Deck 10: Distribution Strategies

Question 1

Intermediaries typically take title to products and also carry the risk for the product while it is in their possession and even beyond.

Answer 1

True

Question 2

Intermediaries normally reduce the cost of the product delivery process and provide an assortment for retailers based on consumer demands.

Answer 2

True

Question 3

Through EDI exchange, intermediaries supply manufacturers with cash register scanner data so manufacturers can know what styles, sizes, colors, etc. of a particular product are selling and which ones are not selling.

Answer 3

False

Question 4

Selective distribution is a strategy whereby firms have some control over the marketing strategy by limiting distribution to a select group of resellers in each area, while, at the same time, the company can achieve a reasonable sales volume and profits.

Question 5

Intensive distribution is a strategy whereby firms have some control over the marketing strategy by limiting distribution to a select group of resellers in each area, while at the same time, the company can achieve a reasonable sales volume and profits.

Question 6

A selective distribution is a strategy that has a goal of high control of the intermediaries handling the product, and thus of the marketing strategy, by limiting the number of distributors to just one or two per geographic area.

Question 7

A direct channel of distribution has no intermediaries.

Question 8

An indirect channel of distribution has no intermediaries.

Question 9

In terms of channel organization and administration, a contractual channel arrangement is a contract between intermediaries that defines all the tasks that each channel member must perform with regard to production, delivery strategy and terms of sale, territorial rights, promotional support, the price policies of each intermediary, and contract length.

Question 10

In terms of channel organization and administration, an administered channel arrangement is an arrangement between intermediaries such that the retailer coordinates the tasks of each member in the channel.

Question 11

In terms of channel organization and administration, the channel captain is almost always the retailer because it has the greatest contact with consumers.

Question 12

A channel of distribution consists of one or more independent intermediaries, where each is a separate entity whose goal, in a vacuum, would be resource or profit maximization.

Question 13

If a manufacturer sells its products directly to consumers through a website and also through distributors who sell to retail stores, the manufacturer is using a dual channel of distribution.

Question 14

Vertical integration is the acquisition or merger with an intermediary in the channel that is either a supplier or a buyer.

Question 15

Horizontal integration is the acquisition or merger with an intermediary at either the wholesale or retail level within the same product category.

Question 16

Horizontal integration may trigger antitrust investigation and create long-term problems for the firms involved.

Question 17

In terms of channel power, legitimate power is based on an anticipation of special privileges, such as financial reward for a particular behavior.

Question 18

In terms of channel power, referent power is based on the close match in terms of values and objectives that members of the channel share.

Question 19

In terms of channel power, expert power is based on experience and knowledge that a channel member possesses.

Question 20

In terms of channel power, referent power is based on an anticipation of special privileges, such as financial reward for a particular behavior.

Question 21

In terms of channel power, coercive power is based on experience and knowledge that a channel member possesses

Question 22

A pull strategy is a strategy whereby the manufacturer focuses on consumer demand through extensive promotion, expecting that consumers will request the brand through the channel.

Question 23

A push strategy involves a focus on intermediaries, providing necessary incentives for them to cooperate in selling the product to the final consumer.

Question 24

The U.S. Department of Commerce reported that 60 percent of all Fortune 500 companies' logistics cost are spent on warehousing.

Question 25

In terms of volume, the highest percentage of products is shipped by truck.

Question 26

Trucks transport smaller shipments over shorter distance than the other freight carriers.

Question 27

Inter-modal transportation has been greatly facilitated by advances in railway technology.

Question 28

Products can be shipped to a free trade zone in the United States, stored, and assembled there, and then shipped to the United States or another country. Such products are not assessed import duties and cannot be subjected to tariffs or quotas in the United States unless they enter the country.

Question 29

Stock turnover is defined as the number of times per month that the inventory on hand is sold.

Question 30

A high stock turnover rate is a goal that allows a company to perform optimally in terms of inventory costs, but at the same time, the company needs to be careful that they do not run out of stock.

Question 31

Logistics encompasses all the activities involved in buying and handling the goods intended for sale to resellers or other organizational users.

Question 32

Wholesalers sell goods and services to manufacturers, to other wholesalers, to retailers, to the government, or to nongovernmental organizations.

Question 33

Merchant wholesalers are independent intermediaries who take title to and possession of products they distribute to resellers or organizational consumers.

Question 34

Manufacturers' agents can represent one or more competing manufacturers.

Question 35

Distribution planning is the

A) organization or individuals involved in the distribution process
B) planning of the physical movement of products from the producer to individual or organizational consumers, and the transfer of ownership and risk; it involves transportation, warehousing, and all the exchanges taking place at each channel level
C) totality of organizations and individuals involved in the distribution process who take title to or assist in the transferring of title in the distribution process from the producer to the individual or organizational consumer
D) chain of activities performed in the process of developing, producing, marketing, delivering, and servicing a product for the benefit of the customer

Question 36

The channel of distribution is defined as the

A) organization or individuals involved in the distribution process
B) planning of the physical movement of products from the producer to individual or organizational consumers, and the transfer of ownership and risk; it involves transportation, warehousing, and all the exchanges taking place at each channel level
C) totality of organizations and individuals involved in the distribution process who take title to or assist in the transferring of title in the distribution process from the producer to the individual or organizational consumer
D) chain of activities performed in the process of developing, producing, marketing, delivering, and servicing a product for the benefit of the customer

Question 37

The value chain, or supply chain, consists of the

A) participants involved in the value chain
B) planning of the physical movement of products from the producer to individual or organizational consumers, and the transfer of ownership and risk; it involves transportation, warehousing, and all the exchanges taking place at each channel level
C) totality of organizations and individuals involved in the distribution process who take title to or assist in the transferring of title in the distribution process from the producer to the individual or organizational consumer
D) chain of activities performed in the process of developing, producing, marketing, delivering, and servicing a product for the benefit of the customer

Question 38

The intermediaries or middlemen are the

A) organizations or individuals involved in the distribution process
B) planning of the physical movement of products from the producer to individual or organizational consumers, and the transfer of ownership and risk; it involves transportation, warehousing, and all the exchanges taking place at each channel level
C) totality of organizations and individuals involved in the distribution process who take title to or assist in the transferring of title in the distribution process from the producer to the individual or organizational consumer
D) chains of activities performed in the process of developing, producing, marketing, delivering, and servicing a product for the benefit of the customer

Question 39

All of the following are advantages of intermediaries except

A) intermediaries deliver convenience to consumers
B) intermediaries carry and store the product
C) intermediaries reduce the cost of the product delivery process
D) intermediaries reduce the cost of producing a product

Question 40

All of the following are advantages of intermediaries except

A) intermediaries often provide service contracts
B) intermediaries pay a higher percentage of advertising costs for both manufacturers and retailers
C) intermediaries often use their own trained salespeople to train retailers sales staff on product use
D) intermediaries conduct research for the manufacturer and the channel

Question 41

All of the following are advantages of intermediaries except

A) intermediaries provide an assortment for retailers, and ultimately, for consumers
B) intermediaries buy products in bulk, from manufacturer, at a discount
C) intermediaries can use scanner-data to guide consumer purchases
D) intermediaries provide credit to other channel members or to consumers

Question 42

A direct channel of distribution

A) has no intermediaries between the producer and consumer
B) involves one or more intermediaries between the producer and consumer
C) is the number of levels of distribution in a distribution channel
D) is the number of independent intermediaries involved at a particular stage of distribution

Question 43

An indirect channel of distribution

A) has no intermediaries between the producer and consumer
B) involves one or more intermediaries between the producer and consumer
C) is the number of levels of distribution in a distribution channel
D) is the number of independent intermediaries involved at a particular stage of distribution

Question 44

Channel length is the

A) number of retailers involved in a particular channel of distribution
B) number of agents or brokers used by a particular manufacturer
C) number of levels of distribution in a distribution channel
D) number of independent intermediaries involved at a particular stage of distribution

Question 45

Channel width is the

A) number of retailers involved in a particular channel of distribution
B) number of agents or brokers used by a particular manufacturer
C) number of levels of distribution in a distribution channel
D) number of independent intermediaries involved at a particular stage of distribution

Question 46

An intensive distribution is a strategy

A) whereby firms have some control over the marketing strategy by limiting distribution to a select group of resellers in each area, while at the same time, the company can achieve a reasonable sales volume and profits
B) that has a goal of high control of the intermediaries handling the product, and thus of the marketing strategy, by limiting the number of distributors to just one or two per geographic area
C) that has as its purpose full market coverage, making the products available to all target consumers when and where they want it
D) none of the above

Question 47

An exclusive distribution is a strategy

A) whereby firms have some control over the marketing strategy by limiting distribution to a select group of resellers in each area, while at the same time, the company can achieve a reasonable sales volume and profits
B) that has a goal of high control of the intermediaries handling the product, and thus of the marketing strategy, by limiting the number of distributors to just one or two per geographic area
C) that has as its purpose full market coverage, making the products available to all target consumers when and where they want it
D) none of the above

Question 48

A selective distribution is a strategy

A) whereby firms have some control over the marketing strategy by limiting distribution to a select group of resellers in each area, while at the same time, the company can achieve a reasonable sales volume and profits
B) that has a goal of high control of the intermediaries handling the product, and thus of the marketing strategy, by limiting the number of distributors to just one or two per geographic area
C) that has as its purpose full market coverage, making the products available to all target consumers when and where they want it
D) none of the above

Question 49

Staple products such as bread, milk, and soft drinks would use a(n) _____ distribution strategy.

A) intensive
B) exclusive
C) selective
D) direct

Question 50

High-end automobiles, such as BMW and Mercedes, would tend to use a(n) _____ distribution strategy.

A) intensive
B) exclusive
C) selective
D) direct

Question 51

Levi Strauss limits the number of retail stores that can sell its products. This would be an example of a(n) _____ distribution strategy.

A) intensive
B) exclusive
C) selective
D) direct

Question 52

In terms of channel organization and administration, a contractual channel arrangement

A) is a contract between intermediaries that defines all the tasks that each channel member must perform with regard to production, delivery strategy and terms of sale, territorial rights, promotional support, the price policies of each intermediary, and contract length
B) is an arrangement between intermediaries such that a dominant member of the distribution channel in terms of size, expertise, or influence coordinates the tasks of each member in the channel
C) is using two or more channels of distribution to appeal to different markets
D) involves acquiring or merging with an intermediary in the channel that is either a supplier or a buyer

Question 53

In terms of channel organization and administration, an administered channel arrangement

A) is a contract between intermediaries that defines all the tasks that each channel member must perform with regard to production, delivery strategy and terms of sale, territorial rights, promotional support, the price policies of each intermediary, and contract length
B) is an arrangement between intermediaries such that a dominant member of the distribution channel in terms of size, expertise, or influence coordinates the tasks of each member in the channel
C) is using two or more channels of distribution to appeal to different markets
D) involves acquiring or merging with an intermediary in the channel that is either a supplier or a buyer

Question 54

In terms of channel organization and administration, a channel captain is

A) the dominant member of a channel of distribution
B) the retailer that sells the products and has access to consumers
C) the manufacturer that has a high level of product quality and prestige
D) the largest member of the channel

Question 55

In terms of channel organization and administration, a dual channel of distribution (or multichannel distribution, or multimarketing) is

A) selling a product to two or more retailers
B) using two horizontal channels
C) using two or more channels of distribution to sell to different markets
D) the acquisition or merger with an intermediary in the channel that is either a supplier or a buyer

Question 56

In terms of channel organization and administration, vertical integration

A) is selling a product to two or more retailers
B) is selling products to manufacturers as well as retailers
C) involves acquiring or merging with an intermediary at the same level in the distribution channel
D) involves acquiring or merging with an intermediary in the channel that is either a supplier or a buyer

Question 57

In terms of channel organization and administration, horizontal integration

A) is selling a product to two or more retailers
B) is selling products to manufacturers as well as to retailers
C) involves acquiring or merging with an intermediary at the same level in the distribution channel
D) involves acquiring or merging with an intermediary in the channel that is either a supplier or a buyer

Question 58

A vertical marketing system is

A) an intermediary marketing system that consists of manufacturers, wholesalers, and retailers in the same channel acting as unified whole
B) an intermediary system at the same level of the distribution channel pooling resources and achieving economies of scale, thereby playing on their individual strengths
C) a large company that specializes in providing intermediary services, risk reduction through extensive information channels, and significant financial assistance to manufacturing firms
D) a Japanese family of firms with interlocking stakes in one another

Question 59

A horizontal marketing system is

A) an intermediary marketing system that consists of manufacturers, wholesalers, and retailers in the same channel acting as a unified whole
B) an intermediary system at the same level of the distribution channel pooling resources and achieving economies of scale, thereby playing on their individual strengths
C) a large company that specializes in providing intermediary services, risk reduction through extensive information channels, and significant financial assistance to manufacturing firms
D) a Japanese family of firms with interlocking stakes in one another

Question 60

A Keiretsu is a Japanese

A) intermediary marketing system that consists of manufacturers, wholesalers, and retailers in the same channel acting as a unified whole
B) intermediary system at the same level of the distribution channel pooling resources and achieving economies of scale, thereby playing on their individual strengths
C) company that specializes in providing intermediary services, risk reduction through extensive information channels, and significant financial assistance to manufacturing firms
D) family of firms with interlocking stakes in one another

Question 61

_____ may trigger antitrust investigation and create long-term problems for the firms involved.

A) Vertical integration
B) Vertical marketing systems
C) Horizontal integration
D) Horizontal marketing systems

Question 62

Trading companies from _____ have been very successful.

A) the United States
B) Japan and South Korea
C) Germany and Italy
D) Australia and New Zealand

Question 63

In terms of channel power, reward power is based on

A) an anticipation of special privileges, such as financial reward for a particular behavior
B) the experience and knowledge that a channel member possesses
C) the ability of one or more intermediaries to remove privileges for noncompliance
D) the close match in terms of values and objectives that members of the channel share

Question 64

In terms of channel power, coercive power is based on

A) an anticipation of special privileges, such as financial reward for a particular behavior
B) experience and knowledge that a channel member possesses
C) the ability of one or more intermediaries to remove privileges for noncompliance
D) the close match in terms of values and objectives that members of the channel share

Question 65

In terms of channel power, expert power is based on

A) an anticipation of special privileges, such as financial reward for a particular behavior
B) experience and knowledge that a channel member possesses
C) an intermediary's status or position in the channel
D) the close match in terms of values and objectives that members of the channel share

Question 66

In terms of channel power, referent power is based on

A) an anticipation of special privileges, such as financial reward for a particular behavior
B) experience and knowledge that a channel member possesses
C) an intermediary's status or position in the channel
D) the close match in terms of values and objectives that members of the channel share

Question 67

In terms of channel power, legitimate power is based on

A) an anticipation of special privileges, such as financial reward for a particular behavior
B) experience and knowledge that a channel member possesses
C) an intermediary's status or position in the channel
D) the close match in terms of values and objectives that members of the channel share

Question 68

Nike spends a large percentage of their marketing budget on advertising to consumers, to build brand loyalty and brand desire. This illustrates Nike's belief in

A) a pull strategy
B) a push strategy
C) reward power
D) expert power

Question 69

In the channel of distribution, the channel captain has _____ power over the other channel members.

A) reward
B) legitimate
C) referent
D) expert

Question 70

In terms of the distribution channel, the logistics function can be handled by the

A) producer
B) intermediaries
C) customer
D) any of the above

Question 71

In terms of using logistics information, the _____ department is likely to use order status information the most.

A) purchasing
B) manufacturing
C) marketing/sales department
D) other

Question 72

In terms of using logistics information, the _____ department is likely to use tracking inbound shipments information the most.

A) purchasing
B) manufacturing
C) marketing/sales department
D) other

Question 73

In terms of using logistics information, the _____ department is likely to use alerts on delayed shipments information the most.

A) purchasing
B) manufacturing
C) marketing/sales department
D) other

Question 74

In terms of using logistics information, the _____ department is likely to use divergence of shipments information the most.

A) purchasing
B) manufacturing
C) marketing/sales department
D) other

Question 75

In terms of using logistics information, the _____ department is likely to use tracking of outbound shipments information the most.

A) purchasing
B) manufacturing
C) marketing/sales department
D) other

Question 76

The U.S. Department of Commerce reported that 60 percent of all Fortune 500 companies' logistics costs are spent on

A) warehousing
B) transportation
C) inventory control and order processing
D) wholesaling

Question 77

_____ transportation is the primary method of transportation for long distances of high-weight, high-volume products that have a low per-pound value.

A) Truck
B) Rail
C) Air
D) Water

Question 78

_____ is(are) ideal for the transportation of perishable products (such as cut flowers) and for low-volume, lower-weight, high-value products (such as jewelry).

A) Trucks
B) Rail
C) Air
D) Water

Question 79

In terms of flexibility, _____ transportation would offer the highest level of area coverage.

A) truck
B) rail
C) air
D) water

Question 80

Inter-modal transportation has been greatly facilitated by

A) rising gas prices
B) enhanced infrastructure
C) containerization
D) freight forwarding brokers