University of Santo Tomas

College of Commerce and Business Administration

MM5710 - Distribution Management

Chapter 6: Selection of Channel Partners

Market Factor is one of the selection partner criteria wherein it involves the product’s current market structure. The
buying-selling process, consumer location and preferences, existence or proportion of industrial or organizational
buyers etc., are involved in this.
Product Factor is One of the selection partner criteria wherein the features of the product define the physical
properties, technical or technological aspects, life cycles, consumer perceptions, market position etc.
Channel Factor is one of the selection partner criteria wherein the features include financial credibility of channel
members, product promotion, capabilities of channel members, selling abilities, after-sales service abilities
(whenever applicable) and finally, willingness or ability of particular channel members.
Evaluation is done mostly on a monthly or quarterly basis, the monthly basis being preferred and are recommended
with standards, tasks and targets.
Control keeps the operation on the right path. It also prevents them from breaking the norms or standards that have
been decided upon.
Contract is a conventional method of controlling functioning or operations in a written form.
Budgeting & Reporting is how a contract or agreement is applied as an instrument of control.
Distribution Audit is an instrument of control wherein it can find flaws in operations or shortfalls in results.

Chapter 7: Target Markets and Channel Design Strategy

Market Geography refers to the geographical extent of markets and where they are located.
Market Density refers to the number of buyers or potential buyers in a given market.
Market Size refers to the number of buyers or potential buyers per unit of geographical area.
Efficient Congestion refers to congested, high-density, markets can promote efficiency in the performance of
several basic distribution tasks.
Buying Centers is a set of people who participate in industrial buying decisions & who are responsible for the
consequences resulting from those decisions.
Users are members of the organization that initiate the buying proposal and help define the product specifications.
Influencers often help define specifications and also provide information for evaluating alternatives.
Deciders are people that have the power to decide on product requirements and/or on suppliers.
Approvers are people that must authorize the proposed actions of deciders or buyers.
Buyers are people with formal authority for selecting the supplier and arranging the terms of purchase.
Gatekeepers are people who have the power to prevent sellers or information from reaching members of the buying
center.

Chapter 8: Product Issues in Channel Management

Encouraging Member Input is the solicit ideas for new products gather feedback on product size or packaging
solicit feedback during test-marketing or commercialization phase.
Member Acceptance of New Products is how the product will sell whether product is easy to stock and display
whether the product will be profitable.
Adding Products to the Assortments defines existing channel members view the new product as appropriate to
add to their assortments? Will channel members feel competent to handle the new product?
Product Life cycle is a model for describing the states through which a product pass.
Introduction Stage of the cycle could be the most expensive for a company launching a new product.
Growth Stage is typically characterized by a strong growth in sales and profits, and because the company can start
to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will
increase.
Decline Stage in product cycle the aim for the manufacturer is to maintain the market share they have built up. This
is the competitive time for most products and businesses.
Product Position Strategy is a strategy that considers interface between positioning and display and sell sight
before strategy is implemented elicit retailer support before strategy is implemented.

UST College of Commerce and Business Administration

MM5710 -Distribution Management (Reviewer)
 University of Santo Tomas
College of Commerce and Business Administration
MM5710 - Distribution Management
Trading up and Trading down is a strategy wherein adding lower priced products or product lines, or higher products
or product lines to a product mix.
Product Brand Strategy is a strategy that does not sell both national and private brand versions of products to the
same channel members.
Product Service Strategy is a strategy wherein the manufacturer should provide after-sale service by offering it
directly at the factory.

Chapter 9: Pricing Issues

Each efficient reseller must obtain unit profit margins in excess of unit operating costs.
Each class of reseller margins should vary in rough proportion to the cost of the functions the reseller
performs.
At all points in the vertical chain (channel levels), prices charged must be in line with those charged for
comparable rival brands.
Special distribution arrangements wherein variations in functions performed or departures from the usual
flow of merchandise and should be accompanied by corresponding variations in financial arrangements.
Margins allowed to any type of reseller must conform to the conventional percentage norms unless a very
strong case can be made for departing from the norms.
Variations in margins on individual models and styles of a line are permissible and expected. They must,
however, vary around the conventional margin for the trade.
A price structure should contain offerings at the chief price points, where such price points exist.
A manufacturer’s price structure must reflect variations in the attractiveness of individual product
offerings.
Diverting occurs when unauthorized members of a channel buy/sell excess merchandise flows through
unauthorized channels to/from authorized members.
Free riding occurs when customers seek product information et. from full-service firms and then purchase
from a limited-service discounter or over the internet.
Gray Marketing occurs when branded merchandise flows through unauthorized channels that cross
national boundaries.

Chapter 10: Logistics & Channel Management

Supply Chain Management it is the management of the flow of goods and services and includes all
processes that transform raw materials into final products.
System Concept refers to various factors involved in the logistical process and the interrelationships
among them. Such factors include transportation, materials handling, inventory control, warehousing, and
packaging of goods.
Total cost approach is the management attempts to minimize the cost of using the components taken as a
whole.
Transportation is the most fundamental and obviously necessary component of any logistics system. The
overriding issue facing the firm is choosing the optimum mode of transportation to meet customer service
demands.
Materials handling encompasses the range of activities and equipment involved in the placement and
movement of products in storage areas.
Order Processing is the time between when an order is placed & when it is received by the customer.
Warehousing is the process of storing goods until they're ready for transport to retailers, distributors or
customers. Businesses can benefit from warehousing in several ways, including more efficiently managing
inventory and optimizing the shipment process
Effective packaging can help reduce inventory carrying costs by reducing product damage.
Logistics management is a component that holds the supply chain together.

UST College of Commerce and Business Administration

MM5710 -Distribution Management (Reviewer)