Answer to Question 1
Forward buying occurs when retailers purchase enough products on one deal to carry them over until the manufacturer's next regularly scheduled deal. Diverting occurs when a manufacturer restricts a deal to a limited geographical area rather than making it available nationally, but retailers take advantage of the opportunity by buying abnormally large quantities at the deal price and then selling off, at a small profit margin, the excess quantities through food brokers in other geographical areas.
It may appear that these practices benefit all parities to the marketing process, but this is not the case. First, a substantial portion of retailers' savings are not passed on to consumers. Second, these practices lead to increased distribution costs because of greater carrying charges in holding inventories of large quantities of forward-bought items or, in the case of diverting, product quality potentially suffers due to delays in getting products from manufacturers to retail shelves and the risk of tampering increases. Third, manufacturers experience reduced margins due to the price discounts they offer as well as the increased costs they incur.
Answer to Question 2
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