WORKSHOP DISTRIBUTION CHANNELS FP AA 4 E 2

Remember there are adjustments in order to make the work more meaningful and
understandable for you!
1. Read the material DISTRIBUTION CHANNELS and answer the following questions:

a. What is a distribution channel?

b. What are the distribution channel criteria based on?
c. Explain the following terms in Spanish:

• Producer
• Wholesaler
• Retailer
• Consumer
• Intermediary

2. Read the following conversation between Susan and Mr. White. Then, decide if the statements are true (T), false (F),
or unknown (U).

Susan: Good morning Mr. White.

Mr. White: Good morning, Ms. Susan. Can we start the meeting?
Susan: Of course, Mr. White. I have the options on the board.

Mr. White: That’s good. Remember, we need to choose the most suitable distribution strategy for our products.

Susan: We have three strategies: Intensive, exclusive, and selective. Intensive strategy pretends to reach the largest
possible number of POS (Point of Sale), but unfortunately, it’s difficult to control. That’s because we would have to
deal with many intermediaries.

Mr. White: What about the exclusive strategy?

Susan: It’s different from the first one. Only it’s necessary one POS by each geographic area, no matter if it’s retailer
or wholesaler.

Mr. White: Sounds good to me. And the last one?

Susan: Well, it is the selective strategy. It is the intermediate strategy between the other ones.

Mr. White: I don’t know. I like the first one, but I don’t know how profitable it is. Hhhhmmm, well. What do you
think?

Susan: Well, I consider that the selective strategy is the best.

Mr. White: You’re right. Well done.

 Susan: Thanks, Mr. White.

a. The Company product is a cake.

T ( ) F ( ) U( )

b. The meeting objective is to choose the product’s price.

T()F()U( )

c. Susan proposes three distribution strategies.

T()F()U( )

d. The selective strategy pretends to reach many POS.

T()F()U( )

e. The exclusive strategy is difficult to control.

T()F()U( )

f. Mr. White chooses the intensive strategy.

T()F()U( )

3. Read the following text called Economic aspects – understanding of channel emergence and do exercise a.

Economic reasons are the foremost determinant of channel structure. The emergence of the wide
variety of intermediaries can be explained in terms of four logically related steps in an economic process:

• Intermediaries can increase the efficiency of the process of exchange,

• They align the quantities and assortments produced with the quantities and assortments consumed,
• They make transactions routine, and
• They facilitate the searching process.

Dependence and cooperation

Each member of a distribution channel is dependent upon the behavior of other channel members.
Four different approaches have been used to assess dependence levels in channel relationships:

• The ‘sales and profit’ approach, which postulates that the larger the percentage of sales and profit
contributed by the source firm, the greater the target’s dependence on the source.

• The ‘role performance’ approach, which assesses the firm’s role performance in carrying out its role
in relation to another company down or up the channel.
 • The ‘specific assets –offsetting investment’ approach, which maintains that offsetting investments
help to safeguard the target company against opportunism by the source.

• The ‘trust’ approach, in which a long-term relationship is built on the extent to which companies
trust one another.

a. Explain the following terms in Spanish. Remember to keep in mind the context the vocabulary is in.

• Approach
• Assets
• Offsetting investment
• Assortment