Deck 11: Marketing Channels

Question 1

Kevin Pinker is a freelance electrical engineer who writes computer algorithms for companies such as SoftStar and BlueHill. SoftStar and BlueHill use these algorithms to make specific programs based on online market research. These programs are then sold to the online retailer, Abundon, which then sells them to individual consumers and businesses. Which of the following is a marketing intermediary in this chain?

A)SoftStar
B)BlueHill
C)the consumer
D)Abundon
E)Kevin Pinker

Answer 1

D

Question 2

A ________ is made up of a company, its suppliers, distributors, and, ultimately, customers who "partner" with each other to improve the performance of the entire system.

A)manufacturing chain
B)distribution centre
C)marketing intermediary
D)value delivery network
E)disintermediation system

Answer 2

D

Question 3

Which of the following is a marketing intermediary?

A)customers
B)producers
C)manufacturers
D)retailers
E)advertisers

Answer 3

D

Question 4

In a ________, producers, wholesalers, and retailers act as a unified system. In such a structure, one channel member owns the others, has contracts with them, or has so much power that they all cooperate.

A)direct marketing system
B)horizontal distribution channel
C)lateral marketing system
D)conventional distribution channel
E)vertical marketing system

Question 5

Which of the following would be considered an upstream partner in a company's supply chain?

A)a firm that resells a finished product and shares the net sales with the producer
B)a firm that provides technical expertise in the production of a product
C)a firm that markets a product to consumers through social media
D)a firm that buys products at wholesale cost from the company
E)a firm that exclusively markets a product to other businesses

Question 6

Which of the following is true of a direct marketing channel?

A)It increases the number of channel transactions.
B)It enables retailers to reach many customers.
C)It does not use any intermediaries.
D)It gives limited distribution control to producers.
E)It creates a complex distribution channel.

Question 7

Jupiter Steel is the chief provider of metals to Greystone Motors. Greystone Motors has two models of cars-one for commercial and ordinary consumers and another for professional car racing teams. Greystone Motors has designated dealers to sell its commercial cars to consumers, while racing cars are sold directly to the racing teams. In such a distribution channel, which of the following would be considered a horizontal conflict?

A)a conflict between Jupiter Steel and Greystone Motors
B)a conflict between Jupiter Steel and Greystone dealers
C)a conflict between two Greystone Motors car dealerships
D)a conflict between a Greystone Motors car dealership and a racing team
E)a conflict between Greystone Motors and its car dealerships

Question 8

Which of the following is true of a conventional distribution channel?

A)It has each channel member acting as a separate business unit trying to maximize its own profits.
B)It consists of producers selling their products directly to customers without the use of intermediaries.
C)It has one channel member owning the other channel members.
D)It is a distribution channel where a producer is owner of all the other channel members.
E)It has all members of the channel working together as a single organization.

Question 9

Which of the following is true of downstream channels in a company's supply chain?

A)They provide their expertise in product design.
B)They manufacture the products of the company.
C)They supply raw materials and components to the company.
D)They contribute financially to the company during production.
E)They form an intermediary link between the company and its customers.

Question 10

Vertical conflicts in distribution channels are conflicts that occur between ________.

A)same levels in the same channel
B)different levels of the same channel
C)same levels of different channels
D)different levels of different channels
E)retailers and customers

Question 11

In which of the following situations is a producer guaranteed full control over product sales?

A)a corporate marketing channel
B)a direct marketing channel
C)a contractual distribution channel
D)a horizontal marketing system
E)an administered marketing system

Question 12

A firm that uses direct marketing would most likely sell its products through ________.

A)one marketing intermediary
B)big box retailers
C)large wholesalers
D)multiple intermediaries
E)the company Web site

Question 13

Mintel Agro provides raw materials in the form of agricultural products to Kiltmark Food Company. Kiltmark produces flour-based edible products, which it distributes to a wholesale company called Yellowstar Trading. Yellowstar Trading then sells Kiltmark products to the discount retailer, Stroos. Stroos sells the products to consumers. Which of the following is considered a marketing intermediary in these transactions?

A)only Kiltmark
B)only Stroos
C)only Yellowstar Trading
D)both Yellowstar Trading and Stroos
E)both Stroos and Mintel Agro

Question 14

Which of the following creates the shortest distribution channel between a producer and a customer?

A)retail marketing
B)indirect marketing
C)share marketing
D)direct marketing
E)wholesale marketing

Question 15

________ are sets of interdependent organizations that help make the product or service of a company available for use by consumers or business users.

A)Research and development channels
B)Upstream channels
C)Marketing channels
D)Raw materials suppliers
E)Backward integration chains

Question 16

Orion Steel is the chief provider of metals to Accline Cars, which manufactures two models of vehicles-cars and large buses. Accline dealers sell the firm's cars to individual citizens, but buses are sold directly to government entities. In such a distribution channel, which of the following would be considered a vertical conflict?

A)a conflict between Orion Steel and Accline Cars
B)a conflict between Orion Steel and Accline dealers
C)a conflict between two Accline car dealers
D)a conflict between Accline dealers and government entities
E)a conflict between Accline Cars and its dealers

Question 17

Which of the following is an example of a horizontal conflict in a distribution channel?

A)a Nike shoe dealer complaining that the shoes provided to the dealer are defective
B)a Ford car dealer complaining that another Ford dealer is underpricing the same models
C)a FedEx agent complaining that a DHL agent is cutting off his business
D)a Walmart executive complaining to a Pepsi executive for not replenishing stocks on time
E)a Gucci executive complaining to Gucci's suppliers of delays in shipping consignments

Question 18

Which of the following is true of a vertical marketing system?

A)It is formed when two or more companies at one level join together to follow a new marketing opportunity.
B)It is formed when a single firm sets up two or more marketing channels to reach one or more customer segments.
C)It does not give overall power to any one member in the channel.
D)It has each channel member acting as a separate business unit trying to maximize its own profits.
E)It has one channel member owning all the other channel members or has contracts with all other channel members.

Question 19

Producers use marketing intermediaries because they ________.

A)create greater efficiency in making goods available to target markets
B)supply inexpensive raw materials for manufacturing products
C)provide technical expertise for faster production
D)monitor day-to-day activities during production
E)form a part of the company's direct channel

Question 20

From the economic system's point of view, the role of marketing intermediaries is to ________.

A)facilitate the production of products without direct customer feedback
B)help a company develop a direct channel selling system
C)buy small quantities of products from producers and break them down into narrow assortments for customers
D)increase the amount of work that must be done by producers and consumers
E)transform the assortments of products made by producers into the assortments wanted by consumers

Question 21

Pastaliano is a restaurant based in Illinois that exclusively sells Italian food. Pastaliano sells the rights to its recipes to a British firm, Clover Trading, which then opens an outlet in London under the Pastaliano brand name. Which kind of channel arrangement does Pastaliano most likely have with Clover Trading?

A)a horizontal marketing system
B)a direct marketing system
C)an administered vertical marketing system
D)a contractual vertical marketing system
E)a corporate vertical marketing system

Question 22

A(n)________ marketing system is a marketing system in which independent firms at different levels of production and distribution join together through binding agreements.

A)corporate vertical
B)horizontal
C)contractual vertical
D)administered vertical
E)direct

Question 23

Selective distribution is a strategy in which ________.

A)more than one but fewer than all willing intermediaries are used by a seller
B)products are stocked in as many outlets as possible by a seller
C)products are not sold through intermediaries but directly to customers from producers
D)all willing intermediaries are given rights to sell a product
E)common household goods are preferred over luxury products by intermediaries

Question 24

Which of the following is an advantage of exclusive dealing between a seller and a dealer?

A)The seller gains more shelf power compared to competitors' products.
B)The seller can avoid using any intermediary and sell the product directly to customers.
C)Customers get more loyal and dependable outlets.
D)The dealer obtains a steady source of supply and more support from the seller.
E)The dealer can freely choose what products to sell without any interference from the seller.

Question 25

Faber Motors manufactures three lines of cars: high-end security cars for government agencies, commercial cars for consumers and individuals, and professional racing cars. The high-end security cars are sold directly to government buyers by the company. The consumer cars are sold through dedicated dealers who only sell Faber's lines at their outlets. For its professional racing cars, Faber collaborates with Radium Tires, an innovative and renowned tire manufacturer. Faber provides the engine and body, while Radium provides the tires and its expertise on the racing industry. Which term best describes Faber's channel arrangements?

A)direct distribution system
B)horizontal marketing system
C)corporate vertical franchise system
D)multichannel distribution system
E)administered vertical marketing system

Question 26

Sonic Shack, an audio equipment retailer, signs an agreement with PineWire, a renowned electronics company, to sell PineWire products. The deal requires Sonic Shack to provide PineWire products with superior displays, shelf space, and promotion compared to competing products. Sonic agrees to these terms as PineWire products command a huge share in the market. Which of the following types of channel arrangements do PineWire and Sonic Shack most likely have?

A)administered vertical marketing system
B)corporate vertical marketing system
C)indirect marketing system
D)wholesaler franchise system
E)horizontal marketing system

Question 27

For over ten years, Erudite, a publishing and educational company that produces college textbooks, has been selling its books online through studysmart.com, a popular online retailer that sells textbooks published by different companies. Recently, Erudite stopped selling its books through studysmart.com and set up its own website for selling its books. This change in channel organization is called ________.

A)disintermediation
B)intensive distribution
C)brokering
D)franchising
E)selective distribution

Question 28

________ distribution is a product distribution strategy that involves stocking a product in as many outlets as possible.

A)Selective
B)Exclusive
C)Intensive
D)Exponential
E)Comprehensive

Question 29

________ distribution gives a limited number of dealers the sole rights to distribute a company's products in their territories.

A)Inclusive
B)Horizontal
C)Intensive
D)Exclusive
E)Vertical

Question 30

TruMart, a leading retail chain, decides to open a restaurant inside its stores, so the firm partners with MeatMe, a popular burger chain. MeatMe opens a restaurant inside TruMart. The MeatMe chain of restaurants also has a deal with Westman Cola to serve only Westman soft drinks at its outlets. This arrangement will benefit all three companies. What kind of channel arrangement is being followed in this case?

A)administered vertical marketing system
B)horizontal marketing system
C)direct marketing system
D)contractual vertical marketing system
E)corporate vertical marketing system

Question 31

When a seller requires that only certain dealers carry its products, its strategy is known as ________.

A)horizontal restraint of trade
B)intensive distribution
C)vertical distribution
D)disintermediation
E)exclusive distribution

Question 32

A(n)________ marketing system combines successive stages of production and distribution under single ownership, where channel leadership is established through common ownership.

A)contractual vertical
B)corporate vertical
C)administered vertical
D)horizontal
E)direct

Question 33

________ distribution gives producers good market coverage with more control and less cost than does intensive distribution.

A)Vertical
B)Selective
C)Horizontal
D)Comprehensive
E)Inclusive

Question 34

GreatWords is a book retailer. Due to the increasing demand for audiobooks, the firm decides to sell audiobooks in its stores. GreatWords signs a deal with Carpem, a leading producer of educational audiobooks. According to the deal, GreatWords will sell only Carpem's audio titles in its stores, while Carpem will not sell its books through other retailer stores. GreatWords profits from Carpem's popularity while Carpem, in return, enjoys better sales. This is most likely an example of a(n)________ marketing system.

A)direct
B)administered vertical
C)corporate vertical
D)contractual vertical
E)horizontal

Question 35

Which of the following is true of an intensive distribution strategy?

A)It gives sole rights to select dealers in a given area.
B)It strives to make products available where and when consumers want them.
C)Compared with other distribution strategies, it uses the least number of intermediaries to sell products.
D)Compared with other distribution strategies, it provides the best support for dealers of luxury products.
E)It discards traditional intermediaries and uses direct marketing to reach customers.

Question 36

A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity is referred to as a(n)________.

A)corporate vertical marketing system
B)contractual vertical marketing system
C)direct marketing system
D)horizontal marketing system
E)administered vertical marketing system

Question 37

Clara's, a cosmetics manufacturer, sells many of its products through retail outlets. However, the firm sells a few expensive, popular products only through direct selling methods. What kind of channel arrangement does Clara's follow for all of its products together?

A)horizontal marketing system
B)multichannel distribution system
C)administered vertical marketing system
D)contractual vertical marketing system
E)corporate vertical marketing system

Question 38

Rage, a leading motor vehicle manufacturer, introduces a new superbike model. It invites proposals from independent dealers who are willing to set up exclusive showrooms that only sell Rage's superbikes. Chosen dealers will sell and service the superbikes, and Rage will oversee national advertising. This is most likely an example of a(n)________.

A)administered vertical marketing system
B)horizontal manufacturing marketing system
C)manufacturer-sponsored retailer franchise system
D)manufacturer-sponsored wholesaler franchise system
E)direct marketing system

Question 39

In a(n)________ marketing system, leadership over production and distribution is assumed through the size and power of one or a few dominant channel members.

A)direct
B)contractual vertical
C)horizontal
D)corporate vertical
E)administered vertical

Question 40

Which type of channel arrangement does a franchise organization most likely follow?

A)administered vertical marketing system
B)horizontal marketing system
C)contractual vertical marketing system
D)corporate vertical marketing system
E)direct marketing system

Question 41

________ includes all activities involved in selling goods and services to those buying for resale or business use.

A)Wholesaling
B)Retailing
C)Franchising
D)Discounting
E)Disintermediation

Question 42

The use of both rail and trucks for transporting goods is called ________.

A)trainshipping
B)fishybacking
C)piggybacking
D)airtrucking
E)autoracking

Question 43

In supply chain management, moving products and materials from suppliers to the factory is known as ________ logistics.

A)outbound
B)reverse
C)inbound
D)downstream
E)inventory

Question 44

In a logistics system, minimizing distribution costs most likely involves ________.

A)flexible assortments
B)large shipping lots
C)rapid delivery
D)large inventories
E)liberal return policies

Question 45

________ are the largest group of wholesalers. The group can be divided into the two broad types of full-service and limited-service.

A)Brokers
B)Manufacturer sellers
C)Agents
D)Merchant wholesalers
E)Specialty wholesalers

Question 46

Reverse logistics refers to moving ________.

A)unwanted, excess products from resellers to producers
B)raw materials from suppliers to the factory
C)excess materials from the factory to suppliers
D)finished products from the factory to customers
E)finished products from producers to resellers

Question 47

Which mode of transportation is best for carrying perishable goods to distant markets?

A)railroads
B)water carriers
C)trucks
D)air carriers
E)pipelines

Question 48

Which of the following is most efficient for short hauls of high-value merchandise and is highly flexible in its routing and time schedules?

A)water carriers
B)pipeline
C)trucks
D)air carriers
E)railroads

Question 49

Which of the following is a cost-effective mode for shipping large amounts of bulk products-coal, sand, minerals, and forest products-over long distances?

A)air carriers
B)water carriers
C)pipelines
D)trucks
E)railroads

Question 50

The Memphis Rock chain of restaurants has a deal with WestEnd Cola, according to which it will serve only WestEnd sodas at its restaurants. What strategy has most likely been adopted by WestEnd Cola?

A)horizontal price fixing
B)disintermediation
C)exclusive distribution
D)selective distribution
E)horizontal integration

Question 51

Under ________, a customer shares real-time data on sales and current inventory levels with a supplier, and the supplier then takes full responsibility for managing inventories and deliveries.

A)periodic inventory systems
B)vendor-managed inventory systems
C)selective-trading inventory systems
D)manual inventory replenishment systems
E)customer-managed inventory systems

Question 52

Bateman Gray Motors sells the cars it produces using dedicated dealers who only sell Bateman Gray's products at their outlets. What kind of marketing strategy has Bateman Gray adopted with its car dealers?

A)direct marketing
B)exclusive distribution
C)disintermediation
D)horizontal integration
E)vertical integration

Question 53

Outbound logistics refers to moving ________.

A)unwanted, excess products from resellers to producers
B)raw materials from suppliers to the factory
C)excess materials from the factory to suppliers
D)products from the factory to resellers
E)broken, damaged products from customers to producers

Question 54

In a just-in-time logistics system, ________.

A)retailers carry small inventories of merchandise to last for only a few days
B)retailers store products for long periods to avoid an interruption in supply
C)producers supply products to resellers before customers place their orders
D)producers that are geographically far from their retailers use an express-delivery system
E)retailers incur high inventory-carrying and inventory-handling costs

Question 55

Which of the following is a difference between warehouses and distribution centres?

A)warehouses are used to store agricultural products, while distribution centres are used to store nonagricultural products.
B)warehouses store goods for moderate to long periods, while distribution centres are used to move goods rather than just store them.
C)warehouses are always owned by a producer, while distribution centres are rented.
D)warehouses are more likely to use newer, computer-controlled systems, while distribution centres generally use outdated materials-handling methods.
E)warehouses are exclusively used by government agencies, while distribution centres are exclusively used by private businesses.

Question 56

A ________ is highly automated and designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible.

A)distribution centre
B)storage warehouse
C)cold storage unit
D)controlled-atmosphere unit
E)storage silo

Question 57

Which of the following is true of RFID or radio frequency ID tags?

A)RFID eliminates the need for intermediaries and facilitates a direct marketing system.
B)RFID can de-automate the entire supply chain.
C)The use of RFID makes it difficult to know where a product is located physically within the supply chain.
D)Retailers and suppliers using RFID have higher risks of shoplifting and robbery.
E)"Smart shelves" can tell when it is time to reorder and can place orders automatically.

Question 58

Which of the following is true of an exclusive dealing arrangement between a producer and a dealer?

A)It prohibits the producer from selling outside the dealer's territory.
B)It prevents the producer from using any other dealer to sell its products regardless of geographical area.
C)It gives the producer's products more shelf power compared to a competitor's products being sold by the dealer.
D)It can be considered illegal if it increases competition substantially.
E)It does not allow other producers to sell to that dealer.

Question 59

________ involves combining two or more systems of transportation to move products.

A)Vertical transportation
B)Disintermediation
C)Just-in-time management
D)Vertical integration
E)Multimodal transportation

Question 60

________ buy mostly from producers and sell to retailers and industrial consumers.

A)Independents
B)Factory outlets
C)Wholesalers
D)Discount stores
E)Megaretailers

Question 61

Under the strategy of exclusive distribution, a seller allows only certain retail outlets to carry its products.

Question 62

Producing a product or service and making it available to buyers requires building relationships not just with customers, but also with key suppliers and resellers in the company's supply chain.

Question 63

In creating customer value, it is more important for a company to build relationships with downstream channel partners than with upstream supplier partners.

Question 64

Members of the marketing channel may help a company complete transactions by performing key functions such as promotion and negotiation.

Question 65

The producer and the final consumer are part of every type of marketing channel.

Question 66

Selective distribution seeks only one outlet in a given market area.

Question 67

The three main types of franchises are manufacturer-sponsored retailers, manufacturer-sponsored wholesalers, and service-firm-sponsored retailers.

Question 68

When the NewWay Dry Cleaners and The Easy Laundromat in your hometown join forces to follow a new marketing opportunity, they are forming a horizontal marketing system.

Question 69

A(n)________ brings buyers and sellers together and assists in negotiations.

A)agent
B)broker
C)retailer
D)wholesaler
E)retail convergence

Question 70

Disintermediation has occurred when an online marketer takes business away from traditional brick-and-mortar retailers.

Question 71

With the success of the Internet, few producers sell through intermediaries today.

Question 72

A major role played by intermediaries is to buy large quantities of products from many producers and break them down into the smaller quantities and broader assortments wanted by consumers.

Question 73

Always Fresh Produce Company has a route selling to more than 100 groceries, schools, and restaurants at wholesale prices. Last week the owners opened up a walk-in discounted consumer produce outlet. Always is now using a multichannel distribution system.

Question 74

The key to managing inventory is to balance the costs and benefits of carrying larger inventories with the costs and benefits of holding less.

Question 75

In a direct marketing channel, which has no intermediary levels, the company sells directly to consumers.

Question 76

When Sherwin Williams Paint Company has single ownership of integrated, successive stages of production and distribution, it has created a corporate VMS.

Question 77

Disintermediation is a threat to incumbent retailers in North America.

Question 78

________ and ________ do not take title to goods, and they perform only a few channel functions.

A)Full-service wholesalers; limited-service wholesalers
B)Brokers; agents
C)Branches; office
D)Power centres; independent wholesalers
E)Independent wholesalers; off-price retailers

Question 79

________ represent a buyer or seller on a more permanent basis.

A)Brokers
B)Franchises
C)Agents
D)Retailers
E)Intermediaries

Question 80

The producer and intermediaries need to agree on the terms and responsibilities of each member, including price policies, conditions of sale, territorial rights, and specific services to be performed by each party.