MKGT 3650 Exam #3 Study Guide

Toys "R" Us employed its purchasing power with toy producers Mattel and Hasbro to coerce them into not selling to competing retailers such as Costco and Sam's Club. Toys "R" Us actions resulted in ___________.

Horizontal channel conflict

Assume that a number of Texas oil refiners decide to work together to uniformly restrict output with the goal of stabilizing declining prices. These firms are likely to be accused of ____________.

Horizontal price fixing

A retail store's _____________ include the decor, merchandise arrangement and crowding, general layout, background music, color schemes, scents, acoustics and noise levels, lighting, and cleanliness of stores.

Internal atmospherics

Montana Coffee Traders operates a coffee shop inside of Kroger's Supermarket in Whitefish Montana. Evidently, in this specific case, Montana Coffee Traders is a ____________

Leased department retailer

Movement of parts and materials from their sources of supply into the manufacturing process is called:

Materials management

When channel members haggle with one another over final prices and product placement within retail settings they are performing which channel function?

Negotiating

Stores such as Family Dollar and Dollar General tend to locate their facilities in ________________ in order to target consumers living nearby, attracting consumers who are primarily interested in a combination of convenience and lower prices.

Neighborhood centers

____________ occurs when products are not sold from fixed retail facilities and consist of four basic types: direct selling, telemarketing, direct marketing, and vending.

Non-store retailing

The physical movement of finished goods from producers to middlemen and, eventually, to consumers is

Physical distribution

_________ is the only marketing mix element that generates revenue for the firm.

Price

__________ is the amount of money or other form of remuneration that is charged for products or services.

Price

Which distribution channel is the manufacturer of small fireproof safes for businesses most likely to use?

Producer to industrial distributor to user

Consider the following statement: "If the net profit margin on each sales dollar earned is 5%, a supply chain operational savings of $5,000 yields the same return to the Firm's bottom line as would a sales increase of $100,000." This statement reflects:

Profit leveraging of costs

For featuring Lego Sets prominently in its store window, Toy Emporium, a store that carries educational toys, received a free motorized Ferris Lego Wheel kit, valued at $150. This is an example of a:

Promotional allowance.

Vending is a relatively expensive form of retailing due to costs associated with all of the following except ____________.

Spoilage of products not purchased before their expiration date.

_________ are combination supermarkets and discount stores with additional services such as fast food restaurants, dry cleaning, banking, check cashing, automobile servicing, and optical centers.

Supercenters

____________ are slowly dying and probably will be phased out incrementally as consumer demand shifts in favor of the greater convenience of e-commerce and preferences for smaller, local retail facilities over big-box retailers.

Supercenters

The channel of distribution for consumer products does not include which of the following?

Suppliers of component parts to the producer.

_________ are groups of independent firms involved in the process of making products or services available for use or consumption by organizations or consumers.

Supply chains

The main difference between agent middlemen and merchant wholesalers is:

That agent middlemen do not own the products they sell--while merchant wholesalers do.

When a seller offers a cash discount with terms of 3/10, n/60, this means:

The buyer gets a discount of 3 percent if the bill is paid within 10 days; otherwise the entire amount is due in 60 days

The sequence of organizations and individuals through which finished consumer goods move is called:

The channel of distribution

Estee Lauder Co. now sells most of its flagship products directly online. This choice, made around 2000, resulted in substantial __________ with the various high-end retailers through which it had been selling.

Vertical supply chain conflict.

____________ is most likely to arise when manufacturers attempt to bypass wholesalers or retailers and sell direct to consumers.

Vertical supply chain conflict.

Whether a given transaction is classified as a wholesale sale or as a retail sale essentially depends on:

Whether the product will be used by an organization or by a consumer

The major distinction between a retail and a wholesale transaction is:

Whether the product will be used by an organization or by a consumer.

Grainger Worldwide buys a wide range of industrial products (mainly maintenance, repair, and operating supplies) from manufacturers and resells these products to other business users. When making sales to its customers, Grainger is engaged in _____________.

Wholesaling

___________ includes all activities involved in the marketing and distribution of goods and services from one business to other businesses.

Wholesaling

Grainger Worldwide buys a wide range of industrial products (mainly maintenance, repair, and operating supplies) from manufacturers and resells these products to other business users. Grainger is a _____________.

Wholesaling intermediary

____________ includes all activities involved in selling goods and services to ultimate consumers for their own personal use.

Retailing

A retailer pays a wholesaler $24.00 for an item and then sells it with a 50 percent markup based on cost. The retailer's selling price is: (Select the closes answer)

$36.00

Cash discount terms of 2/10, net 60 on an invoice would, in effect, amount to borrowing at an annual interest rate of about ________ percent if the buyer did not pay the invoice within the 10 days allowed.

14

DrainKing produces an excellent professional drain-cleaning machine sold to plumbing businesses. The total variable costs for making each unit are $325.00. DrainKing's average selling price for the unit is $750.00. DrainKing's fixed costs of production and sales are $4,500 per month. If DrainKing desires $10,000 in profit each month, how many units must it sell each month? (Select the closest answer)

34

Assume that you are estimating the demand curve for a product using buy-response data and have collected the following via a survey: Price % Who Will Buy 5.00 1%, 4.75 10%, 4.50 25%, 4.25 45%, 4.00 60%, 3.75 75%, 3.50 90%. Assume that research suggests that your target market consists of approximately 500,000 persons. You anticipate that each buyer will purchase an average of 1.5 units of the product. What level of demand can you expect at the $4.00 price? (round to the nearest unit).

450,000 units

In a corporate vertical marketing system,

A firm at one level of the channel owns the firms at multiple levels in the channel.

Denton Plumbing, Inc. buys plumbing supplies, piping, fixtures, and tools from different manufacturers and resells them to construction companies. Denton is MOST LIKELY

A merchant wholesaler

When large-scale retailers, such as Walmart and Target, vie with one another for sales and market share, they are engaging in ____________.

A mild form of horizontal channel conflict.

Lois Lane wants to open a convenience store in Cripple Creek Colorado. What kind of wholesaler will likely provide her chewing gum, tobacco products, candy bars, and other snack foods?

A truck jobber

Assemblers are commonly found in the agricultural and fishery industries. Large food products producers (Hunt, Campbell, StarKist) do not want to buy direct from many small farmers or fishermen. They prefer to buy in large quantities from these assemblers that have already pooled these smaller quantities. The assembler is performing which channel function?

Accumulating

Wal-Mart, because of its sheer size and market position is able to coordinate distribution activities through its market power. This is an example of the ______________ type of VMS.

Administered

For which of the following products would a manufacturer be most likely to offer a seasonal discount?

Air conditioning system.

Under which of the following conditions is a tying contract likely to be declared as legal?

All of the above increase the likelihood that a tying contract will be legal--> -The supplier alone can provide products of the required quality, as in the case of some franchise situations. -A new small company is entering the market and desires full line representation. Under these circumstances adverse effects on competition are minimal. -Buyers are allowed to carry competing products, thereby assuring market access to competing firms.

The AVC curve is typically 'u-shaped' because:

All of the above-> -Scale economies initially drive unit fixed costs down as sales volume increase. -The experience curve tends to drive unit variable costs down as producers become more knowledgeable of how to make products. -Unit variable costs tend to increase after some level of output due to 'diseconomies of scale'

Aggregate Chemical Supply is a large wholesaler of chemical products. Aggregate buys in large quantities from its suppliers and then resells these chemicals in smaller amounts to its customers across the Southwest US. Which supply chain (channel) function is being performed by Aggregate?

Allocating

Break-even analysis is normally conducted during the __________ stage of the price setting process.

Cost-volume-profit analysis

Wal-Mart distribution centers bring together a large variety of different kinds of products from a wide range of manufacturers. Wal-Mart is performing the ______________ function when, based on what each store's needs are at the time, it combines a number of different products together for shipping to each of its Wal-Mart stores.

Assorting

When retailers such as Kroger or Winn-Dixie bring together a variety of different products to offer their customers, they are performing the __________ channel function.

Assorting

The internal and external physical characteristics of stores that shape the retail store's image are referred to as:

Atmospherics

A _____ is an independent agent wholesaling middleman that brings buyers and sellers together and provides marketing information to both parties.

Broker

The manager of the San Francisco Seafood Company knows the market for its Tilapia is geographically quite large. Price and supply conditions vary considerably from season to season. Since San Francisco Seafood can sell its Tilapia only a few months each year, it does not need continuous market representation. San Francisco Seafood and other Tilapia producers should use:

Brokers

For which of the following products is exclusive distribution most likely?

Caterpillar tractors

_____ occurs when one supply chain member perceives that another supply chain member is making decisions in a manner that interferes with the ability of the first supply chain member to achieve its own objectives.

Channel conflict

The Polo outlet at Grapevine Mills, a large factory outlet center, is an example of which channel structure?

Corporate vertical marketing system

Lillian Vernon began her catalog empire with an advertisement for her purses in Seventeen magazine. Young ladies were encouraged to place orders via the telephone or mail. Lilian Vernon was employing _______.

Direct response advertising

Time-Life regularly airs TV commercials promoting books, DVDs, and CDs. Consumers are shown 1-800 numbers and encouraged to use credit cards to make purchases. Time-Life is employing ___________.

Direct response advertising

Which of the following is true about how direct selling differs from direct marketing?

Direct selling is limited to face-to-face contact sales using door-to-door selling and party plan selling

___________ offer a wide assortment of product lines, each provided in shallow, but reasonable, depth. Product lines are organized by department, few services are provided, the retail setting is austere, and prices are set low to attract price-sensitive consumers.

Discount stores

A _____ consists of the set of people and firms involved in the transfer of title to a product as it moves from producer to ultimate consumer or business user.

Distribution channel

Steve Johnson sells fiberglass resins and fiberglass fabrics to the many small sailboat manufacturers in Florida. He takes title to the products but does not handle them. Instead, the materials are shipped directly from the producer to the sailboat manufacturers. Steve is a:

Drop shipper

Todd Jeffries sells bulk lubricants and solvents to the many small machine shops in southern California. He takes title to the products but does not handle them. Instead, the lubricants and solvents are shipped in 25 to 50-gallon barrels directly from the producer to the machine shops. Todd is a:

Drop-shipper

Farmer Brothers distributes its coffee to restaurants, delis, vending operators, and coffee services through a variety of channels to reach essentially the same customers. Farmer Brothers is engaging in the practice commonly referred to as:

Dual distribution

A small manufacturer of custom cabinets wants to expand sales but does not wish to get involved directly with selling or any other marketing activities. The manufacturer probably will opt to employ which form of channel structure for reaching consumers?

Employing an agent to handle sales to other intermediaries

_________ are being employed when a producer prohibits its dealers from carrying its competitors' products,

Exclusive dealing agreements

____________ is the most restricted form of distribution. This form of distribution is best suited to specialty goods and some shopping goods, as well as industrial equipment and installations.

Exclusive distribution

A retail store's __________ include building architecture and storefront, parking, landscaping, surrounding buildings, and the general drive-by appearance that contribute to the consumer's initial image of the store.

External Atmospherics

With which geographic pricing strategy is the seller likely to have the lowest freight charge?

FOB mill pricing

Yesterday Delta Press in Dallas, Texas shipped 1,000 books to a retailer in Florida, 150 books to a retailer in Georgia, and 50 books to a buyer in Montana. However, Delta Press paid no freight charges. Which geographic pricing strategy did Delta use?

FOB plant pricing

Wells Fargo provides the financial services that allow supply chain members (wholesaling and retailing intermediaries) to establish and operate their businesses. In this context, Wells Fargo is a(n) ________.

Facilitating agent.

Transportation firms, such as trucking companies and railroads, assist other supply chain members (producers, wholesalers, and retailers) by transporting products from point of production to point of consumption. In the context of supply chains, these transportation firms are called _________.

Facilitating agents

__________ usually limit sales to products produced by a single manufacturer. These stores are owned and operated by the manufacturer and, therefore, exemplify corporate vertical marketing systems.

Factory outlets

If there is a traditional channel for consumer goods, it is:

From producer to wholesaler to retailer to consumer

When a manufacturer requires that its dealers carry its entire line or the dealer will be dropped, the manufacturer is engaged in _______

Full-line forcing.

For which of the following products is intensive distribution most likely to be employed?

Gillette razor blades

Joe's Electronics Supply stocks electronic repair parts and related supplies and tools from various producers. Joe's sells primarily to small electronic repair shops throughout the country that only want to order one or two items at a time. Orders are usually shipped out on UPS trucks. It appears that Joe's is a

Limited line (specialty) wholesaler

"Inventory in motion or at rest throughout the supply chain" is called:

Logistics

Old Smokie, Inc. is a small producer of specialty equipment for smoking meats. The company does not have its own sales force and has just introduced a cooker which smokes meats 50% faster. The cooker will most likely be distributed by a:

Manufacturers' agent

Sandra Locke sells gluten-free specialty food products to grocery wholesalers and large retail grocery chains in Tampa. She sells for several manufacturers with noncompeting lines of gluten-free foods and earns a 4% sales commission. Sandra does not own or inventory the products she sells. Evidently, Sandra is a:

Manufacturers' agent

The expected price for sunscreen is in the $4 to $6 price range. The introductory price for Sun UVA Guard by Coppertone was set high ($9.99) to recover its research and development costs. Coppertone was using a _____ strategy.

Market-skimming

The supply chain function in which buyers and sellers are brought together to perform exchanges is:

Matching

Managing the flow of parts and other factors of production into the manufacturing process has been traditionally called ___________ by logisticians.

Materials Management

Joe Duncan sells a wide assortment of "emergency" home repair items (fuses, electrical tape, small packets of nails) to grocery and convenience stores. He owns the products he handles, provides the shelves and stocks the display, and monitors the inventory for his customers. Joe is a:

Rack jobber

A national grocery store chain has decided to sell an assortment of hobby, gardening, and cook books. Buyers in the chain's main office are not certain what to stock because they think that consumers in different areas of the country will probably be interested in different books. The store managers have said they don't know what to order either. The chain should probably get help from a:

Rack jobber.

The likely consequences of firms choosing to engage in non-price competition include all of the following except __________.

Reduced ability to raise prices.

Which of the following is not a benefit of business format franchises for the franchisors?

Reduced exposure to potential federal and state regulation.

The Galleria in Dallas is anchored by a Westin Hotel, has an ice-skating rink, offers a five-screen cinema, and is populated by more than 200 select retail department stores, specialty stores, and restaurants for its patrons to visit. The Galleria is a ____________.

Regional center

____________ limits the sale of products to a smaller range of retail outlets. This form of distribution is most appropriate for shopping and some specialty products that are tailored to meet the needs of well-defined market segments.

Selective distribution

A _____ essentially substitutes for a manufacturer's marketing department by marketing the firm's entire output.

Selling agent

Sophie Taylor sells the entire output of several small companies based in Colorado Springs' Tech Center. Each of the companies designs and produces computer components. Sophie has almost complete control of all marketing activites since the engineers who started the companies lack marketing experience and want to focus on what they do best --- inventing things. Sophie is paid a substantial commission on all sales. She is a:

Selling agent

When eggs are packaged into different sizes (medium, large, jumbo) and grades (A or AA) or lumber products, such as 2x4 studs, are graded according to number and severity of knots or splits, which channel function is being performed?

Sorting

Merrill Lynch, an investment firm, groups investment opportunities based on "risk" and "return" from which its clients will choose. Merrill-Lynch is performing which channel function?

Sorting.

A full-service wholesaler in Dallas takes title to the products it stocks and sells i.e. a complete line of home repair products for small, independently owned hardware stores. This wholesaler is a:

Specialty (limited line) wholesaler

In which of the following situations is a manufacturer's exclusive territory agreement with a dealer likely to be declared illegal?

The manufacturer forbids the dealer from selling outside his territory.

Which of the following is least likely to cause problems when employing historical data to estimate demand curves?

The seller introduced several new products that were considered to be category extensions during the time in question.

Joe lives in Hawaii and is a frequent buyer of antiques on Internet auction sites. He is used to paying higher shipping costs than his brother who lives in Colorado and who also likes to buy antiques on the Internet. The price differential is most likely because:

The seller probably was using zone-delivered pricing.

The primary factor that distinguishes between a merchant wholesaler and an agent is

The wholesaler takes title; the agent does not

Which of the following is being used when a manufacturer engages in "full-line forcing?"

Tying contracts.

Which method for estimating demand curves is least appropriate for the marketer of a new product.

Using historical ratios.

Wendy's fast-food restaurant chain priced several of its more popular menu items at $.99 while raising the price of some of its upgraded meal deals. This pricing strategy is an example of _____ pricing because the chain is trying to improve the customer's perception of the ratio of benefits received to the product's price.

Value.

Machines that dispense products, video game machines, and bank ATMs all illustrate which form of retailing?

Vending

When Jon Jones decided to sell 10 acres of land, he contacted Leona Anderson. She showed the land to a potential buyer who wanted to build a home on the site, explained the market conditions for land in the area, and helped negotiate the terms of the sale. She left the final decision about the sale up to Jon and the young couple. Anderson is most likely a:

broker.