Directed Study in Marketing 2

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WK4 Questions/Problems – Chapters 10, 11 & 12
October 30, 2012

Chapter 10

6. Insurance agents are intermediaries who help other members channel by providing information and handling the selling function. Does it make sense for an insurance agent to specialize and work exclusively with one insurance provider? Why or why not?

Insurance intermediaries enable the placement and purchase of insurance and deliver services to insurance companies and consumers that supplement the insurance placement process. Traditionally, insurance intermediaries have been viewed as either insurance agents or brokers. The difference between agents and brokers relates directly to the way they operate in the marketplace.

Insurance agents are generally, licensed to conduct business on behalf of insurance companies. Agents act in the interest of the insurer in the insurance process and generally function under the terms of an agency agreement with the insurer. In some markets, agents are “independent brokers” and work with more than one insurance company (commonly a small number of companies); in others, agents operate exclusively – either representing a single insurance company in one geographic area or selling only one line of business for several insurance companies.

8. Give an example of a producer that uses two or more different channels of distribution. Briefly discuss what problems this might cause.

Delivery of products and services takes place via the use of channels. Channels are groups of mutually supporting organizations called intermediaries, who are involved in making the product available to consumers and in many cases, servicing those customers. Retailers are intermediaries that buy and then resell the products.

An organization can set up any number of channels. Channels are organized by the number of intermediaries between producer and consumer. A level one channel has a single intermediary. This flow is typically from manufacturer to retailer to consumer.

My husband and I used to own three mobile phone distributorships. One of the lines we sold was NEXTEL. This was when it was new to the North Alabama market and we were the first to offer this “push to talk” product. We were only one of the channels NEXTEL Corporate used for distribution. NEXTEL also had a regional direct sales force, several NEXTEL direct stores and the company also sold its product on the Internet. Over time, this became a serious issue because NEXTEL started opening company stores in the same general location as our stores. They also allowed competitor distributorships to locate within a few miles of our store. Eventually, we had to close our locations because the market became saturated.

10. Find an example of vertical integration within your city. Are there any particular advantages to this vertical integration? If so, what are they? If there are no such advantages, how do you explain the integration?

When an organization increases its business into areas that are at different points on the same production track, such as when a manufacturer like Motorola owns its supplier and/or distributor. Vertical integration can help companies reduce costs and improve efficiency by decreasing transportation expenses and reducing turnaround time, among many other advantages. It’s funny, I feel like I have done a little of everything. I guess at my age, it is very possible. Anyway, in the 90s, I actually worked for Motorola for about 5 years. This is a company that routinely operated in vertical integration as it had Motorola stores where consumers could go in and purchase its products in the same city.

Chapter 11

3. Briefly describe a purchase you made where the customer service level had an effect on the product you selected or where you purchased it.

Chegg.com! I love this on-line company! They make it so easy for me to purchase/rent my text books and be able to return them absolutely hassle free! When I...
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