Deck 13: Distribution and Pricing: Right Product, Right Person, Right Place, Right Price

Question 1

Cash and carry wholesalers are full­service merchant wholesalers who specialize in selling to large retail chains.

Answer 1

False

Question 2

One drawback of using distributors in a distribution channel is that the addition of these intermediaries increases the total number of transactions that must occur to get the good from the producer to the consumer.

Answer 2

False

Question 3

Starbucks converting coffee beans into iced coffees and espressos is known as service utility.

Answer 3

False

Question 4

Retailers buy products from producers and sell them to businesses, while wholesalers sell products directly to final consumers.

Question 5

Costco, a warehouse club, is considered a channel intermediary because it buys chocolate from Hershey's and sells it to customers.

Question 6

Physical distribution occurs as products actually travel along the distribution pathway.

Question 7

Producers use channel intermediaries to move products more efficiently and effectively from factories to consumers.

Question 8

Distributors can create time and place utility due to the nature of the utilities' functions, but not information or service utility.

Question 9

Examples of the services provided by full­service merchant wholesalers include extension of credit, promotional assistance, product repairs, and warehousing.

Question 10

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Question 11

Though Newton Coal Supply actually takes possession of coal from local mining companies, it never stores a single ounce of coal on its premises. Instead, it simply arranges for the coal to be shipped directly from the mining company to its customers. This type of arrangement suggests that Newton is a drop shipper.

Question 12

The channel of distribution refers to the actual movement of products as they travel from the producer to the ultimate consumer.

Question 13

Drop shippers do not take legal title of the goods they help distribute; instead, they merely provide delivery services for other wholesalers.

Question 14

Independent wholesalers are independent distributors who represent a number of different producers and distribute their goods to a range of customers.

Question 15

Some producers sell their products directly to consumers through a direct channel.

Question 16

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Question 17

Providing credit, cashing checks, and delivering products are all examples of how distributors provide ownership utility.

Question 18

Merchant wholesalers are independent distributors who take legal possession, or title, of the goods distributed.

Question 19

Drop shippers are part of the distribution channel for bulky products such as timber and coal.

Question 20

Distributors reduce the costs associated with moving goods from producers to consumers.

Question 21

Amazon and Zappos use technology to create a personal shopping experience over the Internet. This is an example of online retailing.

Question 22

Best Buy, PetSmart, and Staples offer a huge variety of one type of product. These companies are examples of outlet stores.

Question 23

Category killers dominate their category by offering a huge variety of one type of product.

Question 24

The specific categories of limited­service wholesalers include drop shippers, cash and carry wholesalers, and truck jobbers.

Question 25

Intensive distribution, selective distribution, and exclusive distribution are the three key strategic distribution strategies that retailers use.

Question 26

Ben Arrington is an agent. This means that he assumes a significant risk of loss because he takes legal title to the products he helps distribute.

Question 27

Firms that produce items for which customers are not willing to make special trips or travel long distances to buy, normally use an intensive distribution strategy.

Question 28

McDonald's placement of stores in Walmart, gas stations, and hospitals is an example of exclusive distribution.

Question 29

Agents and brokers are the most common types of merchant wholesalers.

Question 30

Convenience stores offer a wide variety of merchandise and superior service at multiple locations.

Question 31

The wheel of retailing helps explain the evolution of firms that enter a market on a shoestring budget and gain customers by offering lower prices. It suggests that once a customer base is established, the retailer begins offering higher­end products, more upscale facilities, and better service.

Question 32

Truck jobbers are limited­service merchant wholesalers whose responsibilities include checking the stock, suggesting reorder quantities, and removing out­ of­date goods.

Question 33

Outlet stores are owned by producers which sell directly to final customers, and may offer discontinued or flawed goods.

Question 34

One of the drawbacks of online retailing is the lack of security on the Web for financial transactions.

Question 35

Angelica sells a line of designer handbags. She is planning to open a series of shops to sell her products. Each shop will be in a different area of the state. This type of distribution is known as exclusive distribution.

Question 36

Firms producing high­end goods with a customer base that actively seeks out their products­such as expensive luxury automobiles, jewelry, and watches­ rely on a selective distribution method.

Question 37

Mstraanteyg my.edium­priced and high­priced products use a selective distribution

Question 38

A small convenience store Cream Flake is too small to merit in­person sales service. For this reason, Cream Flake must rely on truck jobbers to service their store.

Question 39

A selective distribution strategy involves establishing a single retailer as the sole provider of a product in a given area.

Question 40

Victoria's Secret and AutoZone are examples of specialty stores.

Question 41

The two largest transportation modes in terms of volume of shipments are rail and truck.

Question 42

Building profitability and boosting volume are two common objectives that influence marketers' pricing decisions.

Question 43

Cost, speed, and dependability need to be considered when deciding upon modes of transportation.

Question 44

Infomercials and telemarketing are examples of direct response retailing.

Question 45

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Question 46

Vendor­managed inventory strategies allow suppliers to determine their buyers' needs and automatically ship supplies as needed.

Question 47

Online retailing grew at a yearly rate of 25 percent in early 2000, but decreased to 1.6 percent in 2009. It bounced back to over 12 percent in 2011. Due to this, experts predict online retailing will continue to increase in double digits.

Question 48

As technology evolves, consumers will see a growing number of vending machines for products, including "fresh­baked pizza", digital cameras, an specialty coffee drinks.

Question 49

Amto prere ssuecnct,e scso.mpanies that prefer competition to collaboration experience

Question 50

One reason vendor­managed inventory is so successful is that it reduces the amount of information that must be shared between producers and suppliers.

Question 51

Mary Kay Cosmetics, Tupperware, and The Pampered Chef hire independent contractors to sell their products to their personal network of friends and family. These companies use multilevel marketing.

Question 52

Door­to­door selling is the real strength of direct response retailing.

Question 53

Logistics does not impact a company's ability to provide products and services to its customers.

Question 54

Despite good marks for customer service for Internet­only retailers, the National Retail Federation (NRF) still ranks store retailers as having better customer service than Internet­only retailers.

Question 55

Logistics focuses primarily on the tactics involved in moving products along the supply chain.

Question 56

Logistics refers to the logical criteria used in the selection of the best mix of retail strategies for marketing a good to its final consumers.

Question 57

Multilevel marketing involves hiring independent contractors to sell products within personal networks of family and friends.

Question 58

Physical distribution strategy is primarily concerned with determining how the product will flow from producer to consumer.

Question 59

The advent of the National Do Not Call list has resulted in a serious decline in all forms of direct selling.

Question 60

Supply chain management is a subset of logistics and is only concerned with the movement of products from point A to point

Question 61

Profits may be increased either by increasing prices or by decreasing costs.

Question 62

Marketers normally have nearly complete control over how their products are priced.

Question 63

The key to a successful pricing strategy is to focus on maintaining stability.

Question 64

Variable costs are those expenses that change as the level of production changes.

Question 65

Price is the easiest variable in the marketing mix for marketers to control.

Question 66

Penetration pricing makes the most sense in situations where a significant group of potential customers are willing to pay a premium price for the good.

Question 67

Breakeven analysis determines the level of sales at which the business will earn enough revenue to cover all of its costs.

Question 68

Costco's everyday­low pricing strategy continued to work well for the company even during the recession.

Question 69

High/low pricing is the strategy of charging some customers a high price while charging other customers a low price for exactly the same product at the same time.

Question 70

Rolex watches, Mont Blanc pens, and Bentley cars use prestige pricing to reinforce their image of high quality and exclusivity.

Question 71

Skimming pricing is an especially effective pricing technique in highly competitive markets with many firms offering similar products.

Question 72

Grocery stores and department stores often use high/low pricing.

Question 73

Walmart and Costco offer discounts to achieve long­term profitability through volume. These companies use everyday­low pricing to sustain their customer base.

Question 74

"The higher the price, the better the product" strategy works only if the product actually delivers top quality.

Question 75

Sales above the breakeven point will lead to a loss.

Question 76

Skimming pricing invo ves offering new products at a premium price.

Question 77

Everyday­low pricing is a pricing strategy that is consistent with a goal of achieving long­term profitability through volume.

Question 78

A 20­ounce bottle of Coca­Cola and a 20­ounce bottle of Pepsi are the same price in your local convenience store and, therefore, you are forced to make a choice based on other factors, such as taste or brand preference. This pricing tactic is an example of matching the competition.

Question 79

Fixed costs are those costs companies incur regardless of the number of units sold.

Question 80

George Castilla willingly paid $499 for an Android phone on the day it hit the market even though it was far more expensive than the cell phones he had bought in the past. He wasn't concerned about the price as he wanted to be one of the first on his campus to have this product. Consumers like George are the target of firms using skimming pricing strategies.