QUESTION 1:

(A) Describe how the necessary channel flow performance differs when selling and servicing an ultrasound machine (a piece of medical equipment) when targeting two different segments of buyers: (a) a hospital emergency room, and (b) an academic medical researcher on a tight government-funded budget, using the machine for laboratory research.

(B) If a consumer buys an item through a catalog over the phone with a credit card, is the credit card company a channel member? If the product is delivered by Federal Express, is Fed Ex a channel member? If yes, what flows do they perform?

QUESTION 2:

(A) A number of companies seem to cycle in and out of vertical integration. For example, Apple Computers moves in and out of having its own store network versus relying on third parties. What might be behind cyclical vertical integration?

(B) The typical Peapod shopper fits a demographic profile of relatively high income. But there are many grocery shoppers who value spatial convenience and quick delivery with broad assortment just as much as the current Peapod shopper does, except that their incomes are too low to pay Peapod delivery rates.

(i) Should these shoppers be a target segment for Peapod? (5 marks) (ii) If Peapod decided to target these shoppers, what would be the implications for its provision of service outputs to the market?