Marketing Midterm

MKT 404

Midterm Exam

1.

        Distribution channel is a chain of intermediaries through which products or services reach its end costumers. The distribution channel includes shopping websites, retailers, wholesalers and traditional distributors.

Exclusive distribution- the suppliers make agreement with few retailers in specific geographic area to sell goods and services. This channel stimulates both retailers and suppliers to work together to sustain image, allot profits and expenses. The specific brand lines are limited and the long run total sales are limited as well.

Intensive distribution- suppliers sell goods to as many retailers as possible. The channel faces huge competition and retailers use various strategies, which may not be beneficial for individual suppliers. Retailers designate little space to particular brand and set very high prices. Products are usually not advertised. (p8)

2.

Retailers should give special attention to its core customers because:

• They generate revenues
• Word of mouth publicity to the company
• Valuable feedback, which helps make essential changes
• Help the company achieve desired objectives and goals

The company can address core customers by providing good shopping experience. Loyalty programs are also very effective, because people like to get benefits. (p 30)

3.

Retail strategy is the overall promotional plan directing a company that influences its commercial activities and response to market forces including the economy and competition.

Thorough and well-integrated market strategy would enable the small retailers to discover new market opportunities and provides them with a competitive advantage. It also helps to overcome difficult situations through well-coordinated activities as well as define the target audience and implement consistent growth. Comprehensive and well-coordinated retail strategy helps to increase the growth and profitability of small retailers. In absence of an effective retail strategy, retailers could not coordinate their employees. It would result in the conflict of roles and responsibilities. The growth and sustainability of retailers would also be affected. (p 69)

4.

Forms of ownership:

• Independent ownership- completely owned by a sole proprietor, where he is responsible for all business activities. The main advantage of independent ownership is that expenses could be controlled as per budget and almost always has a good image among customers.
• Chain ownership- multiple retail stores under common ownership. All of the stores are under centralized management with all the necessary decision made at the main store. Negotiating power, comprehensive function efficiencies, management and long run planning are the advantages of the chain ownership. However the disadvantages are inflexibility, condensed control and partial freedom for decisions.
• Franchising- is a pre-determined contract connecting franchisee and franchisor. It is a permission to operate the same business at a different location. It is easy to gain profits from a franchise because the company is already established and known.
• Leased department- is a type of a retail store rented or leased by a third party where the owner is responsible for the business activities.
• Vertical Marketing System- generally owned by manufacturer, retailer or a wholesaler. Typically have lower costs, direct contact with customers and good bargaining power.
• Consumer cooperative stores- possessed by groups of consumers where people invest, receive stocks, appoint staff and manage operations. (p 93)

5.

        Wheel of retailing- as a low-end retailer upgrades its strategy to increase sales and profit margins, a new discounter takes its place.

        New retailers often enter the market place with low prices, margins, and status. The low prices are usually the result of some innovative cost- cutting procedures and soon attract competitors. With the passage of time, these businesses strive to broaden their customer base and increase sales. Their operations and facilities increase and become more expensive. They may move to better up market locations, start carrying higher quality products or add services and ultimately emerge as a high cost price service retailer. By this time newer competitors as low price, low margin, low status emerge and these competitors too follow the same evolutionary process. The wheel keeps on turning and department stories, supermarkets, and mass merchandise went through this cycles.