Chapter 14: Marketing Channels & Supply Chain Management

Identify the factors affecting distribution channel choice: Who are the potential customers?

customer charateristics

JanSport offers a line of backpacks in a variety of styles and sizes. The company needs to make sure it has an adequate assortment of backpacks available to meet customer demand as part of the _______ stage of logistics. a. inventory management b. materials handling c. warehousing d. transportation

a. inventory management

Which type of channel variation uses a variety of marketing channels to ensure maximum distribution? a. Multichannel distribution b. Direct to consumer strategy c. Digital distribution d. Strategic channel alliance

a. Multichannel distribution

Fila Sports Oceania is a subsidiary of an Italian company that owns apparel rights for certain teams in the Australian Football League. Fila introduced a policy in which retailers could not feature Fila products in the same stores as other licensed products from its rivals. The Australian Competition and Consumer Commission ruled this as anticompetitive. Fila was most likely forcing its retailers into _______. a. exclusive dealing b. full-line forcing c. tying agreements d. refusal to deal agreements e. restricted sales territories

a. exclusive dealing

Grainger is an industrial supply company selling equipment from manufacturers and selling the equipment to manufacturing companies. Grainger takes title and carries inventory of the products it sells. Grainger is an example of a(n) _______. a. industrial distributor b. manufacturer's agent c. broker d. wholesaler

a. industrial distributor

Scenario 14.1. Redbox places its vending machines in easy-to-reach areas around pharmacies, grocery stores, discount stores, and more. Most customers of Redbox purchase video and game rentals around dinnertime, so the fact that many of the machines are located close to grocery stores is a strategic move that benefits both Redbox and the store. Redbox manages its selection by keeping track of what movies are being ordered frequently at that location. The individual kiosks inform the company about past purchases, and the company can adjust the availability of DVDs or Blu-rays based on this information. Customers can also reserve movies online. Redbox attempted to engage in digital distribution to compete with Netflix, but the initiative failed. Redbox, however, is not giving up as it recognizes that digital streaming is the future. Refer to Scenario 14.1. What type of market coverage is Redbox most likely to use? a. Exclusive distribution b. Intensive distribution c. Intermediate distribution d. Extensive distribution e. Selective distribution

b. Intensive distribution

P&G will sell through its website, through grocery stores, through drug stores, and through several other intermediaries—all at the same time. The company is worried that there will be communication difficulties and disagreements between these intermediaries. What would this channel member behavior be? a. Channel cooperation b. Channel leadership c. Channel conflict d. Channel integration

c. Channel conflict

Which of the following involves planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants? a. Procurement b. Supply chain management (SCM) c. Logistics management d. Operations management

c. Logistics management

Which of the following is most likely to use the channel where the good goes from producer to retailer to end consumer? a. Caterpillar b. Hershey c. Sysco d. Netflix e. Target

e. Target

In 2015, Heinz and Kraft Foods merged into one company. This is most likely an example of _______. a. strategic channel alliance b. multichannel distribution c. logistics d. vertical channel integration e. horizontal channel integration

e. horizontal channel integration

What is the receipt and transmission of sales order information? a. Outsourcing b. Inventory management c. Order processing d. Cycle time

c. Order processing

One distribution option Unified is considering is to sell its fair trade coffee through only a dozen coffee shops in each major city in the United States. This is an example of which type of distribution intensity? a. Intensive b. Nontraditional c. Exclusive d. Selective

d. Selective

An arrangement under which a producer forbids an intermediary from carrying products made by competing manufacturers is called _______. a. exclusive dealing b. exclusive distribution c. refusal to deal d. a tying agreement

a. exclusive dealing

Pierre runs a grocery store and is working with his suppliers in the planning and implementation of the flow of products from the manufacturer to his store. The goal is to make the transportation and storage of products more efficient and effective. He is engaging in _______. a. logistics management b. channel management c. operations management d. procurement

a. logistics management

When launching its Dove Men+Care line of men's skin care products, Unilever told its distributors that they had to carry the new line if they still wanted to carry the rest of the Dove line of products. They would have been engaging in which of the following channel management practices? a. Restricted sales territories b. Refusal to deal c. Tying agreements d. Dual distribution

c. Tying agreements

Customers receive the benefits of form utility from an intermediary when _______. a. the product is preassembled in the manufacturer's packaging b. the consumer is preapproved for purchase and does not have to complete paperwork c. a retailer offers to add a monogram to a product d. the retailer has many locations available to purchase a desired product

c. a retailer offers to add a monogram to a product

Alicia is a product manager for a computer manufacturer and has decided to improve its inventory management. She is working with suppliers to wait to purchase materials right before they are needed in production so she can keep the levels of inventory low. She is suggesting a(n) _______ approach. a. ordering minimization b. safety stock c. just-in-time (JIT) d. inventory reduction

c. just-in-time (JIT)

P&G will utilize wholesalers and retailer relationships to make its hair care products available in every possible outlet across the country. This is an example of which type of distribution intensity? a. Intensive b. Exclusive c. Direct d. Selective

a. Intensive

Unified grows its inventory by purchasing from producers and then it distributes these products to retailers of all shapes and sizes. Which logistic function does this represent? a. Inventory management b. Materials handling c. Warehousing d. Order processing

a. Inventory management

Which of the following is not a benefit of Unified using multiple intermediaries? a. Making the distribution channel as short as possible b. Functioning more efficiently c. Reducing expenses d. Performing services more efficiently

a. Making the distribution channel as short as possible

Grainger specializes in products that are used to maintain, repair, and operate facilities (MRO products). Grainger takes title to products and carries inventories. It also offers services such as inventory management and support. Grainger is most likely a(n) _______. a. channel captain b. industrial distributor c. private warehouse d. megacarrier e. third-party logistics firm

b. industrial distributor

Mallory loves her job. She sells complementary products of several producers in assigned territories and is compensated through commissions. Mallory is highly effective at selling these products and is able to earn a high income from commissions. The best part is she never actually owns the products she sells. She acts more as a salesperson. Mallory is most likely a(n) _______. a. industrial distributor b. manufacturer's agent c. logistics manager d. megacarrier e. wholesaler

b. manufacturer's agent

Scenario 14.1. Redbox places its vending machines in easy-to-reach areas around pharmacies, grocery stores, discount stores, and more. Most customers of Redbox purchase video and game rentals around dinnertime, so the fact that many of the machines are located close to grocery stores is a strategic move that benefits both Redbox and the store. Redbox manages its selection by keeping track of what movies are being ordered frequently at that location. The individual kiosks inform the company about past purchases, and the company can adjust the availability of DVDs or Blu-rays based on this information. Customers can also reserve movies online. Redbox attempted to engage in digital distribution to compete with Netflix, but the initiative failed. Redbox, however, is not giving up as it recognizes that digital streaming is the future. Refer to Scenario 14.1. Redbox kiosks keep track of what movies are being ordered frequently at that location. The individual kiosks inform the company about past purchases, and the company can adjust the availability of DVDs or Blu-rays it uses to supply the kiosks based on this information. These activities most likely fall under which of the following? a. Materials handling b. Order processing c. Inventory management d. Warehousing e. Transportation

c. Inventory management

Scenario 14.1. Redbox places its vending machines in easy-to-reach areas around pharmacies, grocery stores, discount stores, and more. Most customers of Redbox purchase video and game rentals around dinnertime, so the fact that many of the machines are located close to grocery stores is a strategic move that benefits both Redbox and the store. Redbox manages its selection by keeping track of what movies are being ordered frequently at that location. The individual kiosks inform the company about past purchases, and the company can adjust the availability of DVDs or Blu-rays based on this information. Customers can also reserve movies online. Redbox attempted to engage in digital distribution to compete with Netflix, but the initiative failed. Redbox, however, is not giving up as it recognizes that digital streaming is the future. Refer to Scenario 14.1. Consider that Redbox locates its kiosks close to shopping centers where customers can pick up a movie while out shopping for food or other supplies. Based upon this, what type of utility do Redbox's kiosks offer to consumers? a. Cost utility b. Time utility c. Place utility d. Form utility e. Possession utility

c. Place utility

Redlands Distributing wants to carry Tide detergent products made by Procter & Gamble (P&G), P&G agrees, but only if the supplier also purchases P&G's entire line of detergents such as Gain and Cheer. If this were to occur, P&G would be engaging in which of the following channel management practices? a. Refusal to deal b. Exclusive dealing c. Tying agreement d. Multichannel distribution

c. Tying agreement

Scenario 14.1. Redbox places its vending machines in easy-to-reach areas around pharmacies, grocery stores, discount stores, and more. Most customers of Redbox purchase video and game rentals around dinnertime, so the fact that many of the machines are located close to grocery stores is a strategic move that benefits both Redbox and the store. Redbox manages its selection by keeping track of what movies are being ordered frequently at that location. The individual kiosks inform the company about past purchases, and the company can adjust the availability of DVDs or Blu-rays based on this information. Customers can also reserve movies online. Redbox attempted to engage in digital distribution to compete with Netflix, but the initiative failed. Redbox, however, is not giving up as it recognizes that digital streaming is the future. Refer to Scenario 14.1. Shane is in charge of working with movie studios and third-party distributors to purchase DVDs and Blu-ray discs to be made available through the kiosks. His only responsibility is to procure the movies and games for the different kiosks. Purchasing specifically falls under ____________________. a. operations management b. logistics management c. procurement d. channel management

c. procurement

A(n) ________________ is all the organizations and activities involved in the upstream and downstream flow of providing products to customers. a. logistics management b. procurement c. operations management d. supply chain

d. supply chain

Procurement involves the processes to obtain resources to create value through sourcing, purchasing, and recycling including materials and information. True False

True

Refusal to deal is legal as long as suppliers do not refuse to deal with intermediaries simply because they resist policies that are anticompetitive. True False

True

Supply chain management (SCM) includes procurement, logistics management, and operations management activities. True False

True

_______ systems exploit the information in supply chain partners' information systems and make it available for easy reference. a. Channel captain b. Procurement c. Strategic channel alliance d. Logistics management e. Customer relationship management

e. Customer relationship management

Which of the following would most likely use intensive distribution? a. Prada b. Sony c. Rolex d. Dell e. Kimberly-Clark

e. Kimberly-Clark

Electronic data interchange (EDI) is most effective for which type of logistics activity? a. Transportation b. Warehousing c. Materials handling d. Inventory management e. Order processing

e. Order processing

Identify the four types of utilities Form utility

elements of the composition and appearance of a product that make it desirable

Identify the four types of utilities Time utility

increase in customer satisfaction gained by making a good or service available at the appropriate time

Identify the four types of utilities Possession utility

increased value of a product that is created as its ownership is transferred

Identify the factors affecting distribution channel choice: How complex or customized is the product?

product attributes

Identify the factors affecting distribution channel choice: What are the producer's marketing resources?

type of organization

Firms that are "upstream" in the supply chain include 1. _______________, while those that are "downstream" include 2. ______________________. 1. a. wholesalers and retailers b. customers c. shippers d. suppliers 2. a. wholesalers and retailers b. customers c. shippers d. suppliers

1. d. suppliers 2. a. wholesalers and retailers

Walmart is most likely to be a channel captain in the supply chain. True False

True

Which channel includes goods passing from producer, to agents, to wholesalers, to retailers, and finally to consumers? a. Channel D b. Channel A c. Channel B d. Channel C

a. Channel D

Which factor of selecting a marketing channel considers new government regulations? a. Environmental forces b. Characteristics of intermediaries c. Product attributes d. Customer characteristics

a. Environmental forces

ACME Corp. sells hammers and other tools to Blue's Hardware Store. Suppose that ACME, which is the only supplier of a specific type of hammer that Blue's sells, informs Blue's that it will have to purchase certain other products from ACME if it wants to continue receiving the hammers. Blue's is dismayed because these other products are costly. It has no need for these products. ACME is attempting to get Blue's to enter into _______. a. a tying agreement b. restricted sales territories c. exclusive dealing d. a vertical integration partnership e. a refusal to deal

a. a tying agreement

Suppose you roast coffee and sell it to Maximum Markets. You have a good relationship with Maximum Markets and have relied on them for many years to display your coffees in its stores. Your marketing chain has been relatively short, going from you (the producer) to the reseller (Maximum Markets) to the end consumer. However, you recently received an offer to sell your coffee in other retail stores, some that compete directly with Maximum Markets. You also would like to start selling directly through your website. You decide to provide discounts for coffee sold online. Integrating more channel members and selling to customers directly is likely to cause ____________ with Maximum Markets. a. channel conflict b. vertical integration c. channel integration d. channel cooperation

a. channel conflict

American Eagle allows shoppers to buy its clothing through its stores or through its website, ae.com. This is an example of _______. a. dual distribution b. horizontal channel integration c. vertical integration d. tying agreements

a. dual distribution

Companies have been using computer technology to integrate order processing with production, inventory, accounting, and transportation in a system referred to as _______. a. electronic data interchange (EDI) b. expected data input c. inventory management d. just-in-time (JIT) delivery

a. electronic data interchange (EDI)

When Coke Zero was added to the line of Coca-Cola products, it most likely was introduced using _______ distribution. a. intensive b. selective c. full-market d. exclusive

a. intensive

Exclusive distribution is _______. a. suitable for products consumed over a long period of time b. not suitable for infrequently purchased products c. appropriate for convenience products d. desirable when a special effort is important

a. suitable for products consumed over a long period of time

_________________ is the most expensive logistics function. a. transportation b. inventory management c. order processing d. materials handling

a. transportation

Which of the following levels of market coverage entails utilizing only one dealer within a relatively large geographic area? a. Selective distribution b. Exclusive distribution c. Digital distribution d. Intensive distribution

b. Exclusive distribution

As the marketing manager for P&G's Hair Care category, you decide to sell P&G's hair products online through P&G's website. This is an example of which type of utility? a. Form utility b. Place utility c. Possession utility d. Time utility

b. Place utility

Which practice allows producers the right to choose or reject the channel member with which they will do business? a. Exclusive dealing b. Refusal to deal c. Tying agreements d. Restricted sales territories

b. Refusal to deal

Large manufacturers such as Procter & Gamble are typically able to have control over how their products are promoted and sold in different retail outlets. Due to this control, Procter & Gamble is likely a channel _______. a. dominator b. captain c. priority d. developer

b. captain

Snap-on Tools uses a franchise model to sell shop equipment products to customers. When Snap-on developed a website that sold tools directly to consumers, this likely caused _______ with franchisees, which would likely increase if Snap-on reaches an agreement to sell through Home Depot as well. a. channel leadership b. channel conflict c. horizontal channel integration d. channel cooperation

b. channel conflict

Which market coverage is often used to motivate retailers to provide adequate service? a. Intermediate distribution b. Extensive distribution c. Exclusive distribution d. Selective distribution e. Intensive distribution

d. Selective distribution

Carlos works at Kellogg's and is on a team developing a new breakfast cereal. He is currently trying to contact different companies who can provide the specific ingredients and equipment needed to make the cereal. He will work with the procurement department to reach an agreement with the companies selected to provide the ingredients and equipment. Carlos is currently engaging in _______. a. logistics management b. procurement c. purchasing d. sourcing

b. procurement

Gucci sells its handbags through its company-owned stores and through a handful of high-end department store chains like Neiman Marcus and Saks Fifth Avenue. Gucci is using _______ distribution. a. intensive b. selective d. exclusive d. full-market

b. selective

Walmart is working with its suppliers, using tools such as electronic billing, purchase order verification, and bar code technology, to integrate data used to improve overall performance. This is an example of _______. a. channel conflict b. supply chain management c. a vertical marketing system d. a horizontal marketing system

b. supply chain management

_____________________ is the most expensive logistics function. a. inventory management b. transportation c. order processing d. materials handling

b. transportation

Which of the following is most likely to use exclusive distribution? a. Nespresso coffee machines b. Ford vehicles c. Boeing 777 Freighter d. Microsoft Office Suite e. Apple iPad

c. Boeing 777 Freighter

What is a group of individuals and organizations that direct the flow of products from producers to customers within the supply chain? a. Place utility b. Form utility c. Marketing channel d. Marketing intermediary

c. Marketing channel

Jake is looking for a way to transport low-sulfur coal. He would like to choose a transportation mode that will get his product to its destination in a reasonable time period. He also needs the transportation mode he chooses to carry large quantities of this coal, but he would like to keep costs down. Which mode of transportation should Jake use? a. Waterway b. Airplane c. Railroad d. Truck e. Pipeline

c. Railroad

When a producer, wholesaler, or retailer has the ability to influence another channel member's goal achievement, it _______. a. is horizontally integrated b. is vertically integrated c. has channel power d. is a channel captain

c. has channel power

___________________ is combining two or more stages of the marketing channel under one management. a. channel captain b. channel cooperation c. vertical channel integration d. horizontal channel integration

c. vertical channel integration

Which channel is the direct channel for business products? a. Channel G b. Channel F c. Channel H d. Channel E

d. Channel E

Which of the following levels of market coverage is most appropriate for products that have a high replacement rate, require almost no service, and are bought based on price cues? a. Selective distribution b. Digital distribution c. Exclusive distribution d. Intensive distribution

d. Intensive distribution

What is the process called for developing and maintaining adequate assortments of products to meet customers' needs? a. Transportation b. Warehousing c. Materials handling d. Inventory management

d. Inventory management

Kraft sells its macaroni and cheese through thousands of retailers across the country. Which of the following marketing channel structures is Kraft most likely to use? a. Producer, wholesaler, and consumer b. Producer and consumer c. Producer, retailer, and consumer d. Producer, wholesaler, retailer, and consumer

d. Producer, wholesaler, retailer, and consumer

A channel that includes both a manufacturers' agent and an industrial distributor is appropriate under which of the following circumstances? a. The product being sold is relatively inexpensive and easy-to-use. b. The manufacturer's sales force is available to assist the agents and distributors. c. The manufacturer's product is expensive with a lot of specific technical detail. d. The producer wants to cover a large geographic area but has no sales force.

d. The producer wants to cover a large geographic area but has no sales force.

A practice where an agreement states that a supplier provides a product to a channel member with the condition that the channel member must purchase other products as well is known as what? a. Refusal to deal b. Restricted sales territories c. Exclusive dealing d. Tying agreements

d. Tying agreements

Which of the following provides time utility by enabling firms to compensate for dissimilar production and consumption rates? a. Transportation b. Inventory management c. Order processing d. Warehousing

d. Warehousing

If Kellogg's is forcing its retailers to place its cereals in prime locations on the shelves so customers can see them easier than the competition, it would be _______. a. integrating the channel vertically b. integrating the channel horizontally c. leading channel cooperation d. demonstrating channel power

d. demonstrating channel power

In addition to producing the popular iPhone and iPad, Apple also helps design the components as well as the processors. It also owns its own retail stores. Apple therefore operates in the hardware, software, services, and retail industries. This is an example of _______. a. channel conflict b. channel cooperation c. channel leadership d. vertical channel integration e. horizontal channel integration

d. vertical channel integration

A manufacturer has the legal right to refuse to do business with a channel member unless _______. a. dealers and customers in a given market have access to similar products b. the intermediary is free to carry competing products as well c. the supplier is the only firm able to provide products of a certain quality d. competition is promoted among dealers handling different brands e. the channel member resists policies that are anticompetitive or in restraint of trade

e. the channel member resists policies that are anticompetitive or in restraint of trade

BSNF Logistics is a third-party organization that companies can use to help with their logistics needs. BSNF claims that it has strong capabilities in land, air, water, and rail services. It creates customized solutions to meet a variety of logistics needs for its customers. BSNF Logistics maintains that it has strong expertise in core logistics activities and can often perform these activities more efficiently. BSNF is most likely a(n) _______. a. industrial distributor b. megacarrier c. manufacturer's agent d. wholesaler e. third-party logistics firm

e. third-party logistics firm

Identify the four types of utilities Place utility

usefulness of a good or service as a function of the location at which it is made available