Marketing Channels Exam 3

In attempting to gain price control in the channel, the manufacturer should use:

"Friendly persuasion."

An item cost a manufacturer $4 to produce. It has a wholesale trade discount of 66% and a retail trade discount of 50%. The list price of the item is $15. Assuming the retailer sold the item for $12, the dollar gross margins received by the manufacturer, wholesaler, and retailer are respectively:

$1.10, $2.40, $4.50.

If a product has a list price of $25 and offers a wholesale trade discount of 59% and a retail trade discount of 40%, the cost to the wholesaler is:

$10.25.

An item cost $20 to produce. The retailer sold the product for $79. It had cost the retailer $50. The wholesaler had paid $34 for the product. The list price of the product was $100. The total of the dollar gross margins received by the manufacturer, wholesaler, and retailer amounts to:

$59.

Consumer product companies launch more than 45,000 products each year. Yet, just over _______ maintain distribution for more than two years.

25%

If an item that had cost the retailer $7 sold at retail for $12.50, the gross margin percentage on selling price is:

44%.

A product cost a wholesaler $6.80. The wholesaler sold the product to a retailer for $10.00. The percentage gross profit on the wholesaler's cost is:

47%.

Of the total expenditures by all manufacturers on promotion about __________ of every dollar spent goes for push type promotions.

50%

If a wholesaler can buy an item for $38 that has a list price of $95, the trade discount percentage available to the wholesaler is:

60%.

Gross margins of wholesalers range approximately from:

7% to 34%.

A fundamental but long-term strategic channel management option that should be considered during the maturity stage of the product life cycle is:

A change in the channel structure.

Distribution programming may be defined as:

A comprehensive program for the promotion of a product through the channel.

A distribution programming approach to motivating channel members means:

A comprehensive set of policies for the promotion of product through the channel.

A periodic gathering of data on how channel members perceive the manufacturer's marketing program, its component parts, where the relationships are strong and weak, and what is expected of the manufacturer to make the channel relationship viable and optimal, is known as:

A marketing channel audit.

The most typical strategy used for promotional allowances is to offer channel members:

A percentage of purchases on particular products.

Forward buying causes:

A slowdown in the distribution process.

Webster's phases in the development of a partnership arrangement include:

A statement of each partner's specific tasks and role in the partnership.

The term securing the cooperation of channel members suggests that:

Administrative actions by the channel manager are necessary to develop channel member cooperation.

Which of the following is not a stage of the product life cycle?

Advanced

Which of the following is most likely to have the effect of moving price points downward for a product category?

Advancing technology

Product decisions __________ channel management decisions.

Affect

Which of the following is true regarding manufacturers' attempt to uncover channel members' views on the manufacturer's pricing strategies?

All of the above

Trade discounts:

Are reductions from list price.

McVey's propositions imply that manufacturers:

Are unaware of or insensitive to the needs and problems of channel members.

The particular mix of products carried by a channel member at the wholesale or retail level is referred to in the text as its:

Assortment

Before the channel manager can successfully motivate the channel members, he or she must:

Attempt to learn about channel member needs and problems.

Which of the following is a false statement about marketing channel audits?

Audits aid manufacturers in determining what problems have already been solved.

Clayton Products, Inc. is considering establishing a Distributor Advisory Council. It can expect that this council will provide all of the following advantages except:

Be quite simple to set up and require little ongoing management.

Which of the following would not be considered a differentiated product?

Bic pens

Which of the following is not an example of displays and/or selling aids?

Billboards

The belief underlying the so-called pull strategy is?

By building strong consumer demand for their products, manufacturers pressure channel members to promote these products.

Perhaps the best way for a manufacturer to find out how his products are selling relative to competitive products is:

By monitoring the flow of products at the point of final sale.

Push and pull promotion:

Can be used together successfully.

A typical Programmed Merchandising Agreement contains all of the following major categories except:

Capital requirement plan.

Which of the following is not an example of in-store promotion?

Cardboard cutouts

Cooperative advertising dollars are also called:

Case allowances.

Which of the following is not one of the methods suggested for learning about channel member needs and problems?

Channel inspection tours

Treating post-sales service as an afterthought is a shortcoming in:

Channel management.

For samples to be an effective in-store promotion, it is suggested that:

Channel managers and retailers will need to be more clever and develop situational sampling.

Which of the following is a false statement about when a manufacturer is developing new products and involvement of channel members?

Channel members should have experts at the manufacturer's plant during product development.

Bruce Computer Software, in developing its new products, must recognize that its intermediaries will be enthusiastic only if the new products:

Complement the intermediaries' current assortment.

Which of the following activities is not usually performed by missionary salespeople calling on retailers?

Conducting customer surveys

Which of the following is not a factor that should normally be included in developing pricing strategies?

Consumer income

Manufacturers are often concerned about their products being involved in the gray market for all of the following reasons except:

Consumers may stop buying the product because of a perceived decrease in value.

Which of the following represents a ranking of channel member support programs from the least comprehensive to the most comprehensive?

Cooperative, partnership, distribution programming

The channel manager's efforts to manage the marketing channels effectively should focus on:

Creating synergy among the four components of the marketing mix.

Which of the following areas is not one found by research to be appropriate for study in a marketing channel audit?

Customer's satisfaction with new products being introduced

Wal-Mart stays in touch with Procter & Gamble by all of the following except:

Daily meetings between managers of both companies.

When the maturity stage of the product life cycle is reached, the sales turnover experienced by many of the channel members for the product in question is likely to:

Decrease.

Differing perceptions of price incentives between the consumers and channel members' viewpoints stem from:

Differing price elasticities.

Before automatically passing price increases through the channel, the manufacturer should:

Do whatever it can do to mitigate the negative effects of the increase on channel members.

When reviewing the margins offered to different classes of channel members, the channel manager should consider all of the following functions except:

Does the channel member offer guarantees and repair warranties?

___________ are products that usually have the lowest price in the product line and yield low margins.

Door openers

___________ is the term used to describe strategic alliances that are formed as a part of an Internet strategy.

E-alliances

Anheuser-Busch's "100 percent share of mind" program is most consistent with beer distributors:

Following an exclusive dealing arrangement.

When a channel member makes disparaging remarks about a product in order to sell a competitor's product, the channel member is engaging in:

Footballing.

Which of the following was a major problem for Jaguar dealers when Ford introduced the X-Type Jaguar?

Ford was careless about quality, which resulted in higher warranty costs.

When channel members load up on discounted products featured in the manufacturer's promotion but pass on the lower price for just a portion of the amount purchased to their customers, they are most likely to be engaged in:

Forward buying.

Distributors and dealers who offer extremely low prices but little if any service to customers are engaging in a practice called:

Free riding.

Gross margins for retailers of __________ are on the average lower than for retailers of ___________.

Gasoline service stations; furniture

Which of the following is not an issue that needs to be addressed in e-alliances?

Gathering information about alliance members' operations

Which of the following statement pertaining to "special pricing deals" is false?

Generally special pricing deals enhance brand equity.

One of the main issues Proctor & Gamble (P&G) Company had with its Max Factor is:

Giant mass market U.S. retailers were not willing to give more shelf space to Max Factor products.

The "golden rule" of channel pricing advises channel managers to:

Give explicit consideration to the effect of pricing decisions on channel member behavior.

A product differentiation strategy includes all of the following except:

Gross profit margins will increase through the life of the product.

With inter-firm relationships, channel members become strategically integrated because they:

Have an explicit and acknowledged stake in the other's success.

Amazon.com has begun to pressure manufacturers to use less wasteful packaging because:

Having a large advertising budget.

Effective retail training programs should include all of the following except:

How retail customers can promote products.

A producer may offer a margin different from that offered by competitive brands if:

If the customers associate superior benefits with the product.

If a powerful manufacturer, an industry leader with exceptionally strong brand loyalty from final customers, offers channel members margins they perceive to be inadequate, the channel members are likely to do all of the following except:

Immediately drop the product from their product line.

During the decline stage of the product life cycle, it is not unusual to find all of the following except:

Increased profit margins.

Sales quotas are a way for the manufacturer to communicate:

Information regarding the channel member's territory sales potential.

___________ is a term used to refer to the use of several promotional tools in a coordinated effort to achieve maximum promotional impact.

Integrated marketing communication

In general, a good cooperative program has all of the following components except:

It does not need to include retail channel members.

Which of the following is not a feature of the Evergreen and Ivy display for candles?

It handles product that comes in one size.

From the standpoint of the manufacturer, using trade shows as a promotional strategy for motivating channel members is beneficial for all the following reasons except:

It is an effective way to gain government approval for new products.

Which of the following is not true about missionary selling in the industrial market?

It is inexpensive.

A manufacturer may feel it needs to control resale price for all of the following reasons except:

It needs all channel members to perform in a specific manner in order to meet strategic objectives.

For the channel manager, the most powerful element of the marketing mix for gaining channel member cooperation is:

It varies.

Training programs at the wholesale level should be aimed at improving all of the following except:

Knowledge of tax implications for their respective companies.

Manufacturers have to exert a lot of effort to gain channel member acceptance of new products because of all the following except:

Manufacturers are experts in identifying what customers want.

The major strategic emphasis for channel managers to make possible changes to the channel structure or to select different types of intermediaries occurs in the _______ product life cycle stage.

Maturity

Consultants such as SymphonyIRIGroup have made it feasible for manufacturers to:

Measure the effects of promotional programs more accurately.

During the growth stage of the product life cycle, two overriding issues for channel management are:

Monitoring competitive products and providing for adequate product availability.

When securing the cooperation of channel members, the channel manager is:

Motivating channel members.

A manufacturer risks creating its own competition when it adopts a product strategy of:

National and private brands.

One of the most critical channel management tasks during the introductory stage of the product life cycle is to:

Obtain adequate market coverage.

Large supermarkets have selected small food manufacturers to provide natural food items for their stores because:

Of the small manufacturer's credibility.

Which of the following is an accurate statement regarding displays and selling aids?

Often manufacturers have difficulty getting retailers to use displays and selling aids.

Marketing channel communications systems:

Often need to be supplemented by other approaches for learning channel members' needs and problems.

The success of a manufacturer's product strategies is:

Often related to channel management.

It is now easier for manufacturers to measure the effect of promotional allowances because of:

Outside consulting firms.

In order for a cooperative advertising program to work effectively, the channel members must do all of the following except:

Pass the high cost of print ads to the manufacturer.

Channel members are often reluctant to support advertising programs if they feel there is too much emphasis on the manufacturer's products and not enough emphasis on:

Patronage appeals.

The concept of "buying distribution" refers to:

Paying channel members for services through the margins offered by the manufacturer.

Product line expansion and contraction is becoming even more challenging for channel managers because:

Power retailers are emphasizing store-by-store category management.

The underlying basis of all attempts to provide leadership in the channel is:

Power.

Virtually all of the policy options for developing a distribution programming arrangement can be categorized into the following three major groups:

Price concessions, financial assistance, and protection.

For some product categories, customers simply have come to expect finding products priced at customary levels. The "expected" prices for such products are referred to as:

Price points.

In a marketing channel communication system, indirect-flow information media include all of the following except:

Product catalogs.

In a pull and push promotional strategy, the three main flows involved are:

Product, negotiation, and promotion.

A detailed statement covering the manufacturer's policies in most of the relevant areas of its relationship with channel members is referred to as a:

Programmed merchandising agreement.

Which of the following is not an advantage of using trade shows as a promotional strategy?

Provides an opportunity to advise and give technical assistance to channel members

According to the text, research studies dealing with channel members conducted by the manufacturer are:

Relatively rare.

Which of the following is a common abuse of cooperative advertising money by retailers?

Retailers buying newspaper space at rates lower than what they bill manufacturers.

Cooperative programs must be offered on a proportionally equal basis to all channel members in the same class or they violate the:

Robinson-Patman Act.

The effectiveness of the overall promotional strategy depends on how successful the manufacturer is in:

Securing cooperation from independent channel members in implementing the promotional strategy.

The underlying concept behind the push promotional strategy is:

Securing mutual effort and cooperation between manufacturers and channel members in the use of promotion.

When dealing with product brand strategy, the most difficult channel management issues arise in connection with:

Selling products under both national and private brands.

Product service:

Should be considered as an important strategic issue.

Training for channel members to sell new products successfully:

Should be planned as the new product is being developed.

Sales quotas for channel members:

Should be set in conjunction with the channel member.

________ are payments made by manufacturers to encourage channel members to display and stock new products.

Slotting allowances

Which of the following is a false statement about slotting fees?

Slotting fees may discriminate against large manufacturers who are willing and able to pay high fees.

Ideally, the channel manager should set the margins offered the channel members:

So that margins would vary in direct proportion to the functions performed by the different classes of channel members.

The relationships between Procter & Gamble and Wal-Mart, Black & Decker and its distributors, and Rust-Oleum and its distributors all are examples of:

Strategic alliances.

The partnership approach as applied to the marketing channel means a:

Supportive relationship between channel members based on a careful delineation of their mutual roles in the channel.

A basic tenet of virtually all programs of channel member support should be:

That they emphasize the specific needs and problems of the channel members.

In the context of the marketing channel, control may be defined as:

The ability to predict events or to achieve a desired outcome.

In using in-store promotions, the most critical factor for the channel manager to consider in judging the probable effectiveness of the promotion is:

The benefits of the program as perceived by retailers.

At the beginning stage of managing the marketing channel, it is assumed that:

The channel design decision process has already taken place.

Household appliance retailers earn an average 33.5% gross margin. These retailers might be willing to accept a lower margin on promotional products if:

The channel members are convinced that the promotional products will help build customer patronage.

A product positioning strategy includes all of the following except:

The cost to manufacture the product.

The sale of well-known brand products by unauthorized dealers, usually at very low prices, is referred to as:

The gray market.

The increasing emphasis on push promotions in recent years is attributed to:

The increasing size and power of retailers and wholesalers.

Which of the following is not one of McVey's propositions about the behavior of intermediaries?

The intermediary is a link in a chain forged by the manufacturer.

The "price" paid to gain channel member support must emphasize:

The job performed by the channel members.

Which of the following factors tend to limit the channel manager's attempt to gain total control of the channel?

The lack of central direction

Which of the following is not a potential reaction by channel managers to a manufacturer's cut in price?

The price cut may decrease sales volume and profits.

K&B Manufacturing, in developing its new products, must recognize that its intermediaries will judge the acceptability of the new products based on:

The product's profit potential in terms of meeting established margin structures.

In the context of the marketing channel, leadership may be defined as:

The use of power to achieve control.

A customer buying a branded product from a low-priced distributor likely is:

There is no way to tell from the information given.

Many channel members feel that when it comes to contests and incentives:

They are a one-sided deal in the manufacturer's favor.

Special trade deals can keep a channel member attracted to a product in the maturity stage of the product life cycle, but they may not be in the manufacturer's long-run interest because:

They are stopgap measures.

To a channel manager, the elements of the marketing mix do all of the following except:

They do not affect the performance of other channel members.

Which of the following is not typically mentioned as an advantage of distributor advisory councils?

They enable channel members to engage in price maintenance.

Which of the following is a false statement about Oxenfeldt's set of eight classic guidelines for developing pricing strategies?

They guarantee results.

Which of the following is a possible channel member reaction to a manufacturer-initiated price cut?

They may resent the reduction in their margins that may result from the price cut.

Giant retail chains such as Home Depot and Lowe's, demand lower prices from manufacturers because:

They perform many wholesaler functions.

All of the following are direct-flow information media in a channel communication system except:

Trade journals.

The practice whereby intermediaries, under special promotional deals, buy more inventory than they possibly could sell in a reasonable period of time is known as:

Trade loading.

All of the following are cooperative programs usually aimed at retailers except:

Training salespeople.

The main channel management issue in product line expansion and contraction strategies is:

Trying to gain channel member support for reshaped product lines.

The Cisco Systems' example cited in the textbook showed that Cisco:

Used training and certification of dealers to lead in the channel.

When pursuing a trading up or trading down product strategy, the most critical issue a channel manager must consider whether:

Whether existing channel members provide adequate market coverage of the high or low end of the market.

Pricing in the marketing channel can be thought of as analogous to:

Who gets what "piece of the pie".

Some producers use outside marketing research firms to learn about channel members' needs and wants because:

a higher degree of objectivity is likely.

Generally, when manufacturers make major changes in their pricing structure, channel members usually are __________ when manufacturers make major changes in their terms of sale.

as uneasy as

Typically, __________ programs are on-again/off-again while __________ programs stress a continuing relationship.

cooperative; strategic alliance

The __________ often causes a problem with price promotions.

differing price elasticities of consumers and retailers

Ethan Allen Interiors Inc., cited in the text, best illustrates the _____________ approach to motivating channel members.

distribution programming approach

The most sophisticated approach to providing channel member support is the:

distribution programming approach.

Slotting fees are most commonly used in the ________ industry.

grocery

As a general rule, each channel participant wants a price that provides a __________ sufficient to cover its __________ and provide a contribution to __________.

gross margin; expenses; profit

During the __________ stage of the product life cycle, manufacturers must be especially mindful of channel member actions with respect to competitive products.

growth

It is fair to say that many retailers have become ___________ about the profitability of the barrage of new products offered to them.

hyperskeptical, even cynical

Acceptance of a new product by channel members __________ its acceptance by final users.

is necessary for

The first step in developing a distribution program is an analysis by the manufacturer of __________ and the level of support the manufacturer needs from channel members.

marketing objectives

Distribution programming is the __________ form of channel member support.

most comprehensive

Retailers and wholesalers are __________ content to be conduits that giant manufacturers using massive national advertising can send their products smoothly through to final customers.

no longer

A partnership in the context of marketing channels is __________ legal partnership.

not related to a

Of all the elements in the marketing mix, channel members at the wholesale and retail levels view __________ as being most in their domain.

pricing

Consignment selling, liberal returns allowances, and rebate provisions are examples of __________ in a distribution programming arrangement.

protective provisions

Trade shows, if conducted properly, provide the manufacturer with an opportunity to strengthen its __________ power base.

referent

It is expected that ________ may become the most dominant form of promotional allowance demanded by large retailers.

slotting fees

Channel members judge a product package based on how well it meets their __________ requirements.

stock and display

When Levi Strauss Co. introduced its Levi Strauss Signature brand jeans, it was engaging in a(n) __________ strategy.

trading down