Deck 9: Marketing Channels and Channel Mapping

Question 1

A direct marketing channel produces higher margins than an indirect channel,but the business must bear the cost of channel management and all marketing and sales expenses.

Answer 1

True

Question 2

Customers who make small purchases are usually profitably served with a direct channel system.

Answer 2

False

Question 3

Which of the following is an operational component of marketing channel performance?

A)product assortment
B)sales revenue
C)service quality
D)customer value
E)profitability

Answer 3

C

Question 4

As an operational component of channel performance,customer reach refers to ________.

A)cost to serve
B)volume
C)operating efficiency
D)service quality
E)retention

Question 5

Marketing channels make it possible for target customers to buy the product at their desired points of purchase.

Question 6

For the consumer market,marketing channels include direct channels as well as indirect channels.

Question 7

Businesses exercise greater control over service quality when they use direct marketing channels to market their goods.

Question 8

Marketing channel performance is evaluated based on the operational components of ________.

A)customer reach,operating efficiency,and service quality
B)customer value,sales revenues,and profitability
C)return on sales,brand image,and sales margin
D)product quality,product assortment,and product form
E)product costs,branding strategy,and customer loyalty

Question 9

The net price a business can derive from the use of indirect marketing channels is much higher than that with other channel types.

Question 10

VARs and OEMs operate in the consumer market but not in the business-to-business market.

Question 11

Every marketing channel is basically the same in its cost structure and its customer reach.

Question 12

In indirect channel systems,the business interfaces with customers at all contact points and retains ownership of the product until delivery.

Question 13

Indirect channels are able to achieve the lowest out-of-pocket marketing and sales expenses.

Question 14

A channel system should enhance customer value by increasing customer benefits,lowering customer cost of purchase,or both.

Question 15

The cost of using direct marketing channels is typically higher than that of indirect marketing channels for manufacturers.

Question 16

Marketing channel performance is based on customer reach,operating efficiency,and service quality.

Question 17

TDZ Manufacturing wants to change its distribution system from an indirect channel to a direct channel system.Which of the following should the company use to achieve this?

A)cash-and-carry wholesalers
B)retailers
C)full-function wholesalers
D)traveling sales representatives
E)dealers

Question 18

Compared to a direct marketing channel,an indirect marketing channel has lower margins and also,lower costs of marketing and channel management.

Question 19

Mixed channel systems are unsuitable for marketing specialized and technological products.

Question 20

As an operational component of channel performance,operating efficiency refers to ________.

A)cost to serve
B)volume
C)customer reach
D)return on sales
E)retention

Question 21

In a direct channel marketing system,________.

A)the manufacturer retains title of all products until they are delivered to the customer
B)wholesalers and retailers take ownership of the products for sale
C)the cost of customer sales contact is lower than that in indirect marketing systems
D)the opportunities for sales communication and customer interaction are nonexistent
E)customers who make infrequent,small purchases can be profitably served

Question 22

________ buy components from manufacturers and assemble them to make their own products.

A)Wholesalers
B)Value-added resellers
C)Original equipment manufacturers
D)Sales agents
E)Distributors

Question 23

Which of the following marketing channels has the most potential for expanding customer reach at the lowest cost?

A)telemarketing
B)personal selling
C)trade shows
D)catalog marketing
E)digital marketing

Question 24

Which of the following is true of cash-and-carry wholesalers?

A)They undertake delivery of the product from manufacturer to consumer.
B)They offer a greater variety of services than retailers and dealers.
C)They do not offer credit facilities to customers.
D)They do not take title to the manufacturer's products.
E)They are full-function wholesalers.

Question 25

Which of the following factors determines that a marketing channel is an indirect channel rather than a direct channel?

A)The products are complex and require extensive after-sales service.
B)The products are intended for business-to-business markets rather than consumer markets.
C)At least one marketing intermediary takes ownership of the products and controls distribution.
D)Telemarketing and digital marketing are an integral part of the distribution system.
E)The marketing channel uses one or more intermediaries who are a part of the company.

Question 26

Which of the following is an example of an indirect B2C marketing channel?

A)Wellspring Cosmetics sells its products exclusively through its monthly catalogs,mailed to a subscriber list.
B)GTB Computers uses its own sales force to initiate sales contacts,but uses external local dealers to provide products and after-sales services.
C)Radix Inc. ,a manufacturer of automotive parts,sells its products to a number of automobile companies.
D)More4Less.com buys products from manufacturers and sells them to consumers through its Web site.
E)Apparel retailer UrbanScene elected to close all its brick-and-mortar stores and sell products only through its online storefront.

Question 27

Which of the following statements is true of marketing channels?

A)A direct marketing channel removes a business from the end-user customer.
B)A direct marketing channel offers higher margins than an indirect channel,but the company must bear the cost of marketing expenses.
C)Customers who make small purchases are usually profitably served with a direct channel system.
D)An indirect marketing channel is often expensive,so it limits the number of customers a business can profitably reach.
E)Original equipment manufacturers (OEMs)are part of a direct marketing channel system.

Question 28

Which of the following is the best example of a mixed marketing channel?

A)Wellspring Cosmetics sells its products exclusively through its monthly catalogs,mailed to a subscriber list.
B)GTB Computers uses its own sales force to initiate sales contacts,but uses external local dealers to provide products and after-sales services.
C)Radix Inc. ,a manufacturer of automotive parts,sells its products to a number of automobile companies.
D)More4Less.com buys products from manufacturers and sells them to consumers through its Web site.
E)Apparel retailer UrbanScene elected to close all its brick-and-mortar stores and sell products only through its online storefront.

Question 29

Which of the following is true of an indirect channel system?

A)The business retains ownership of the products until delivered to customers.
B)The cost of indirect customer sales contact is high and increasing.
C)An indirect marketing channel system includes telemarketing and digital marketing.
D)An indirect marketing channel system is particularly important for specialized and technological products.
E)An indirect marketing channel system involves an intermediary that takes over ownership and sales.

Question 30

Which of the following types of marketing intermediaries assumes the selling responsibility for a business and receives a commission when a sale occurs,as part of a direct channel system?

A)retailers
B)brokers
C)wholesalers
D)commercial distributors
E)dealers

Question 31

Why might a business use a combination of direct,indirect,and mixed marketing channel systems?

A)to have total control over the quality of customer service
B)to lower the risk of distributing products to end-users
C)to attain maximum profits at minimum cost
D)to reach different target markets cost effectively and to deliver the service level expected by target customers
E)to comply with legal requirements that limit a business from having too much control over the distribution of products to consumers

Question 32

Which of the following benefits with respect to a customer's service needs and expectations must a business consider to determine if a channel system is viable?

A)product quality
B)product assortment
C)availability/delivery
D)product form
E)image benefits

Question 33

A channel system that accommodates the customers' credit needs,terms of payment,warranty needs,desire for delivery at no charge,and easy return of faulty products is satisfying the quality of ________.

A)transaction services
B)after-sale services
C)availability/delivery
D)product form
E)product assortment

Question 34

A channel system that provides a wide range of products required in order to achieve the desired level of customer appeal is satisfying the product performance factor of ________.

A)quality
B)assortment
C)form
D)delivery
E)after-sale service

Question 35

________ purchase a variety of equipment from several manufacturers and package them as a system.

A)Wholesalers
B)Value-added resellers
C)Brokers
D)Sales agents
E)Distributors

Question 36

In which of the following situations is a business most likely to opt for a direct rather than an indirect marketing channel system for product distribution?

A)The business manufactures products for the consumer market rather than the business market.
B)The business's products are sold in wide markets,and require localized availability of parts and services.
C)The business is new to the market and does not have a network of contacts in place for distribution.
D)The business wants to maintain complete control over its marketing messages and collection of payments for products.
E)The business manufactures a product that people buy on impulse and is generally sold in small quantities.

Question 37

Which of the following is true of marketing using a direct marketing channel system?

A)Direct mail and catalog sales are more labor-intensive than telemarketing,but are more efficient at customer interaction.
B)Using direct salespeople is generally cheaper than using brokers,sales agents,or manufacturer's representatives.
C)Telemarketing provides a better opportunity for a sales communication but is more labor intensive and usually more expensive than direct marketing.
D)Compared to indirect marketing channel systems,direct marketing channel systems maximize the number of customers that a business can profitably reach.
E)Digital marketing channels have a greater customer reach than other channels,but are also more expensive.

Question 38

Pell buys disk drives from Leagate and computer chips from Lentel to incorporate into the computer systems it manufactures.Which company or companies would be considered an original equipment manufacturer (OEM)?

A)Pell
B)Leagate
C)Lentel
D)Leagate and Lentel
E)Pell,Leagate and Lentel

Question 39

Which type of marketing channel allows a manufacturer to have the highest degree of control over service quality?

A)indirect
B)direct
C)intermediate
D)mixed
E)value-added

Question 40

Paterson Inc.is a business that purchases computers,printers,modems,fax machines,software,and telecommunications equipment from several manufacturers and markets them as complete (bundled)customized systems to small businesses to meet their specific needs.What type of channel intermediary is Paterson Inc.?

A)wholesaler
B)value-added reseller
C)original equipment manufacturer
D)sales agent
E)distributor

Question 41

Explain how channel systems build customer value.

Question 42

If there are 20 manufacturers and 500 retailers,and each manufacturer has 15 interactions per year with each retailer at a cost of $200 per transaction,calculate the total number of transactions.

A)100,000 transactions per year
B)150,000 transactions per year
C)200,000 transactions per year
D)250,000 transactions per year
E)300,000 transactions per year

Question 43

15 million transactions are made per year at a total cost of $750 million.Calculate the cost per transaction.

A)$5
B)$50
C)$500
D)$5,000
E)$50,000

Question 44

Once the market share has exceeded the outlet share,the rate of market share growth ________ with further increase in outlet share.

A)becomes zero
B)becomes infinity
C)remains constant
D)increases
E)decreases

Question 45

MINI-CASE
Dow Corning has been a market leader in silicon technology applications for over 50 years.Its products span many market applications in electronics,construction,health care,and a multitude of industrial applications.However,as some of its product-market applications reached the mature stage of the product life cycle,they became less competitive.Dow Corning's full service consultative engineering approach did not work in more mature,price-sensitive market applications.It was also unprofitable for Dow to pursue these customers as they represented a majority of target customers but only represented 20% of the revenue potential for the total market for their products.
Mini-Case Question.In which of the following situations is Dow using a mixed channel system?

A)Instead of using salespeople,Dow uses manufacturer's representatives and brokers,and pays them a commission on every product sold.
B)Retailers take over Dow's sales and point-of-purchase distribution in consumer markets,but distributors or dealers assume this responsibility in B2B markets.
C)Dow uses primarily direct mail and catalog sales to market its products,but also uses telemarketing to target large customers.
D)Dow distributes its products directly to customers in the innovation/technology segment but finds that use of wholesale distributors and dealers are more efficient in reaching the service quality segment.
E)Dow uses manufacturers' representatives,sales agents,and brokers who assume the selling responsibility for the business and receive a commission when a sale occurs,but do not take title to the products.

Question 46

If 30 million transactions are made per year at $15 per transaction,what is the total transaction cost?

A)$450 million
B)$200 million
C)$2 billion
D)$4.5 billion
E)$900 million

Question 47

Calculate the total number of retailers interacting with 120 manufacturers if 10 transactions are made per year.The total number of transactions is 15 million transactions per year.

A)7,900
B)4,800
C)12,500
D)16,500
E)22,000

Question 48

Which of the following is true of direct marketing channels?

A)Direct marketing channels offer the greatest opportunity for sales communication and customer interaction.
B)Direct marketing channels yield very low margins for the manufacturer.
C)Direct marketing channels do not allow the manufacturer control over the sales messages and service quality.
D)Direct marketing channels are most suited for inexpensive products that are bought in low quantities.
E)Direct marketing channels result in the lowest out-of-pocket marketing expenses for the manufacturer.

Question 49

MINI-CASE
Dow Corning has been a market leader in silicon technology applications for over 50 years.Its products span many market applications in electronics,construction,health care,and a multitude of industrial applications.However,as some of its product-market applications reached the mature stage of the product life cycle,they became less competitive.Dow Corning's full service consultative engineering approach did not work in more mature,price-sensitive market applications.It was also unprofitable for Dow to pursue these customers as they represented a majority of target customers but only represented 20% of the revenue potential for the total market for their products.
Mini-Case Question.Dow developed a digital marketing channel for its more price-sensitive customer segment.Which operational component of the channel performance did Dow improve?

A)product quality
B)after-sales service
C)customer reach
D)sales margins
E)net price

Question 50

If there are 20 manufacturers and 500 retailers,and 15 transactions are made per year at a cost of $200 per transaction,calculate the total number of transactions.

A)150,000 transactions per year
B)200,000 transactions per year
C)250,000 transactions per year
D)300,000 transactions per year
E)350,000 transactions per year

Question 51

Identify the operational components of channel performance.Explain how each impacts channel performance,and describe how these factors are influenced by the type of channel system used.

Question 52

If there are 10 manufacturers and 200 retailers,and each manufacturer has 12 interactions per year with each retailer at a cost of $100 per transaction,the total transaction cost of doing business through this channel method is ________.

A)$2,000
B)$24,000
C)$200,000
D)$1,200,000
E)$2,400,000

Question 53

Calculate the total number of transactions made per year if the total transaction cost is $2 billion at $50 per transaction.

A)25 million transactions per year
B)10 million transactions per year
C)100 million transactions per year
D)40 million transactions per year
E)250 million transactions per year

Question 54

MINI-CASE
Dow Corning has been a market leader in silicon technology applications for over 50 years.Its products span many market applications in electronics,construction,health care,and a multitude of industrial applications.However,as some of its product-market applications reached the mature stage of the product life cycle,they became less competitive.Dow Corning's full service consultative engineering approach did not work in more mature,price-sensitive market applications.It was also unprofitable for Dow to pursue these customers as they represented a majority of target customers but only represented 20% of the revenue potential for the total market for their products.
Mini-Case Question.When considering Dow's product offerings,if the channel system can build an image among quality-conscious customers,the company is improving customer value by increasing ________.

A)product assortment
B)after-sale services
C)availability/delivery
D)transaction services
E)brand reputation

Question 55

Which of the following is true of improving cost efficiency of the marketing process?

A)If a business does not make products available at customers' preferred points of purchase,it lowers the cost of the transaction.
B)For undifferentiated products,customers' transaction costs are high even when availability is unrestricted.
C)The more undifferentiated a product is,the greater its perceived value.
D)Customer value can be increased by lowering the cost of reaching customers.
E)The general assumption is that the more intermediaries a channel system has,the lower the total cost of purchase.

Question 56

Calculate the number of transactions made per year if a total of 20 million transactions are made in a year by 40 manufacturers and 4,000 retailers.

A)250
B)125
C)75
D)50
E)175

Question 57

Office Services Inc.uses a direct sales force to sell office equipment to its 1,000 target customers.The required rate of customer contact for sales effectiveness and customer satisfaction is two customer visits per month,translating into 24,000 customer contacts per year.Assuming that a salesperson can make three customer visits per day,has 4 days per week to make customer calls,and works 50 weeks per year,how many salespeople does Office Services Inc.need to meet its requirements?

A)4
B)40
C)480
D)2,000
E)2,400

Question 58

Calculate the total number of manufacturers,if 15 transactions are made per year with 10,000 retailers.The total number of transactions is 3 million transactions per year.

A)25
B)10
C)20
D)35
E)50

Question 59

Which of the following is true of marketing channels?

A)In a direct marketing channel,intermediaries take a portion of the purchase price for their services.
B)The net price derived from the use of indirect marketing channels is much higher than from direct channels.
C)Direct channels are able to capture most,if not all,of the end-user price.
D)The cost of direct marketing channels is generally lower for a manufacturer than that of other channels.
E)Indirect channels incur the highest out-of-pocket marketing and sales expenses for manufacturers.

Question 60

Which type of marketing channel typically yields the highest margins for a manufacturer?

A)direct channel
B)indirect channel
C)mixed channel
D)intermediate channel
E)distributor channel