MKTG 437 EXAM 1 QUESTIONS AND
ANSWERS
Disintermediation - Correct Answers -DTC: direct-to-consumer distribution
Channel system parties - Correct Answers -The organizations and individuals that make
a product or service available to consumers
Brokers/Agents- help connect buyers and sellers
Wholesalers/Distributors- buy in bulk from manufacturers and resell in smaller lots
Franchisees- Independent operators licensed to sell under a parent company's brand
and system
Retailers
Channel captain - Correct Answers -The entity who manages the distributionchannel
Often, it's the brand (most important...)
Producers/manufacturers' role in distribution - Correct Answers -Maintain ownership of
product
Holds on to the product (until it travels to the next channel member)
Negotiates with buyers
Wholesalers' role in distribution - Correct Answers -sells to other channelintermediaries
(e.g. retailers)
Retailers' role in distribution - Correct Answers -Many different forms: department
stores, mass merchandisers, hypermarkets, specialty stores, category killers,
convenience stores, franchises, buying clubs, warehouse clubs, direct retailers...
Retailer - sells to consumer end-users(sometimes also B2B)
Cost-side positioning - Correct Answers -Choosing margin vs. turnover
Margins - Correct Answers -how much money you make on each unit sold
Turnover - Correct Answers -how fast products sell (the speed of sales)
How to measure Profitability - Correct Answers -Strategic profit model (SPM):
(margins x asset turnover) x leverage
, Leverage - Correct Answers -Financial concept: how much profit generated with net
worth (e.g. bootstrapped company vs. loans; size)
How to increase asset turnover - Correct Answers --GMROI: Gross margin return on
inventory investment
-GMROL: Gross margin return on labor
-GMROS: Gross margin return on space
GMROI - Correct Answers -"how much profit do you generate with the inventory you
have?"
GMROL - Correct Answers -"how much profit do you generate with your employees?"
GMROS - Correct Answers -"how much profit do you generate with your store size?" (or
shelf space, or area for theproduct category, etc.
SKUs - Correct Answers -Stock Keeping Units
unique, internally-generated identification codes assigned to each product variation a
retailer sells to track inventory, manage stock levels, and streamline fulfillment
Cost-side vs Demand-side Positioning - Correct Answers -Cost-side positioning focuses
on internal factors like operational efficiency and cost control to offer competitive pricing
and value
Demand-side positioning analyzes and responds to external customer needs,
preferences, and willingness to pay to develop differentiated products and services that
create value for the target market
Bulk-breaking (demand-side positioning) - Correct Answers -Traditional, service-
oriented retailers buy in large quantities and offer the consumer exactly the quantity
they want
Other retailers such as warehouse stores (e.g., Costco), offer consumers a lower price
but require them to buy larger lot sizes (i.e., break bulk less)
Spatial convenience - Correct Answers -Effort and location
Ex. Walgreen's drug and convenience store chain purposefully seeks out locations that
are conveniently on consumers' usual shopping paths
Waiting and delivery time - Correct Answers -Consumers differ in their willingness to
tolerate out-of-stock situations when they shop
Customer service - Correct Answers -Sales, general, and administrative (SG&A)
expenses for retailers must include the cost of keeping salespeople on the floor to help
shoppers.
ANSWERS
Disintermediation - Correct Answers -DTC: direct-to-consumer distribution
Channel system parties - Correct Answers -The organizations and individuals that make
a product or service available to consumers
Brokers/Agents- help connect buyers and sellers
Wholesalers/Distributors- buy in bulk from manufacturers and resell in smaller lots
Franchisees- Independent operators licensed to sell under a parent company's brand
and system
Retailers
Channel captain - Correct Answers -The entity who manages the distributionchannel
Often, it's the brand (most important...)
Producers/manufacturers' role in distribution - Correct Answers -Maintain ownership of
product
Holds on to the product (until it travels to the next channel member)
Negotiates with buyers
Wholesalers' role in distribution - Correct Answers -sells to other channelintermediaries
(e.g. retailers)
Retailers' role in distribution - Correct Answers -Many different forms: department
stores, mass merchandisers, hypermarkets, specialty stores, category killers,
convenience stores, franchises, buying clubs, warehouse clubs, direct retailers...
Retailer - sells to consumer end-users(sometimes also B2B)
Cost-side positioning - Correct Answers -Choosing margin vs. turnover
Margins - Correct Answers -how much money you make on each unit sold
Turnover - Correct Answers -how fast products sell (the speed of sales)
How to measure Profitability - Correct Answers -Strategic profit model (SPM):
(margins x asset turnover) x leverage
, Leverage - Correct Answers -Financial concept: how much profit generated with net
worth (e.g. bootstrapped company vs. loans; size)
How to increase asset turnover - Correct Answers --GMROI: Gross margin return on
inventory investment
-GMROL: Gross margin return on labor
-GMROS: Gross margin return on space
GMROI - Correct Answers -"how much profit do you generate with the inventory you
have?"
GMROL - Correct Answers -"how much profit do you generate with your employees?"
GMROS - Correct Answers -"how much profit do you generate with your store size?" (or
shelf space, or area for theproduct category, etc.
SKUs - Correct Answers -Stock Keeping Units
unique, internally-generated identification codes assigned to each product variation a
retailer sells to track inventory, manage stock levels, and streamline fulfillment
Cost-side vs Demand-side Positioning - Correct Answers -Cost-side positioning focuses
on internal factors like operational efficiency and cost control to offer competitive pricing
and value
Demand-side positioning analyzes and responds to external customer needs,
preferences, and willingness to pay to develop differentiated products and services that
create value for the target market
Bulk-breaking (demand-side positioning) - Correct Answers -Traditional, service-
oriented retailers buy in large quantities and offer the consumer exactly the quantity
they want
Other retailers such as warehouse stores (e.g., Costco), offer consumers a lower price
but require them to buy larger lot sizes (i.e., break bulk less)
Spatial convenience - Correct Answers -Effort and location
Ex. Walgreen's drug and convenience store chain purposefully seeks out locations that
are conveniently on consumers' usual shopping paths
Waiting and delivery time - Correct Answers -Consumers differ in their willingness to
tolerate out-of-stock situations when they shop
Customer service - Correct Answers -Sales, general, and administrative (SG&A)
expenses for retailers must include the cost of keeping salespeople on the floor to help
shoppers.
