Deck 13: Marketing Channels and Supply-Chain Management

Question 1

Define an industrial distributor and state some of the disadvantages of using industrial distributors.

Answer 1

An industrial distributor is an independent business that takes title to products and carries inventories. Industrial distributors usually sell standardized items, such as maintenance supplies, production tools, and small operating equipment. Industrial distributors may be difficult to control because they are independent firms. They often stock competing brands, so a producer cannot depend on them to promote its brand aggressively. Furthermore, industrial distributors incur expenses from maintaining inventories and are less likely to handle bulky or slow-selling items, or items that need specialized facilities or extra selling efforts.

Question 2

Describe the horizontal and vertical channel integration.

Answer 2

Vertical channel integration combines two or more stages of the channel under one management. This may occur when one member of a marketing channel purchases the operations of another member, or simply performs the functions of another member, eliminating the need for that intermediary. Vertical channel integration represents a more progressive approach to distribution in which channel members become extensions of one another as they are combined under a single management. Combining organizations at the same level of operation under one management constitutes horizontal channel integration. An organization may integrate horizontally by merging with other organizations at the same level in the marketing channel. Although horizontal integration permits efficiencies and economies of scale in purchasing, marketing research, advertising, and specialized personnel, it is not always the most effective method of improving distribution.

Question 3

Which of the following is true about supply-chain management?

A) Supply chains for durable goods typically begin at raw materials and end at the retailer.
B) Supply chains for durable goods typically begin at suppliers and end at the retailer.
C) Supply chains for durable goods typically begin at raw materials and end at the customer.
D) Supply chains for durable goods typically begin at suppliers and end at the customer.
E) Supply chains for durable goods typically begin at retailers raw materials and end at the customer.

Answer 3

C

Question 4

Explain the electronic data interchange (EDI) method.

Question 5

The driving force behind marketing channel decisions should be:

A) convenience.
B) cost reduction.
C) environmental concerns.
D) customer satisfaction.
E) quality.

Question 6

Describe the three forms of vertical marketing systems.

Question 7

Revlon, a maker of cosmetics and skin-care products, is effectively involved in the management of its supply chain. It coordinates activities with both its suppliers and its distributors in order to produce and deliver products that its customers demand. Which of the following statements is most likely to be true about the impact of Revlon's supply-chain management?

A) Revlon demonstrates a product firm orientation which increases its competitiveness.
B) Revlon demonstrates a market firm orientation which increases its competitiveness.
C) Revlon demonstrates a sales firm orientation which increases its competitiveness.
D) Revlon's supply­chain management overlaps with all of the firm's marketing functions but not its financial functions.
E) Revlon's primary objective is to maximize efficiency in its supply­chain.

Question 8

A channel of distribution is defined as a group of individuals and organizations that:

A) consumes about one-half of every dollar spent on products in the United States.
B) directs the flow of products from producers to customers.
C) links producers to other marketing intermediaries.
D) takes title to products and resells them.
E) manages transportation and warehousing functions.

Question 9

Name and define the four types of utility created by marketing channels.

Question 10

What is supply chain management? List the activities involved in it.

Question 11

Greenmart Corp. is working with its suppliers, using tools such as electronic billing, purchase order verification, and bar code technology, to integrate data used to improve overall performance. This is an example of:

A) supply-chain management.
B) a vertical marketing system.
C) a horizontal marketing system.
D) channel conflict.
E) dual distribution.

Question 12

A set of approaches used to integrate the functions of operations management, logistics management, and marketing channel management so products are produced and distributed in the right quantities, to the right locations, and at the right time is known as:

A) supply-chain management.
B) vertical channel integration.
C) industrial management.
D) industrial distribution.
E) marketing management.

Question 13

What are marketing intermediaries, and what are the activities that they perform?

Question 14

List the three major levels of market coverage and define each of them.

Question 15

How do marketing channels increase efficiency in exchange situations?

Question 16

How do marketing channel decisions influence the rest of the marketing mix?

Question 17

Discuss the importance of order processing in the physical distribution system.

Question 18

Identify the various transportation modes and describe in detail two modes of transportation.

Question 19

When is selective distribution said to be at a desirable level of market coverage?

Question 20

Why is the choice of warehouse facilities an important strategic consideration?

Question 21

U.S. banks provide their banking services through brick and mortar sites, by phone, and through on-line access. These various ways in which a customer can access their account information is called .

A) possession utility
B) place utility
C) time utility
D) possession utility
E) information utility

Question 22

Which of the following is most likely to be a product stocked solely by an industrial distributor?

A) Tires
B) Wind turbines
C) Roofing nails
D) Kitchen countertops
E) Office supplies

Question 23

When Sophie buys organic produce for her household using a channel with only one intermediary, that intermediary is classified as a:

A) retailer.
B) wholesaler.
C) broker.
D) functional middleman.
E) producer.

Question 24

Manufacturers of convenience products such as chewing gum reach customers through thousands of retailers. Which of the following marketing channels do these manufacturers most likely to use?

A) Producer, consumer
B) Producer, wholesaler, retailer, consumer
C) Producer, wholesaler, agent, retailer, consumer
D) Producer, retailer, consumer
E) Retailer, consumer

Question 25

If Nokia decides to make changes in its marketing channels, the strategic significance is that channel decisions are:

A) long-term commitments.
B) short-term commitments.
C) easier to change than prices.
D) easier to change than promotion.
E) impossible to change.

Question 26

Consumers receive the benefits of place utility when:

A) they have to travel excessively to obtain products they want.
B) retailers remain open 24 hours a day.
C) they can stock up on products they need but not use them right away.
D) they make purchases with credit and debit cards.
E) products are available in locations where consumers want to buy them.

Question 27

Channel decisions are important to marketers mostly because:

A) they are relatively flexible to change quickly.
B) consumers value reasonable prices delivered through marketing channels.
C) they dictate what promotional strategies companies should use.
D) many businesses are marketing intermediaries.
E) they involve long-term commitments and affect customer accessibility.

Question 28

Possession utility is best described as:

A) products being available in places where the customers wish to purchase them.
B) the customer having access to the product to use now or store and use later.
C) having a company's products available when a customer needs them.
D) being able to legally own a product despite restrictions on trade.
E) getting the products to the consumers in as short of time as possible for ownership.

Question 29

Netflix sells its movie services using its website, while Red Box sells its movie services using vending machines. From a customer's point of view, which of the following is true about Netflix and Red Box?

A) Netflix is using a direct-marketing channel and Red Box is using a type of a slightly shorter channel.
B) Netflix is using a direct-marketing channel and Red Box is using a type of an agent.
C) Netflix is using an Internet wholesaler and Red Box is using a type of retailer.
D) Netflix is using an Internet wholesaler and Red Box is using a slightly longer channel.
E) Netflix is using a direct-marketing channel and Red Box is using a type of retailer.

Question 30

Jeff Wood's company buys machine tools from large producers and sells them to several Midwestern manufacturing companies. The company Jeff works for carries inventories of the tools, which reduces capital requirements for the producers. Jeff's company is an example of a(n) in a distribution channel.

A) direct distributor
B) manufacturers' agent
C) industrial distributor
D) producers' agent
E) wholesalers' agent

Question 31

Which of the following describes a disadvantage of using industrial distributors?

A) Industrial distributors possess considerable market information.
B) Their marketing exchange relationships are much focused.
C) They are unlikely to handle bulky items or items that are slow sellers.
D) Industrial distributors sell specific brands aggressively.
E) Industrial distributors acquire title to the products and take possession.

Question 32

Without wholesalers and other intermediaries:

A) most products would be much less expensive because fewer companies would be handling the product.
B) products would be cheaper because the functions of intermediaries would be eliminated.
C) products would likely be more expensive due to the use of less efficient channel members.
D) products would never be able to make it to the ultimate consumer at any price without passing through intermediaries.
E) many products would be more expensive because retailers would expect more profit.

Question 33

In a simple economy of five producers and five consumers, there would be transactions possible without an intermediary and ten transactions possible with one intermediary.

A) ten
B) thirty
C) fifteen
D) sixteen
E) twenty-five

Question 34

Josh is the vice-president for the 20th Century Fox, a movie production company. He has the responsibility for managing the firm's marketing channels and its relationships with its marketing intermediaries. As a manager of its marketing intermediaries, part of Josh's role is to:

A) link movie wholesalers to other wholesalers.
B) link film producers to other middlemen.
C) always oversee the sale of movies to retailers.
D) maintain quality of the movie product.
E) engage in short-term commitments to the least expensive channel member.

Question 35

When three buyers purchase the products of three producers, nine transactions are required. If one intermediary serves both producers and buyers, the number of possible transactions is:

A) fifteen.
B) five.
C) eighteen.
D) six.
E) twenty.

Question 36

Which of the following links producers to consumers through the purchase and reselling of products or contractual agreements?

A) Marketing intermediaries
B) Distributors
C) Suppliers
D) Middle marketers
E) Marketing channels

Question 37

Select Comfort, a producer of adjustable air mattresses, sells most of its products through direct mail sales and on its website. This channel would be classified as:

A) direct distribution.
B) producer, retailer, consumer.
C) telemarketing.
D) direct-marketing.
E) indirect marketing.

Question 38

River City, Inc. is an independent business that takes title to products and carries inventories. River City, Inc. is most likely a(n):

A) industrial distributor.
B) intermediary.
C) agency.
D) wholesaler.
E) producer.

Question 39

Caruthers Paint Manufacturing Company buys the chemicals it needs for producing its products from a chemical producer, Roth Chemicals. In this instance, through which of the following types of channels are the chemicals being distributed to Caruthers?

A) Industrial distributor
B) Direct distribution
C) Retail
D) Wholesaler-sponsored
E) Producer

Question 40

Eliminating a wholesaler from a marketing channel will:

A) cut costs and lower prices.
B) not eliminate the functions performed by that wholesaler.
C) eliminate the functions performed by that wholesaler.
D) lead to lower costs but higher prices.
E) reduce channel conflict.

Question 41

Many companies use more than one marketing channel to distribute their products to the same target market, a tactic known as:

A) multiple channeling.
B) strategic channel alliance.
C) intensive distribution.
D) dual distribution.
E) market splitting.

Question 42

Using only some of the available outlets to distribute a product is known as:

A) selective distribution.
B) intensive distribution.
C) channel conflict.
D) vertical channel integration.
E) exclusive distribution.

Question 43

A producer is not likely to receive from an industrial distributor.

A) selling activities in local markets
B) market information about consumers
C) aggressive promotion of its brand
D) reduced capital requirements
E) a reduced financial burden from customers

Question 44

Which of the following is an advantage of using an industrial distributor?

A) These firms are easy to control because they work directly for the producers.
B) Inventory holding costs are minimized because they can store inventory very cheaply.
C) They are closer geographically to all of the producers' customers.
D) They possess a high level of technical knowledge about their products.
E) They help reduce a producer's financial burdens by extending credit to customers.

Question 45

A channel that includes both a manufacturer's agent and an industrial distributor is appropriate when:

A) the firm wants specialized personnel to follow up the work of the sales force and expand the business.
B) the marketer wishes to enter a new geographic market but does not wish to expand the existing sales force.
C) only one or two channels of distribution are available for the products.
D) the sales force is large and the marketer is thinking of cutting it down to reduce the costs of production.
E) customers are highly concentrated in one geographic area.

Question 46

Fragile products that require special handling are more likely to be distributed through:

A) longer channels.
B) shorter channels.
C) direct channels.
D) strategic alliances.
E) exclusive outlets.

Question 47

ToysPalace Inc. produces toys and baby-related products. For the introduction of its line of nursery furniture for infants and small children, ToysPalace will most likely use distribution for the products.

A) intensive
B) exclusive
C) horizontal
D) priority
E) selective

Question 48

An independent businessperson who is paid a commission to sell complementary products of different producers in an assigned territory without actually taking title of the merchandise is a(n):

A) sole intermediary.
B) manufacturers' agent.
C) producers' broker.
D) industrial distributor.
E) channel facilitator.

Question 49

Which of the following is least likely to be a factor affecting the selection of marketing channels?

A) Customer characteristics
B) Product attributes
C) Product packaging
D) Competition
E) Environmental forces

Question 50

Rob Stevens is the head of a company that produces computer software for production scheduling. The firm is small and presently does not generate enough volume to justify hiring a sales force. The firm is probably using to maintain contact with the firms using its products.

A) Wholesalers
B) Brokers
C) Agents
D) Merchants
E) Retailers

Question 51

Apple makes its computers available through its own stores, its website, and some major retailers. This is an example of:

A) dual distribution.
B) vertical integration.
C) horizontal integration.
D) tying agreements.
E) exclusive dealing.

Question 52

When considering the best channel to use, all of the following are true with regard to larger firms except they:

A) can use an extensive product mix as a competitive tool.
B) may be better able to negotiate better deals with vendors or other channel members.
C) may have more distribution centers.
D) may have the resources to develop their own sales force.
E) may be better suited to serve customers in a particular region.

Question 53

When Busch Light Beer was introduced as part of the Anheuser-Busch product line, the company most likely used distribution.

A) horizontal
B) intensive
C) selective
D) agent
E) exclusive

Question 54

Paper towels and trash-can bags are most likely to be distributed through:

A) selective distribution and multiple channels.
B) intensive and dual distribution.
C) intensive and strategic channel alliances.
D) exclusive and a single channel.
E) dual distribution and convenience channels.

Question 55

What is a primary difference between an industrial distributor and a manufacturers' agent?

A) A manufacturers' agent does not acquire title nor usually takes possession of the products whereas an industrial distributor does.
B) A manufacturers' agent is employed by the manufacturers while an industrial distributor is independent.
C) An industrial distributor is employed by the manufacturers while a manufacturers' agent is independent.
D) A manufacturers' agent rarely adds any value to the marketing channel while an industrial distributor reduces costs significantly.
E) An industrial distributor does not form relationships with customers for repeat business whereas a key asset of a manufacturers' agent is his knowledge of his customers.

Question 56

When Amazon.com introduced its Kindle FireHD, it was available through Amazon.com, Staples office supplies store, and a few other retailers. The Kindle FireHD was most likely distributed through the of distribution.

A) selective level
B) extensive level
C) intensive level
D) exclusive level
E) agent form

Question 57

The major levels of intensity at which a company can choose to distribute its products are distribution.

A) vertical and horizontal
B) cooperative, conflicting, and integrated
C) strategic, extensive, and exclusive
D) selective, cooperative, and conflicting
E) exclusive, selective, and intensive

Question 58

Del Monte markets ketchup for household use to supermarkets through grocery wholesalers. It markets ketchup for institutional use through industrial distributors and food brokers. Del Monte is using:

A) dual distribution.
B) industrial distribution.
C) strategic channel alliance.
D) supply-chain management.
E) an unethical marketing channel.

Question 59

Sales are most likely to have a direct relationship to product availability for products that use distribution.

A) selective
B) dual
C) intensive
D) extensive
E) exclusive

Question 60

Starbucks has an agreement with Pepsi Co. through which Pepsi distributes Starbucks' coffee drink, Frappucino, to grocery stores and other retail outlets. This is an example of a(n):

A) strategic channel alliance.
B) exclusive distribution.
C) dual distribution.
D) horizontal channel integration.
E) channel leadership.

Question 61

Marketing channel members are likely to experience misunderstandings, frustration, and poorly coordinated strategies as a result of:

A) channel conflict caused by inefficient communication between channel members.
B) open communication among the channel members.
C) methods of channel coordination designed to reduce ambiguity.
D) negotiating territorial issues among regional distributors of a product.
E) allowing one member of the channel to take the role of channel captain.

Question 62

Nike maintains a good deal of control over how its products are promoted, displayed, and sold. Because of this control, Nike would be appropriately described as the channel .

A) intermediary
B) captain
C) allocator
D) terminator
E) price leader

Question 63

Warner Bros. sells cookie jars, puzzles, photo albums, and other items featuring its popular cartoon characters directly through its own retail outlets. This is an example of:

A) channel leadership.
B) channel cooperation.
C) channel conflict.
D) horizontal channel integration.
E) vertical channel integration.

Question 64

Expensive, high-quality products that are purchased infrequently often reach consumers through:

A) selective distribution.
B) highly-selective distribution.
C) sole-source retailers.
D) complex marketing channels.
E) exclusive distribution.

Question 65

The iPhone is such a popular product and the company is so powerful that Apple Inc. is in a position to exert considerable control over channel structures and the way iPhone is marketed. This is an illustration of channel in the distribution channel.

A) conflict
B) leadership
C) dominance
D) cooperation
E) negotiation

Question 66

IMA Wholesalers is a distributor of car repair parts and supplies, selling to both retailers and auto repair service businesses. If IMA has been promoting the Pennzoil brand of oil over the Quaker State brand of oil by offering larger discounts to the channel members, and it continues to do this, is likely to result.

A) channel disintegration
B) vertical channel integration
C) horizontal channel integration
D) channel conflict
E) a tying arrangement

Question 67

The reasons a vertically integrated channel can be more effective against competition is because of all of the following except:

A) the consolidation of power.
B) tightly controlled and bureaucratic management style.
C) the ability to inhibit competitors.
D) the sharing of responsibilities and information.
E) increased bargaining power.

Question 68

Vertical channel integration:

A) results in two or more different management teams for each member of the channel.
B) is made possible when a large corporation divests itself of smaller subsidiaries.
C) is a shift back to the conventional channel of distribution.
D) combines institutions at the same level of operation.
E) is made possible by purchasing the operations of a link in the channel.

Question 69

Overall channel goals and individual channel member goals cannot be achieved together without:

A) conflict.
B) captains.
C) leadership.
D) cooperation.
E) tying agreements.

Question 70

When a single channel member manages an integrated marketing channel to achieve low-cost, efficient distribution for satisfying target markets, exists.

A) a vertical marketing system
B) horizontal channel integration
C) channel power
D) channel cooperation
E) extensive distribution

Question 71

United Clothes, a leading manufacturer of knitwear in Italy, expanded its operations to include retail outlets in the United States and South America. This type of channel is called:

A) horizontal integration.
B) vertical integration.
C) multilevel integration.
D) retail integration.
E) merchandising integration.

Question 72

Honey Farms is a maker of fine chocolates. The company's latest product, Fudge-Dipped Strawberries, is the premier product in its Fudge-Dipped line. The product is very expensive and targeted to upscale consumers. Which of the following forms of distribution would Honey Farms be likely to use for its new product?

A) Intensive distribution
B) Selective distribution
C) Targeted distribution
D) Exclusive distribution
E) Premier distribution

Question 73

Product and target market characteristics usually determine the type of coverage a product receives. For which of the following products is selective distribution most appropriate?

A) Gasoline
B) Jaguar automobiles
C) Skippy peanut butter
D) Laundry detergent
E) Organic foods

Question 74

Goodyear allows companies like Sears and Discount Tire to distribute and discount its tires. This action significantly increases the possibility of channel with independent Goodyear dealers.

A) understanding
B) power
C) leadership
D) communication
E) conflict

Question 75

A single leader who controls and organizes a marketing channel is known as a:

A) channel champion.
B) distribution leader.
C) marketing maverick.
D) channel captain.
E) lead distributor.

Question 76

If Ralston Purina forced Kroger's grocery chain to place all of its products in the stores' most favorable locations, it would be:

A) demonstrating sound channel leadership.
B) insisting on exclusive exposure.
C) exercising channel power.
D) minimizing channel conflict.
E) creating a coordinate system.

Question 77

When produce companies such as Dole Bananas bypass wholesalers and sell directly to retailers, it is likely to:

A) create channel conflict between Dole and these wholesalers.
B) increase cooperation between Dole and the wholesalers.
C) show that Dole is integrating its channel intermediaries.
D) create horizontal integration between channel members.
E) increase the vertical integration of the channel intermediaries.

Question 78

Few supermarkets would try to replace a national brand of baby food with their own brand. Assuming that this is true, we have a good example of channel leadership by:

A) wholesalers.
B) producers.
C) retailers.
D) agents.
E) brokers.

Question 79

For which of the following products would exclusive distribution be most appropriate?

A) Gasoline
B) Rolls Royce automobile
C) Ray-Ban sunglasses
D) Louis Vuitton luggage
E) Harley-Davidson motorcycle

Question 80

When one company in a marketing channel has the ability to influence another member's goal achievement, the company has:

A) channel control.
B) channel power.
C) marketing leadership.
D) a channel captain.
E) distributive influence.