chapter 12

108) Producers of convenience products and common raw materials typically seek exclusive distribution, a strategy in which they stock their products in as many outlets as possible.

false

109) Under the strategy of intensive distribution, the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories.

false

110) The producer informs each channel member what its responsibilities are, and what the terms of business are.

false

30) The role of marketing intermediaries is to transform the assortments of products made by retailers into the assortments wanted by producers.

false

32) It is more efficient for a company to keep the marketing channel functions—such as information gathering, promotion, contacting customers and matching their needs, negotiation, and physical distribution—in-house as they are most skilled at those functions.

false

33) The number of products supplied indicates the length of a channel.

false

34) In a direct marketing channel, the producer sells directly to the intermediaries, who in turn sell directly to the customers.

false

72) Horizontal conflicts are conflicts between different levels of the same channel.

false

73) Vertical conflict occurs among firms at the same level of the channel.

false

51) Which of the following is true of vertical marketing systems? A) Producers, wholesalers, and retailers act as a unified system. B) Channel members have no control over each other. C) Channel conflict is governed by informal mechanisms. D) The system is dominated by the consumer. E) Channel members work independently with no cooperation from other members.

A) Producers, wholesalers, and retailers act as a unified system.

11) Which of the following is most likely true of marketing channel decisions? A) They often involve long-term commitments to other firms. B) They have minimal influence on the prices of products offered to customers. C) They increase the amount of time a company spends connecting with customers. D) They increase the amount of effort a company puts in to distribute goods. E) They are easily altered, replaced, or discarded.

A) They often involve long-term commitments to other firms.

52) Which of the following is a major type of vertical marketing system? A) corporate B) conventional C) multilevel D) intrinsic E) extrinsic

A) corporate

92) Which of the following is an environmental factor that affects channel objectives and design? A) economic conditions B) factory staffing C) organizational objectives D) interpersonal influences E) individual motives

A) economic conditions

98) Ocean Spray sells its air fresheners only through Ray's Drugs. This is an example of ________ distribution. A) exclusive B) selective C) intensive D) indirect E) corporate

A) exclusive

102) When the seller allows only certain outlets to carry its products, this strategy is called ________. A) exclusive distribution B) subjective dealing C) selective distribution D) exclusive pricing E) disintermediation

A) exclusive distribution

96) With which of the following strategies would a company give only a limited number of dealers the right to distribute its products in their territories? A) exclusive distribution B) extensive distribution C) moderate distribution D) primary distribution E) intensive distribution

A) exclusive distribution

55) The ________ organization is the most common type of contractual relationship. A) franchise B) horizontal C) conventional D) multi-national E) entrepreneurial

A) franchise

105) Why do firms have difficulty accessing potential market areas in developing countries, such as China and India? A) inadequate distribution systems B) anti-globalization efforts C) highly centralized rural markets D) limited manpower E) high operating costs

A) inadequate distribution systems

97) For which product would a company use an exclusive distribution strategy? A) luxury cars B) newspapers C) chewing gum D) dairy products E) soft drinks

A) luxury cars

56) Ford and its network of independent franchised dealers is an example of a ________. A) manufacturer-sponsored retailer franchise system B) manufacturer-sponsored wholesaler franchise system C) service-firm-sponsored retailer franchise system D) service-firm-sponsored equity strategic alliance E) manufacturer-and-service-sponsored joint venture

A) manufacturer-sponsored retailer franchise system

22) Which of the following is a type of flow that connects all institutions in a marketing channel? A) payment flow B) ownership flow C) physical flow D) promotion flow E) information flow

A) payment flow

117) Producers motivate channel members using all of the following EXCEPT ________. A) using strict rules to force compliance with contract terms B) partner relationship management C) working to sell through the intermediaries D) persuading the intermediaries that they are first-line customers E) convincing channel members that each will enjoy greater success working together with a common goal

A) using strict rules to force compliance with contract terms

7) A ________ is made up of the company, suppliers, distributors, and customers who partner to improve the performance of the entire system. A) value delivery network B) horizontal channel C) consumer base D) product delivery network E) product line

A) value delivery network

49) Which of the following is true of conventional distribution channels? A) Channel members have complete control over each other. B) Channel members seek to maximize their own profits. C) Channel conflict is governed by formal mechanisms. D) Channel members are assigned roles according to a clearly defined framework. E) Channel members work exclusively for the good of the organization.

B) Channel members seek to maximize their own profits.

39) ________ are complex behavioral systems in which people and companies interact to accomplish individual, company, and channel goals. A) Customer relationship management systems B) Distribution channels C) Partner relationship systems D) Consumer bases E) Buying centers

B) Distribution channels

93) ________ distribution is a strategy in which producers of convenience products and common raw materials stock their products in as many outlets as possible. A) Direct B) Intensive C) Inclusive D) Exclusive E) Selective

B) Intensive

13) ________ play an important role in efficiently making products available to target markets in the needed varieties and quantities. A) Virtual banks B) Intermediaries C) Price consultants D) Uniform-delivery networks E) Upstream partners

B) Intermediaries

8) ________ play an important role in matching supply and demand by providing consumers with a broad assortment of products in small quantities. A) Virtual banks B) Intermediaries C) Price consultants D) Uniform-delivery networks E) Upstream partners

B) Intermediaries

115) ________ management calls for selecting, managing, and motivating individual channel members and evaluating their performance over time. A) Inventory B) Marketing channel C) Brand image D) Customer experience E) Brand content

B) Marketing channel

99) ________ distribution involves the use of more than one but fewer than all of the intermediaries who are willing to carry a company's products. A) Exclusive B) Selective C) Intensive D) Indirect E) Corporate

B) Selective

41) Which of the following is true of channel members? A) They act independent of each other. B) They play specialized roles in the channel. C) They are not accountable to other channel members. D) They play generalized and interchangeable roles in the distribution process. E) Their competence and cooperation don't affect the company's image or profits.

B) They play specialized roles in the channel

60) In a(n) ________, two or more companies at one level join together to follow a new marketing opportunity. A) administered vertical marketing system B) horizontal marketing system C) corporate vertical marketing system D) hybrid distribution system E) conventional marketing system

B) horizontal marketing system

9) Which of the following questions is NOT of major concern regarding marketing channels? A) What role do physical distribution and supply chain management plan in attracting and satisfying customers? B) What impact do marketing channels have on the profitability of the firm and its partners? C) How do channel firms interact and organize to do the work of the channel? D) What problems do companies face in designing and managing their channels? E) What is the nature of marketing channels, and why are they important?

B) What impact do marketing channels have on the profitability of the firm and its partners?

58) In a(n) ________, leadership is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members. A) horizontal marketing system B) administered VMS C) corporate VMS D) contractual VMS E) conventional VMS

B) administered VMS

88) Which of the following should be a manufacturer's first step when designing an effective marketing channel? A) set channel objectives B) analyze consumer needs C) identify channel alternatives D) evaluate channel alternatives E) establish strategic alliances

B) analyze consumer needs

15) A ________ is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer. A) product platform B) channel level C) resource bank D) contact center E) customer franchise

B) channel level

48) A(n) ________ consists of one or more independent producers, wholesalers, and retailers, each seeking to maximize its own profits, sometimes even at the expense of the system as a whole. A) multitiered supply chain B) conventional distribution channel C) intrinsic market matrix D) resource bank E) product platform

B) conventional distribution channel

67) Which of the following is a disadvantage of adding new channels in a multichannel distribution system? A) decreasing complexity of markets B) decreasing control over the system C) reducing opportunities for franchising D) lowering sales and market coverage E) minimizing publicity needs

B) decreasing control over the system

16) In a(n) ________ channel, the same member both produces and distributes a product or service to consumers. A) tiered B) direct C) platform D) vertical E) exclusive

B) direct

69) The Bookworm began delivering books directly to customers through mail instead of selling through brick-and-mortar companies. This is an example of ________. A) indirect marketing B) disintermediation C) franchising D) exclusive distribution E) intensive distribution

B) disintermediation

3) Which of the following terms refers to the wholesalers and retailers that form a vital link between the firm and its customers? A) factory-supply networks B) downstream partners C) resource banks D) upstream partners E) supply channels

B) downstream partners

118) When a seller requires its dealers to abstain from handling competitors' products, it is called ________. A) subjective distribution B) exclusive dealing C) selective distribution D) exclusive pricing E) disintermediation

B) exclusive dealing

23) The greater the number of channel levels in a marketing channel, the ________. A) less distance between producer and end-consumer B) greater the channel complexity C) less time it takes for products to reach end-consumers D) greater the control producers have over the distribution of their products E) greater the control producers have over the demand of their products

B) greater the channel complexity

42) Conflict that occurs among firms at the same level of the marketing channel is known as ________ conflict. A) multitiered B) horizontal C) vertical D) prolonged E) financial

B) horizontal

57) Fire Up makes fireproof clothing material and it licenses select stores around the world to use its material to make finished products with the Fire Up logo. Which of the following types of franchising is evident here? A) manufacturer-sponsored retailer franchise system B) manufacturer-sponsored wholesaler franchise system C) service-firm-sponsored retailer franchise system D) service-firm-sponsored equity strategic alliance E) manufacturer-and-service-sponsored joint venture

B) manufacturer-sponsored wholesaler franchise system

14) From the economic system's point of view, the role of ________ is to transform the assortments of products made by producers into the assortments wanted by consumers. A) upstream partners B) marketing intermediaries C) third-party logistics D) price consultants E) factory supervisors

B) marketing intermediaries

24) Which of the following is a conventional consumer marketing channel? A) producer to business distributor to end consumer B) producer to wholesaler to retailer to end consumer C) producer to end consumer to business customer D) producer to retailer E) producer to business distributor to business customer

B) producer to wholesaler to retailer to end consumer

4) The term supply chain is considered limited because it ________. A) ignores the make-and-sell aspect of the market B) suggests that planning begins with raw materials and factory capacity C) takes a step-by-step, linear view of purchase-production-consumption activities D) takes a sense-and-respond view of the market E) suggests that planning starts with identifying the needs of target customers

B) suggests that planning begins with raw materials and factory capacity

2) The sets of firms that supply companies with the raw materials, components, parts, information, finances, and expertise needed to create products or services are known as ________. A) retailers B) upstream partners C) distributors D) downstream partners E) distribution channels

B) upstream partners

43) Conflict that occurs between different levels of the same marketing channel is known as ________ conflict. A) horizontal B) vertical C) multitiered D) equilateral E) communal

B) vertical

68) ________ occurs when product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones. A) Extensive distribution B) Multichannelization C) Disintermediation D) Inclusive distribution E) Cross merchandising

C) Disintermediation

101) Which of the following is true of the exclusive distribution strategy? A) It makes products available to everybody, everywhere. B) It is used primarily for convenience items. C) It helps promote a brand's luxury image. D) It gives producers no control over their products. E) It enlists all of the intermediaries willing to carry a company's products.

C) It helps promote a brand's luxury image.

70) Which of the following is true of changes in the organization of distribution channels? A) Developing new channels seldom causes conflict with a company's established channels. B) To remain competitive, product and service producers must use fewer marketing channels. C) The growth of the Internet threatens many brick-and-mortar companies with disintermediation. D) Companies have fewer channel options today than they did in the past due to economic problems. E) Advances in technology have decreased the number of channels available to entrepreneurial firms.

C) The growth of the Internet threatens many brick-and-mortar companies with disintermediation.

61) Which of the following is most likely a manufacturer-sponsored retailer franchise system? A) international fast food chains like McDonald's and Pizza Hut B) Starbucks outlets operating within Target stores C) Toyota and its network of independent franchised dealers D) licensed bottlers that bottle and sell soft drinks to retailers E) hotel chains like the Ritz Carlton and Shangri-La

C) Toyota and its network of independent franchised dealers

21) Which of the following is an example of an indirect marketing channel? A) June Bride, which sells bridal gowns via its click-to-order online catalogs B) Farmer Brown, who delivers fresh milk from his dairy to customers every morning C) Wine & Dine, which sells its picnic baskets to select novelty stores across the country D) Lifebelt Insurance, which sells life insurance through its door-to-door salespeople E) Rhonda's Rental, which rents cars to people for the day

C) Wine & Dine, which sells its picnic baskets to select novelty stores across the country

20) Plasticine Palace supplies its products exclusively to Arts & Crafts, a chain of stationery stores across the country. The chain then makes the plasticine available to end consumers. This is an example of ________. A) a direct marketing channel B) intensive distribution C) an indirect marketing channel D) disintermediation E) extensive distribution

C) an indirect marketing channel

119) A strategy of exclusive dealing is most likely considered legal if ________. A) the industry is newly developed B) both parties have large territories C) competition is not substantially lessened D) the dealer agrees to promote the competitor's products E) the dealer receives a steady source of supply and support

C) competition is not substantially lessened

54) A ________ VMS consists of independent firms at different levels of production and distribution who join together through formal agreements to obtain more economies or sales impact than each could achieve alone. A) corporate B) contingency C) contractual D) communal E) conventional

C) contractual

53) A ________ VMS integrates successive stages of production and distribution under single ownership. A) contractual B) contingency C) corporate D) conventional E) communal

C) corporate

120) Which of the following involves the producer agreeing not to sell to other dealers in a given area, or the buyer agreeing to sell only in its own region? A) closed loop marketing B) uniform-delivery pricing C) exclusive territorial agreement D) cross merchandising E) nationalized marketing

C) exclusive territorial agreement

66) Which of the following is an advantage of adding new channels in a multichannel distribution system? A) limiting market complexity B) reducing control over the system C) expanding sales and market coverage D) decreasing marketing needs and costs E) minimizing mass customization of products

C) expanding sales and market coverage

10) A ________ is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user. A) product line B) product delivery network C) marketing channel D) consumer base E) resource bank

C) marketing channel

64) Atlas Imports and Exports sells products directly to consumers via the Atlas Web site, and through local retailers as well. Which of the following is evident here? A) corporate vertical marketing system B) horizontal marketing system C) multichannel distribution system D) administered vertical marketing system E) conventional distribution channel

C) multichannel distribution system

5) The term demand chain is considered limited because it ________. A) advocates a make-and-sell view of the market that relies on a responsive supply network B) suggests that planning starts with raw materials, productive inputs, and factory capacity C) takes a step-by-step, linear view of purchase-production-consumption activities D) ignores the evolution of the global marketplace E) overlooks the needs of target customers

C) takes a step-by-step, linear view of purchase-production-consumption activities

91) The company's channel objectives are influenced by all of the following EXCEPT ________. A) the company's marketing intermediaries B) the company's competitors C) the age of the company D) the nature of the company E) the company's products

C) the age of the company

47) Conflict in the channel can be healthy because ________. A) it can disrupt channel effectiveness B) normal give-and-take simply is normal C) the channel could become passive and non-innovative D) it can cause harm to channel relationships E) the respective rights of the channel partners take priority

C) the channel could become passive and non-innovative

12) Distribution channel decisions frequently require long-term commitments between firms. A primary reason is that ________. A) advertising is not easy to change B) old products are difficult to discard and new products are difficult to introduce C) when they set up distribution through franchisees, independent dealers, or large retailers, they cannot readily replace these channels with company-owned stores or Internet sites if conditions change D) changing the manufacturing requirements is expensive and takes significant time E) management does not want to be constantly changing the method of selling and distributing its products

C) when they set up distribution through franchisees, independent dealers, or large retailers, they cannot readily replace these channels with company-owned stores or Internet sites if conditions change

17) Which of the following companies uses a direct marketing channel? A) Fishhooks, a factory that manufactures fishing equipment that it ships to hobby stores worldwide B) Germfight, a factory that manufactures dental products that it distributes only to select department stores C) Apple Blossoms, a company that sells its cosmetics exclusively through Ray's Retail Store D) Holly Wreaths, a store that sells Christmas ornaments to customers via its online click-to-order catalogs E) Showdown, a clothing store that stocks merchandise from different international brands

D) Holly Wreaths, a store that sells Christmas ornaments to customers via its online click-to-order catalogs

40) Which of the following does NOT apply to channel systems? A) Some channel systems consist of only informal interactions among loosely organized firms. B) Channel systems do not stand still; they evolve. C) Some channel systems are formal interactions guided by strong organizational structures. D) Intermediaries play interchangeable roles in the system. E) Different types of intermediaries develop and emerge.

D) Intermediaries play interchangeable roles in the system.

89) Which of the following is NOT a step in designing an effective marketing channel? A) evaluating the channel alternatives B) identifying major channel alternatives C) analyzing consumer needs D) determining pricing policy for channel members E) setting channel objectives

D) determining pricing policy for channel members

45) The management of two Panizza restaurants has an ongoing disagreement over the discount rate given to students from the local high school. This is an example of ________ conflict. A) intensive B) selective C) exclusive D) horizontal E) vertical

D) horizontal

95) Whitelight sells its toothpastes in many convenience stores across the country. This is an example of ________ distribution. A) exclusive B) selective C) hybrid D) intensive E) normal

D) intensive

116) To help recruit, train, organize, manage, motivate, and evaluate relationships with channel partners, companies are now installing integrated high-tech ________ systems. A) advertiser funded programming B) customer segmentation network C) brand content management D) partnership relationship management E) closed loop marketing

D) partnership relationship management

100) Craftsman Furniture Company offers its bedroom and living room furniture through independent and smaller chain furniture stores, not through every store that sells furniture. It uses ________ distribution. A) intensive B) direct C) corporate D) selective E) exclusive

D) selective

94) For which of the following products would the intensive distribution strategy most likely be used? A) high-end cameras B) luxury cars C) lawn mowers D) soft drinks E) furniture

D) soft drinks

1) Producing a product or service and making it available to buyers requires building relationships not only with customers but also with key suppliers and resellers in the company's ________. A) upstream partnerships B) marketing channels C) inventory providers D) supply chain E) downstream partnerships

D) supply chain

50) A(n) ________ marketing system consists of producers, wholesalers, and retailers acting as a unified system. A) horizontal B) communal C) multitiered D) vertical E) equilateral

D) vertical

59) ________ VMS is a vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties. A) Contingent B) Aligned C) Corporate D) Contractual E) Administered

E) Administered

18) At its most basic form, a marketing channel consists of the producer and the ________. A) retailer B) sales agent C) competitor D) processor E) consumer

E) consumer

44) Managers at the Imperial Hotel-Chicago complained that the chain's overall image was hurt because Imperial Hotel-Dallas was overcharging guests and providing poor service. The Imperial Hotel was experiencing ________ conflict. A) equilateral B) vertical C) multitiered D) communal E) horizontal

E) horizontal

62) When McDonald's offers its products inside of a Walmart store, it is using a(n) ________. A) conventional marketing system B) corporate VMS C) contractual VMS D) administered VMS E) horizontal marketing system

E) horizontal marketing system

19) A marketing channel that consists of one or more intermediaries is known as a(n) ________ marketing channel. A) cyclic B) upstream C) looped D) direct E) indirect

E) indirect

104) Which of the following is NOT a criterion a company will use to evaluate the major channel alternatives? A) adaptability B) control C) commitment D) sales and costs E) likability

E) likability

65) Movie Giants offers DVD rentals through its Web site. It also offers DVD rentals via Star City stores. This is an example of a(n)________ distribution system. A) conventional B) inclusive C) intensive D) extensive E) multichannel

E) multichannel

63) A(n) ________ system involves a single firm setting up two or more marketing channels to reach one or more customer segments. A) conventional distribution B) corporate vertical marketing C) horizontal marketing D) administered vertical marketing E) multichannel distribution

E) multichannel distribution

25) Which of the following is an indirect business marketing channel? A) producer to retailer to business distributor B) producer to wholesaler to retailer to end consumer C) producer to end-consumer to business distributor D) producer to retailer E) producer to business distributor to business customer

E) producer to business distributor to business customer

6) A view of the market that specifies that planning starts by identifying the needs of target customers, to which the company responds by organizing a chain of resources and activities with the goal of creating customer value is a(n) ________ view. A) make-and-sell B) identify-and-target C) purchase-produce-and-consume D) market-and-profit E) sense-and-respond

E) sense-and-respond

90) In designing the marketing channel, a company must balance customer needs and wants with ________. A) the need to make a profit B) the requirement to find channel members to fill all the steps C) the firm's position in the customers' minds D) the desire to be "the best" in all service areas E) the firm's resources and skills to provide all the desired services

E) the firm's resources and skills to provide all the desired services

46) When KFC came into conflict with its franchisees over the brand's Unthink KFC repositioning, which emphasized grilled chicken over its traditional Kentucky fried chicken, KFC experienced ________ conflict. A) equilateral B) horizontal C) multitiered D) communal E) vertical

E) vertical

75) A non-corporate VMS integrates successive stages of production and distribution under single ownership.

false

76) In a vertical marketing system, two or more companies at one level join together to take advantage of a new marketing opportunity.

false

106) Multichannel marketing occurs when a single firm sets up two or more marketing channels to reach one or more customer segments.

true

107) Marketing channel design calls for analyzing consumer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives.

true

27) Downstream marketing channel partners, such as wholesalers and retailers, form a vital link between the firm and its customers.

true

28) A company's channel decisions directly affect the prices of its products.

true

29) Producers use intermediaries because they create greater efficiency in making goods available to target markets.

true

31) Each layer of marketing intermediaries that performs some work in bringing the product and its ownership closer to the final buyer is a channel level.

true

71) A marketing channel works most effectively when each channel member performs the tasks it does best.

true

74) A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers; each seeking to maximize its own profits, perhaps even at the expense of the system as a whole.

true

77) Disintermediation occurs when radically new types of channel intermediaries displace traditional ones

true