Deck 13: Distribution and Pricing: Right Product, Right Person, Right Place, Right Price

Question 1

Supply chain management is a subset of logistics and is only concerned with the movement of products from point A to point B.

Answer 1

False

Question 2

Which of the following statements is true of distributors in a channel of distribution?

A)They increase the number of transactions for goods to flow from producers to consumers.
B)They do not charge for adding value to products.
C)They add value in a number of different ways.
D)They make distribution channels more complex.

Answer 2

C

Question 3

Which of the following statements is true of the members of a distribution channel?

A)All channels have at least five channel intermediaries.
B)A producer follows a single channel of distribution.
C)The businesses that buy from wholesalers can be retailers, other wholesalers, or business users.
D)Retailers buy products from the producer and sell them to businesses or other nonfinal users.

Answer 3

C

Question 4

Hansel owns and runs a fruit juice manufacturing company. He decides that the company will sell packaged fruit juices through wholesalers and retailers. In this scenario, which of the following distribution strategies is Hansel planning to use?

A)Channel intermediaries
B)Direct channel
C)Voicemail marketing
D)Direct mail

Question 5

Single Tone, a local music and video store, consistently offers music CDs and movie DVDs at lower prices than its competitors. The pricing tactic that Single Tone uses is high/low pricing.

Question 6

One drawback of using distributors in a distribution channel is that the addition of intermediaries increases the total number of transactions that must occur to get the goods from the producer to the consumer.

Question 7

Plateus Inc., a warehouse club, is considered a channel intermediary because it purchases chocolates from Chocodelight chocolatiers and sells it to customers.

Question 8

Breakeven analysis is a relatively simple process that determines the number of units a firm must sell to cover all costs.

Question 9

Newton Coal Supply takes possession of coal from the local mining companies. However, it does not store a single ounce of coal on its premises. Instead, it simply arranges for the coal to be shipped directly from the mining company to its customers. This type of arrangement suggests that Newton Coal Supply is a _____.

A)drop shipper
B)full-service merchant
C)cash and carry wholesaler
D)truck jobber

Question 10

Merchant wholesalers can develop their own marketing strategies, including pricing strategies, because they:

A)facilitate transactions in exchange for commissions.
B)take legal title to the goods they help distribute.
C)are the producers of the goods they distribute.
D)are the least common form of independent wholesalers.

Question 11

Which of the following statements is true of independent wholesalers?

A)Merchant wholesalers comprise about 80 percent of all wholesalers.
B)Merchant wholesalers do not take legal ownership of the goods they distribute.
C)Agents take legal possession, or title, of the goods they distribute.
D)Independent wholesalers cannot represent multiple producers.

Question 12

Drop shippers do not take legal title of the goods they help distribute; instead, they merely provide delivery services for other wholesalers.

Question 13

First Bake delivers fresh cakes, breads, pies, and muffins to several small grocery stores in Central Radisova.In addition to delivering baked goods, First Bake's employees help the small store owners keep track of what they need to order, and they even remove outdated baked goods from the shelves. First Bake is an example of a:

A)truck jobber.
B)drop shipper.
C)cash and carry wholesaler.
D)product broker.

Question 14

Which of the following statements best defines a channel of distribution?

A)It is the network of regulatory agencies that regulate production strategies.
B)It is the path that a product takes from the producer to the consumer.
C)It is a theory which suggests that retail firms and retail categories become more upscale as they go through their life cycles.
D)It is the path through which products are produced and packaged in an assembly line.

Question 15

Which of the following are the elements of the distribution strategy?

A)Recruitment and performance appraisals
B)Channels of distribution and physical distribution
C)Pricing strategy and credit standards
D)Normal distribution and probability distribution

Question 16

Infomercials and telemarketing are examples of direct response retailing.

Question 17

In the context of nonstore retailers, vending machines are a key element of multilevel marketing.

Question 18

Everyday-low pricing (EDLP)aims to achieve long-term profitability through high sales volume.

Question 19

Which of the following statements is true of the distribution strategy?

A)It enables physical distribution without the interference of channel intermediaries.
B)It aims at eliminating channel intermediaries.
C)It reconciles conflicts between pricing strategies and promotion strategies.
D)It is a plan for delivering the right product to the right person at the right place at the right time.

Question 20

Truck jobbers are limited-service merchant wholesalers whose responsibilities include checking the stock, suggesting reorder quantities, and removing out-of-date goods.

Question 21

A specialty store:

A)offers a small range of everyday and impulse products at easy-to-access locations.
B)offers a wide range of food products, plus limited nonfood items.
C)sells a wide selection of merchandise within a narrow category.
D)sells a complete selection of food and general merchandise at a steep discount in a single enormous location.

Question 22

In the context of a supply chain, which of the following statements is true of the different modes of transportation?

A)Transportation by planes is the fastest but most expensive means of transport.
B)Pipelines offer the lowest on-time dependability and the lowest frequency of shipments among all the major modes of transportation.
C)Marketers usually rely on a single mode of transportation.
D)Ships offer the least flexibility in handling, but the highest on-time dependability of all major modes of transportation.

Question 23

_____ involves placing a producer's products such as low-cost convenience goods in as many stores as possible.

A)Selective distribution
B)Intensive distribution
C)Wholesale distribution
D)Direct distribution

Question 24

Joanne works in the marketing department of a toy manufacturing company. Her company offers discounts for soft toys but sells electronic toys at a price higher than that of its competitors. In this scenario, Joanne's company is adopting the strategy of:

A)everyday-low pricing.
B)high/low pricing.
C)penetration pricing.
D)skimming pricing.

Question 25

In _____, marketers determine prices based on what consumers are willing to pay and then subtract desired margins to yield target costs.

A)cost-based pricing
B)demand-based pricing
C)gap-determined pricing
D)fixed-margin pricing

Question 26

Which of the following is a form of nonstore retailing?

A)Intensive distribution
B)Direct selling
C)Exclusive distribution
D)Penetration pricing

Question 27

Which of the following statements is true of online retailing?

A)All the people visiting a typical website convert into paying customers.
B)Online retailers cannot provide efficient customer service like their on-ground counterparts.
C)There is a lack of security on the Web.
D)Online retailing will attract less customers than on-ground retailing.

Question 28

Which of the followingstatements is true of odd pricing?

A)It is the idea that if a television costs $599 instead of $600, consumers perceive the first one to be far cheaper than it actually is.
B)This strategy includes random and arbitrary price fluctuations in order to increase foot traffic.
C)It is the most popular method of establishing a fixed margin by determining the actual cost of each product.
D)It means that a producer has decided to decrease variable costs.

Question 29

Which of the following statements is true of penetration pricing?

A)Penetration pricing makes sense only in categories that have a significant group of consumers who would be willing to pay a premium.
B)Penetration pricing involves increasing product prices to target upscale consumers.
C)A company using the strategy of penetration pricing makes a huge profit from the sheer volume of sales.
D)A company using the strategy of penetration pricing gains a very high profit on each individual sale.

Question 30

_____ involves hiring independent contractors to sell products to their personal network of friends and colleagues and to recruit new salespeople in return for a percentage of their commissions.

A)Multilevel marketing
B)Direct response retailing
C)Online retailing
D)Vending

Question 31

Which of the following is a disadvantage of online retailing?

A)It is more expensive than on-ground retail.
B)Online-only brands do not offer effective customer service.
C)Consumers cannot exchange products once they are bought.
D)Product delivery does not happen immediately.

Question 32

Mopsun, a garment store, sells customized hoodies at $7 per unit. The total fixed costs add up to $8000 per year, and the variable costs add up to $3 per unit. How many hoodies should Mopsun sell every year in order to cover all costs?

A)1000
B)2000
C)1500
D)2500

Question 33

Gregory works for Ocan Foods, a food supplier. His main responsibility is to make tactical decisions involving the actual movement of goods along his company's supply chain. In this case, Gregory is involved in:

A)logistics.
B)vending.
C)direct selling.
D)direct response retailing.

Question 34

_____ remain constant regardless of how many products are sold.

A)Variable costs
B)Overhead costs
C)Fixed costs
D)Marginal costs

Question 35

_____ means establishing only one retail outlet in a given area.

A)Intensive distribution
B)Wholesale distribution
C)Exclusive distribution
D)Direct distribution

Question 36

Rancone Technologies, a laptop manufacturer, released a new laptop model that was priced at $800 to attract customers who could afford to pay a higher price. After a few months, it introduced low-priced versions of the same laptop to attract new buyers. By doing so, it maximized profitability by targeting different segments of the market. In this scenario, Rancone Technologies has used the _____ strategy.

A)penetration pricing
B)everyday-high pricing
C)loss-leader pricing
D)skimming pricing

Question 37

Pentogreen, a company that manufactures soda, offers its latest products at very low prices. Pentogreen's strategy is based on the assumption that more customers will be willing to buy its products if they're offered at lower prices. Pentogreen has adopted this strategy to attract a larger customer base and increase its sales volume even though it will only gain a small profit on each individual sale. In this scenario, Pentogreen has implemented the _____ strategy.

A)high/low pricing
B)skimming pricing
C)penetration pricing
D)loss-leader pricing

Question 38

The _____ includes all organizations, processes, and activities involved in the flow of goods from the raw materials to the final consumer.

A)distribution chain
B)vendors' network
C)supply chain
D)wheel of retailing

Question 39

Which of the following statements is true of cost-based pricing?

A)It determines price by adding a fixed margin to the per-unit cost of the product.
B)It determines the price based on the amount consumers are willing to pay for a product.
C)It is an interesting theoretical approach to pricing, but it is seldom used in the real world.
D)It is obtained by subtracting the desired margin, which yields the target costs.

Question 40

Odd pricing refers to the practice of:

A)varying prices at odd intervals rather than maintaining stable and predictable pricing.
B)charging prices that fall slightly below even dollars and cents in order to create a perception of greater value.
C)charging prices that differ significantly from competitors' prices in order to create an image of prestige and quality.
D)setting prices based on a statistical analysis of the amount consumers are willing to pay.

Question 41

A(n)_________ takes legal possession of the goods to be distributed.

A)broker
B)agent
C)merchant wholesaler
D)store retailer

Question 42

The _________ involves determining how a product will flow through the distribution channel from producer to consumer.

A)wheel of retailing
B)physical distribution strategy
C)vendor allocation strategy
D)breakeven analysis

Question 43

What are the three key distribution strategies for delivering products to consumers? Explain and define these strategies.

Question 44

Sending products by _________ is the least expensive option available to producers.

A)rail
B)truck
C)ship
D)plane

Question 45

Describe and compare the roles of retailers and wholesalers in a distribution channel.

Question 46

Describe the difference between penetration pricing and skimming pricing. Give an example of each to illustrate your answer.

Question 47

_________ are distribution organizations-informally called "middlemen"-that facilitate the movement of products from the producer to the consumer.

A)Stakeholders
B)Financial intermediaries
C)Suppliers
D)Channel intermediaries

Question 48

In the context of physical distribution, discuss the considerations that need to be taken into account while making key management decisions.

Question 49

The _________ is a classic distribution theory which suggests that retail firms and retail categories become more upscale as they go through their life cycles.

A)theory
B)wheel of retailing
C)hierarchy of needs theory
D)breakeven analysis

Question 50

Assume the price of your product is $10.00. The variable cost per unit is currently $5.00 and fixed costs are $15,000 per month. Assume that the company can invest in some equipment that will reduce variable costs to $3.00 each, but the cost of financing the new equipment will increase fixed costs to $17,500 per month. Compare the breakeven points for these two different options. Assuming the firm believes it can sell 2,800 units of its product at the $10.00 price, which is the better choice?