Remedying a Cost Disadvantage Associated with Activities Performed by Forward

question 101

Multiple Choice

Remedying a cost disadvantage associated with activities performed by forward channel partners (wholesale distributors and retail dealers) would not involve

• A)changing to a more economical distribution strategy such as putting more emphasis on cheaper distribution channels (perhaps direct sales via the Internet)or perhaps integrating forward into company-owned retail outlets.
• B)enhancing differentiation through activities such as cooperative advertising at the forward end of the value chain.
• C)pressuring distributors/dealers and other forward channel allies to reduce their costs and markups.
• D)insisting on across-the-board cost cuts in all value chain activities-those performed by suppliers, those performed in-house, and those performed by distributors/dealers.
• E)collaborating with forward channel allies to identify win-win opportunities to reduce costs.

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Definitions:

Income Effect

The income effect describes the change in an individual's or economy's income and how that change will affect the quantity demanded of a good or service.

Normal Good

A type of good for which demand increases as the income of the consumer increases, holding all else constant.

Wealth Effect

The change in spending and consumption patterns by individuals or households due to changes in their real or perceived wealth.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute away from more expensive goods towards cheaper ones.