if Subway takes the physical aspects of the customers taking a stamp out of the business, by adding an electronic data base. The data base will keep up with customers purchases and alert the teller when customers are ready for a free six inch sub. The data base can be connected to special loyal Subway customer website that allows the customer to monitor purchases online. Each customer can be given a log-on identification and pass word. Cell phone technology with internet capability would make this a very capable program and would allow customers to check their purchases online at the register.