Which of the following statements about the choice of distribution strategy is true?
A) The longer a channel, the greater the aggregate markup, and the higher the price that consumers are charged for the final product.
B) If price is an important competitive weapon and if the firm does not want to see its profit margins squeezed, other things being equal, the firm would prefer to use a longer channel.
C) The shorter a channel, the greater the aggregate markup, and the higher the price that consumers are charged for the final product.
D) An international business must use shorter channels in countries where the retail sector is fragmented and longer channels in countries where the retail sector is concentrated.

Question

Quizplus · Accepted Answer

Because each intermediary in a channel adds its own markup to the products, there is generally a critical link between channel length, the final selling price, and the firm's profit margin. The longer a channel, the greater the aggregate markup, and the higher the price that consumers are charged for the final product. To ensure that prices do not get too high as a result of markups by multiple intermediaries, a firm might be forced to operate with lower profit margins.

Which of the Following Statements About the Choice of Distribution