Question 1

To serve its target market more efficiently, Medusa Cement Manufacturers purchased (1) a gravel pit to make sure it always had a ready supply of gravel and (2) a company that manufactures cement trucks. This is an example of a(n):

Accepted Answer

A)   contractual VMS.
B)   administered VMS.
C)   wholesaler-sponsored voluntary chain.
D)   corporate VMS.
E)   franchise system. D

Question 2

Which of the following offers the greatest potential for vertical channel conflict?

Accepted Answer

A)   Toys "R" Us and Fisher-Price toy manufacturer
B)   IGA supermarkets and a bakery
C)   a True Value hardware store and Kmart
D)   Waldenbooks and Kmart
E)   Walgreen drugstores and Wal-Mart A

Question 3

Channel control becomes unlawful when it substantially lessens competition, creates a monopoly, or restrains trade.

Accepted Answer

A) True 
 B)False  True

Question 4

A manufacturer that uses selective distribution:

Accepted Answer

A)   limits the number of outlets for its product in each market.
B)   probably does not sell items classified as shopping goods.
C)   is unable to use vertical marketing systems.
D)   has only one outlet in each market.
E)   encourages its retailers to use price cutting.

Question 5

Ralston-Purina, with its lines of cereal, snack food, and pet food, has such brand equity and market position that it is able to coordinate distribution activities through its market power. It uses a(n): _____ for distribution.

Accepted Answer

A)   contractual VMS
B)   administered VMS
C)   voluntary chain
D)   corporate VMS
E)   franchise system

Question 6

A by-product of the rise of the Internet has been an increase in vertical and horizontal channel conflict.

Accepted Answer

A) True 
 B)False

Question 7

In 1989, Seeds of Change started with a simple mission: "To preserve biodiversity and promote sustainable, organic agriculture." With its ever-expanding line of Certified Organic Foods, it has stayed True to its mission. It uses only the freshest, select, organic ingredients. All are great tasting and healthy and just as nature intended. Seeds of Change also seeks out unique ingredients such as quinoa, an ancient and little-known South American grain that is high in protein and a valuable source of many amino acids. By using quinoa, Seeds of Change is helping to preserve a nutritious food that might have otherwise been lost for future generations. In close collaboration with an extensive network of certified organic seed growers and plant breeders, Seeds of Change cultivates, studies, refines, and expands the products it provides to consumers.
-For the first years of its existence, the only place you could buy Seeds of Change products was at Whole Food Markets. Recently, Seeds of Change established its own Web site from which consumers can purchase its entire product line. In other words, Seeds of Change has engaged in:

Accepted Answer

A)   multiple sourcing.
B)   disintermediation.
C)   cross-selling.
D)   collaborative selling.
E)   relationship marketing.

Question 8

_____ occurs when a manufacturer prohibits its dealers from carrying its competitor's products.

Accepted Answer

A)   Exclusive dealing
B)   An exclusive-territory policy
C)   An intensive distribution strategy
D)   A tying contract
E)   Horizontal conflict

Question 9

A primary source of horizontal conflict is:

Accepted Answer

A)   scrambled merchandising.
B)   long channels of distribution.
C)   vertical distribution strategies.
D)   franchise agreements.
E)   exclusive distribution strategies.

Question 10

Optimal intensity of distribution, from the standpoint of the producer, is just enough middlemen to meet the desires of the target market.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following products is LEAST likely to be marketed using an exclusive distribution strategy?

Accepted Answer

A)   one-of-a-kind designer gowns
B)   custom-designed belt buckles
C)   computer diskettes
D)   machines to bale hay
E)   road graders

Question 12

When Del Monte foods introduced its Kibble 'n Bits Homestyle dog food, Del Monte more than likely had to pay a _____ to each supermarket that it wanted to carry its new product.

Accepted Answer

A)   termination fee
B)   distribution fee
C)   service charge
D)   slotting fee
E)   failure-protection fee

Question 13

Sparkling wine producers in Spain are convinced their sparkling wine is superior to that produced in France, but wine distributors continue to give preferential treatment to the French wine producers. This situation could lead to _____ between the Spanish wine producers and the wine distribution companies.

Accepted Answer

A)   horizontal channel empowerment
B)   vertical conflict
C)   horizontal integration
D)   vertical integration
E)   horizontal conflict

Question 14

Deborah sells several different varieties of candy at a local flea market. She buys the candy from a wholesaler who specializes in selling to convenience stores. Deborah gets low prices if she is willing to buy open bags, candy that is slightly past its "best-if-used-by-date," and candy that is not selling well to convenience store owners. The wholesaler buys from a number of different manufacturers to get the assortment desired by its buyers. This is an example of _____ distribution.

Accepted Answer

A)   flexible
B)   inflexible
C)   selective
D)   direct
E)   indirect

Question 15

Multiple channels of distribution benefit both producers and middlemen.

Accepted Answer

A) True 
 B)False

Question 16

_____ can have a significant influence on the selection of distribution channels.

Accepted Answer

A)   Geographic concentration of the market
B)   Order size
C)   Type of market
D)   Number of potential customers
E)   All of the above

Question 17

Some retailers demand a _____ from a manufacturer before they will place its products on store shelves.

Accepted Answer

A)   termination fee
B)   distribution fee
C)   service charge
D)   slotting fee
E)   failure-protection fee

Question 18

_____ typically occurs between producer and wholesaler or between producer and retailer.

Accepted Answer

A)   Horizontal channel empowerment
B)   Vertical conflict
C)   Horizontal integration
D)   Vertical integration
E)   Horizontal conflict

Question 19

A firm that wants to _____ may decide to use a selective distribution strategy.

Accepted Answer

A)   become a channel leader
B)   provide fewer customer services
C)   enhance the image of its products
D)   create a differential advantage which its competition cannot imitate
E)   pay less attention to the other elements of the marketing mix

Question 20

7-Eleven convenience stores has installed technology in every store that will allow each store to order merchandise directly from suppliers and abandon a distribution system in which most of the ordering is done by its suppliers' route drivers. According to 7-Eleven's chief executive officer, "The collaborative use of information technology will allow the stores to take back purchasing responsibilities. Through the use of information technology, the corporation and the suppliers can better know what each individual store needs." 7-Eleven is:

Accepted Answer

A)   opting for disintermediation.
B)   establishing channel partnerships.
C)   eliminating chargebacks.
D)   entering into tying contracts.
E)   abandoning its intensive distribution strategy.

Exam 14: Channels of Distribution

To serve its target market more efficiently, Medusa Cement Manufacturers purchased (1) a gravel pit to make sure it always had a ready supply of gravel and (2) a company that manufactures cement trucks. This is an example of a(n) :

Which of the following offers the greatest potential for vertical channel conflict?

Channel control becomes unlawful when it substantially lessens competition, creates a monopoly, or restrains trade.

A manufacturer that uses selective distribution:

Ralston-Purina, with its lines of cereal, snack food, and pet food, has such brand equity and market position that it is able to coordinate distribution activities through its market power. It uses a(n) : _____ for distribution.

A by-product of the rise of the Internet has been an increase in vertical and horizontal channel conflict.

_____ occurs when a manufacturer prohibits its dealers from carrying its competitor's products.

A primary source of horizontal conflict is:

Optimal intensity of distribution, from the standpoint of the producer, is just enough middlemen to meet the desires of the target market.

Which of the following products is LEAST likely to be marketed using an exclusive distribution strategy?

When Del Monte foods introduced its Kibble 'n Bits Homestyle dog food, Del Monte more than likely had to pay a _____ to each supermarket that it wanted to carry its new product.

Multiple channels of distribution benefit both producers and middlemen.

_____ can have a significant influence on the selection of distribution channels.

Some retailers demand a _____ from a manufacturer before they will place its products on store shelves.

_____ typically occurs between producer and wholesaler or between producer and retailer.

A firm that wants to _____ may decide to use a selective distribution strategy.