Caterpillar Chapter 12

Chapter 12

Marketing Channels and Supply Chain Management

Individual Assignment

1. Read the opening vignette to the chapter. Think about the answers to the following questions:
1. What appears to be Caterpillar’s primary distribution strategy?
2. Why are dealers important to Caterpillar?
3. How is service linked to distribution in the industrial equipment industry?
4. How have Caterpillar’s dealers attempted to build a strong customer relationship?
5. What are the basic principles used by Caterpillar to establish strong partnerships? Which of these do you think is most important? Explain.
6. What recommendations would you suggest to Caterpillar for the future?

Share your findings with the class.

Think-Pair-Share

1. Consider the following questions, formulate an answer, pair with the student on your right, share your thoughts with one another, and respond to questions from the instructor.
1. Are marketing channel decisions are among the most important decisions that management faces? Explain.
2. Why are marketing intermediaries used? Explain.
3. What is a distribution channel?
4. What do you think is the most important distribution channel function? Explain.
5. What is a direct marketing channel? An indirect channel?
6. What is channel conflict and how does it occur? What is generally the remedy to channel conflict?
7. What are the advantages to a vertical marketing system? What are the types? Describe each.
8. Characterize the different types of franchise organization.
9. How is a horizontal marketing system different from a vertical marketing system?
10. What is disintermediation? How might it be brought on? What role does it have to play in e-commerce or on the Internet?
11. What is a channel objective?
12. Characterize the three different forms of marketing intermediaries.
13. How can channel members be motivated?
14. What public policy acts affect distribution?
15. Characterize the major logistics functions.
16. What is integrated logistics management?
17. When should third-party logistics be used?

Outside Example

A leading industrial conglomerate has an excellent reputation for delivering a high-quality material for a largely indoor household application. Its research labs have found a way to extend this technology to an exterior application and have proven the concept in a few instances. Now it wants to launch the technology into this new market, and has asked you to help them.

The very first decision is their value delivery network. For the indoor applications, they supply material to value-added distributors, who take that material and turn it into the finished product. It then goes to general contractors, who actually install it in consumer’s homes and some businesses.  The company is not yet sure that their current distributors will have a role to play in this new application, but they also don’t want to just walk away from them in this new application. They feel like their distributors have been good to them, so they should return the favor. And some of the distributors have already helped them out in getting the few installations they do have.

Through answering the questions below, help them diagram their new value chain. You may need to pull in knowledge you gained in previous chapters to answer these questions effectively.

1. How might a channel partner help them get to market? Think about the role the intermediary could play as described in the text.
2. How would you reduce and/or eliminate channel conflict if the company elects to not use the current distributor network?


3. Because this is a market they’ve not sold to before, how would you go about analyzing customer needs?
4. Would you recommend intensive, exclusive, or selective distribution for this market?