Deck 14: Marketing Channels and Supply Chain Management

Question 1

Wholesalers are often criticized for being inefficient and for causing consumers to pay higher prices than they would if there were no wholesalers. Discuss.

Answer 1

Critics accuse wholesalers of being inefficient and adding to costs. Buyers often think that making the distribution channel as short as possible will decrease the prices for products, but this is not the case. Critics who suggest that eliminating wholesalers will lower prices for customers fail to recognize that this would not eliminate the need for the services the wholesalers provide. Although wholesalers can be eliminated, their functions cannot. Other channel members would have to perform those functions, perhaps not as efficiently, and customers still would have to pay for them. In addition, all producers would deal directly with retailers or customers, meaning that every producer would have to keep voluminous records and hire sufficient personnel to deal with a multitude of customers. In the end, customers might end up paying a great deal more for products because prices would reflect the costs of an inefficient distribution channel. To mitigate criticisms, wholesalers should only perform the marketing activities that are desired, and they must strive to be as efficient and customer focused as possible.

Question 2

Rovio, the parent company of the popular Angry Birds app, made several marketing mix decisions that were considered to be part of its distribution. Which of the following was not a decision that relates to distribution?

A) Downloads of the game Angry Birds
B) The sale of T-shirts and stuffed birds and pigs through its website
C) The sale of Halloween costumes through Amazon
D) The opening of retail stores in Finland and China
E) The licensing of the Angry Birds to producers of T-shirts and costumes

Answer 2

E

Question 3

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

Answer 3

There are three levels of market coverage: intensive, selective, and exclusive. Different types of products are best handled using different intensities of market coverage. In choosing intensive distribution, producers strive to make a product available to all possible dealers. In selective distribution, only some outlets in an area are chosen to distribute a product that requires more consideration and effort on the part of the consumer before purchase. Exclusive distribution is used for more expensive items and usually gives a single dealer rights to sell a product in a large geographic area.

Question 4

Under what circumstances is selective distribution a desirable level of market coverage?

Question 5

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

Question 6

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

Question 7

What are the key tasks in supply-chain management? How does each of these facilitate supply-chain management?

Question 8

Compare and contrast horizontal and vertical channel integration.

Question 9

Describe the three forms of vertical marketing systems.

Question 10

The coordination of all the activities involved with the flow and transformation of supplies, products, and information throughout the supply chain to the ultimate consumer is called

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

Question 11

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

Question 12

Discuss channel cooperation and conflict. How might each one affect distribution channel functions?

Question 13

What is a marketing intermediary, and what are the activities that marketing intermediaries perform?

Question 14

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

Question 15

What advantages do industrial distributors offer? What are some of the disadvantages of using industrial distributors?

Question 16

How do marketing channels increase efficiency in exchange situations?

Question 17

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

Question 18

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

Question 19

Explain how electronic data interchange (EDI) and just-in-time (JIT) inventory management might be used in combination to improve physical distribution effectiveness and efficiency.

Question 20

Explain the legal ramifications of attempts to control distribution functions.

Question 21

The supply chain includes

A) producers, wholesalers, and retailers.
B) suppliers, producers, intermediaries, and customers.
C) suppliers and suppliers' suppliers.
D) all entities that facilitate product distribution.
E) buyers, sellers, marketing intermediaries, and agents.

Question 22

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 little time as possible for ownership.

Question 23

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 24

Marketing channels create four types of utility for consumers including

A) place, time, possession, and form.
B) location, form, availability, and suitability.
C) form, time, location, and promotion.
D) marketer, retailer, wholesaler, and producer.
E) position, price, possession, and place.

Question 25

Cassie and Julian both are buying new iPhones this week. Cassie goes to the Apple store because she wants to actually see the phone before she makes a final decision. Julian knows that he does not need to see the phone, because he just wants to update from his older version. He simply orders it online. Cassie is purchasing her phone through_____, while Julian is purchasing his through ___.

A) an indirect-marketing channel; the most efficient channel of distribution
B) the most common type of marketing channel; an indirect channel
C) a retailer; a direct-marketing channel
D) a business-to-business channel; a direct-marketing channel
E) a retail channel; an indirect-marketing channel

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

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 28

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 29

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) 15.
B) 5.
C) 18.
D) 6.
E) 20.

Question 30

Josh is a vice-president for 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 31

Supply chains for durable goods typically begin at _____ and end at _____.

A) raw materials; the retailer
B) suppliers; the retailer
C) raw materials; the customer
D) suppliers; the customer
E) retailers; the customer

Question 32

A marketing channel 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 33

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 34

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 35

What 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 36

Netflix sells its movie services using its website while Redbox sells its movie services using vending machines. Each requires the products to be distributed through different channels. Netflix is using ____, while Redbox is using ___ to get the movies to its vending machines.

A) multichannel distribution; digital distribution
B) digital distribution; just-in-time distribution
C) intensive distribution; selective distribution
D) multichannel distribution; physical distribution
E) digital distribution; physical distribution

Question 37

Large retailers such as JCPenney and Target are most likely to participate in which of the following channels?

A) Producer, industrial distributors, retailers, consumers
B) Producer, consumers
C) Producer, wholesalers, retailers, consumers
D) Producer, retailers, consumers
E) Producer, agents, wholesalers, retailers, consumers

Question 38

After direct marketing, the next slightly longer marketing channel adds a(n)

A) retailer.
B) producer.
C) wholesaler.
D) agent.
E) consumer.

Question 39

The driving force behind marketing channel decisions should be

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

Question 40

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

A) 10; 25
B) 30; 10
C) 25; 15
D) 16; 8
E) 25; 10

Question 41

Starbucks has an agreement with PepsiCo through which Pepsi distributes Starbucks' coffee drink, Frappuccino, to grocery stores and other retail outlets. This is an example of

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

Question 42

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 43

A channel that includes both a manufacturers' agent and an industrial distributor is appropriate under which of the following circumstances?

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

Question 44

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

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

Question 45

Steelcase, Inc. markets furniture directly to businesses. This is an example of a(n) ____ channel.

A) producer-to-business buyer
B) producer-to-industrial-distributor-to-business buyer
C) producer-to-agent-to-business buyer
D) equipment
E) consumer

Question 46

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 47

Which of the following is the most commonly used channel for distributing business products?

A) Producer, agents, industrial distributors, organizational buyers
B) Producer, industrial distributors, organizational buyers
C) Producer, agents, organizational buyers
D) Producer, organizational buyers
E) Industrial distributors, organizational buyers

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 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 50

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

A) Industrial distributors possess considerable market information.
B) Their marketing exchange relationships are very 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 51

All of the following products are likely to use the producer-retailer-consumer marketing channel except for

A) pharmaceutical drugs.
B) U-Pick farm produce.
C) Amazon Kindle Fire.
D) designer wedding gowns.
E) microbrew beers.

Question 52

Organizational buyers are especially partial to direct marketing channels when

A) they buy cheap materials in large quantities.
B) they try a new product for the first time.
C) they are filling an order for a very important customer.
D) a modified rebuy type of decision is involved.
E) expensive and/or complex equipment is involved.

Question 53

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

Question 54

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 55

The marketing channel of producer-retailer-consumer is most likely to be used by producers of which of the following products?

A) KitchenAid appliances
B) Tobacco
C) Automobiles
D) Apples and oranges
E) Wedding photographs

Question 56

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

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

Question 57

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 58

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 59

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

A) A manufacturers' agent does not acquire title nor usually take 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 60

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

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

Question 61

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 62

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 63

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

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

Question 64

If 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 65

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 66

Using only some of the available outlets to distribute a product is called

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

Question 67

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 68

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 form of distribution would Honey Farms be likely to use for its new product?

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

Question 69

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 70

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 71

A single leader who controls and organizes a marketing channel is called a

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

Question 72

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 73

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) intensive, extensive, and exclusive
D) selective, cooperative, and conflicting
E) exclusive, selective, and intensive

Question 74

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 75

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 76

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 77

Paper towels and trash can bags are most likely distributed through ____ and ____.

A) selective distribution; multiple channels
B) intensive; multichannel distribution
C) strategic channel alliances; intensive distribution
D) exclusive distribution; a single channel
E) multichannel distribution; convenience channels

Question 78

Durable goods such as television sets and appliances generally reach their target markets through ____; goods such as car batteries and tires generally reach their target markets through _____.

A) intensive distribution; intensive distribution
B) exclusive distribution; intensive distribution
C) selective distribution; exclusive distribution
D) selective distribution; intensive distribution
E) selective distribution; selective distribution

Question 79

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.

Question 80

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.