Marketing Channels and Distribution: Retailing, Wholesaling and Logistics Basics Questions

Question 1

Define channel of distribution.

Accepted Answer

A channel of distribution is the path of intermediaries through which goods move from producer to final consumer.

Question 2

What is a wholesaler?

Accepted Answer

A wholesaler buys goods in bulk from producers and sells them in smaller lots to retailers or business buyers.

Question 3

What is retailing?

Accepted Answer

Retailing is selling goods directly to the final consumer for personal use.

Question 4

State one function of logistics.

Accepted Answer

Transportation of goods is a key logistics function.

Question 5

What is a direct channel?

Accepted Answer

A direct (0-level) channel is Producer → Consumer without intermediaries.

Question 6

What is channel conflict?

Accepted Answer

Channel conflict is disagreement among channel members due to clash of goals or roles.

Question 7

Explain functions performed by channel members (any three).

Accepted Answer

Channel members perform important functions. Any three are:

1) Physical distribution: storing and transporting goods to make them available.
2) Financing and credit: wholesalers/retailers provide credit and support cash flow.
3) Risk bearing: holding inventory involves risk of damage, theft and obsolescence.

Other functions include promotion, negotiation, ordering and market information collection.

Question 8

Describe different levels of distribution channels with examples.

Accepted Answer

Channel levels depend on number of intermediaries:

1) 0-level (Direct): Producer → Consumer (brand website selling direct).
2) 1-level: Producer → Retailer → Consumer (supermarket).
3) 2-level: Producer → Wholesaler → Retailer → Consumer (common FMCG distribution).
4) 3-level: Producer → Agent → Wholesaler → Retailer → Consumer (agent coordinates distribution).

Choice depends on product, market size and company resources.

Question 9

Explain factors affecting channel choice (any three).

Accepted Answer

Factors affecting channel choice (any three):

1) Product factors: perishability, complexity, need for service (perishable goods need shorter channels).
2) Market factors: customer concentration, order size, buying habits (scattered customers need intermediaries).
3) Company factors: resources, desired control, brand image (big firms may sell direct).

Other factors include competition, technology (e-commerce) and legal environment.

Question 10

Explain wholesaling and its functions (any three).

Accepted Answer

Wholesaling means selling goods in bulk to retailers or business buyers. Functions (any three):
1) Breaking bulk: buy in large quantities and sell in small lots.
2) Warehousing: storage to ensure continuous supply.
3) Financing/credit: provide credit to retailers.

Wholesalers also bear risk and provide market information to producers.

Question 11

Explain retailing and its functions (any three).

Accepted Answer

Retailing is selling goods directly to final consumers. Functions (any three):
1) Assortment: provides variety of brands and products.
2) Customer service: guidance, information, handling complaints/returns.
3) Promotion and display: attractive display and local advertising at point of sale.

Retailers are the final link and influence customer experience strongly.

Question 12

Explain logistics/physical distribution and mention key activities.

Accepted Answer

Logistics (physical distribution) is planning and controlling the flow and storage of goods from origin to consumption efficiently.

Key activities include: transportation, warehousing, inventory management, order processing, packaging and material handling.

Objective is to deliver the right product, at the right place and time, in right condition at minimum cost.

Question 13

Explain channels of distribution and discuss their importance in marketing (exam-style).

Accepted Answer

Channels of distribution are the routes through which goods move from producer to consumer, involving intermediaries like agents, wholesalers and retailers.

Types/levels of channels:
- Direct (0-level): Producer → Consumer
- 1-level: Producer → Retailer → Consumer
- 2-level: Producer → Wholesaler → Retailer → Consumer
- 3-level: Producer → Agent → Wholesaler → Retailer → Consumer

Importance of channels (exam points):
1) Availability and convenience: customers get product where and when they need it.
2) Reduction in transaction cost: producer cannot reach all customers directly; intermediaries reduce cost and effort.
3) Creation of utility: time, place and possession utility through storage and delivery.
4) Assortment and breaking bulk: channels provide variety and small lot purchases.
5) Promotion and information: retailers/wholesalers support display, local promotion and feedback to producers.
6) Financing and risk taking: credit and inventory risk are handled by channel members.

Thus, channels are essential for efficient marketing and customer satisfaction.

Question 14

Discuss wholesaling and retailing. Compare their functions and explain how they help producers and consumers.

Accepted Answer

Wholesaling and retailing are key intermediaries in distribution.

Wholesaler (bulk to retailers):
- Buys in bulk and sells in small lots (breaking bulk).
- Warehousing and storage; ensures steady supply.
- Financing/credit to retailers and risk bearing.
- Provides market information to producers (demand trends).

Retailer (to final consumer):
- Sells in small quantities to consumers.
- Provides assortment of brands and convenience (nearby/online).
- Customer service: information, demonstration, returns/complaints.
- Promotion and display at point of sale.

Comparison (short): wholesalers serve retailers/business buyers; retailers serve final consumers.

How they help:
- Producers: wider market coverage, reduced selling effort, faster distribution.
- Consumers: availability, variety, smaller quantities, and service support.

Therefore, both wholesalers and retailers are essential for efficient distribution and customer satisfaction.

Question 15

Explain logistics management and describe key logistics decisions (inventory, warehousing, transportation, order processing).

Accepted Answer

Logistics management means planning, implementing and controlling the efficient flow and storage of goods, services and related information from origin to consumption to satisfy customer needs at minimum cost.

Key logistics decisions:
1) Inventory management
- Decide stock levels to avoid stock-outs while reducing carrying cost (storage, insurance, interest).
- Use reorder levels and forecasting to balance cost vs service level.

2) Warehousing
- Decide number and location of warehouses.
- More warehouses improve delivery speed but increase cost; fewer reduce cost but may delay delivery.

3) Transportation
- Select mode (road/rail/air/sea) based on cost, speed, reliability and product nature (perishable/high value).
- Transport impacts delivery time and distribution cost.

4) Order processing
- Accurate and fast order processing improves customer satisfaction and reduces delays/returns.

Overall objective: right product, right place, right time, right condition, right cost. Efficient logistics becomes a competitive advantage.

Marketing Channels and Distribution: Retailing, Wholesaling and Logistics Basics

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