Deck 12: Distribution Channel Decisions

Question 1

Brokers are used primarily by small firms or start-ups that have limited marketing capabilities.

Answer 1

False

Question 2

Firms can assess coverage by measuring how often customers in a territory are called on by company or distributor salespeople and by the time required to fill and deliver an order.

Answer 2

True

Question 3

High-margin/low-turnover stores usually concentrate on fastmoving items and carry a relatively limited selection in each product category.

Answer 3

False

Question 4

Contractual entry modes are equity arrangements that involve the transfer of technology and/or skills to an entity in a foreign country.

Question 5

Agents do not take title to,or physical possession of,the goods they deal in.

Question 6

Intensive distribution is useful when a firm wants to differentiate its product on the basis of high quality,prestige,or excellent customer service.

Question 7

Intensive distribution uses the maximum possible number of retailers and is most appropriate for low-involvement,frequently purchased convenience goods.

Question 8

A sole ownership investment entry strategy involves setting up a production facility in a foreign country.

Question 9

Due to the substantial mutual investments,well-entrenched channels are usually easy to change in response to shifting market or competitive conditions.

Question 10

Middlemen are rarely relied on for accurate feedback of information about such things as sales trends,inventory levels,and competitors' actions.

Question 11

The greater the strategic importance of availability and the more intensive the desired retail coverage,the less likely wholesalers and/or agents are to be used.

Question 12

Services often require physical distribution activities.

Question 13

Channel management decisions involve the development of policies and procedures to gain and maintain the cooperation of the various institutions within the channel.

Question 14

Dependability refers to how long it takes the manufacturer to receive,process,and deliver an order.

Question 15

Feedback is crucial for firms pursuing prospector business strategies.

Question 16

When the brand holds a small relative share of the total market,the firm may have to offer extra incentives and inducements to wholesalers or retailers to achieve an adequate product availability.

Question 17

High-margin/low-turnover retailers emphasize prestigious national brands or exclusive goods unavailable elsewhere.

Question 18

The primary role of merchant wholesalers is to represent other organizations in the sale or purchase of goods or services.

Question 19

Manufacturer's reps are common in the industrial equipment,automotive supply,footwear,and toy industries.

Question 20

Franchising is the simplest way to enter a foreign market because it involves the least commitment and risk.

Question 21

Pull strategies are commonly employed by large consumer goods marketers.

Question 22

The idea that wholesalers can spread their costs across different manufacturers,and therefore,perform the selling function at a lower cost than can these manufacturers is known as:

A)scale efficiency.
B)functional efficiency.
C)transactional efficiency.
D)agent efficiency.

Question 23

Sales agents:

A)represent only one manufacturer and are responsible for the full range of marketing activities.
B)are independent firms or individuals whose purpose is to bring buyers and sellers together for exchange.
C)work for several manufacturers and carry noncompetitive,complementary merchandise for an exclusive territory.
D)perform a full range of wholesaling activities and also take over some retailing functions.

Question 24

The set of interdependent organizations involved in the process of making a product or service available for consumption or use by consumers or industrial users are known as a(n):

A)retail market.
B)reseller channel.
C)marketing channel.
D)intermediary stream.

Question 25

The power of any firm within a distribution channel is inversely proportional to how dependent the other channel members are on that firm.

Question 26

Cooperative advertising programs pay a percentage of a reseller's expenses for local advertising up to some limit based on that reseller's sales of the product.

Question 27

Manufacturer's export agents specialize in only a few countries and have a short-term relationship with their clients.

Question 28

Manufacturer-retailer franchise systems are exemplified by the soft-drink industry.

Question 29

As channel conflict is inevitable,the challenge is not to eliminate channel conflict but to manage it better.

Question 30

Which of the following is the most important element of distribution service to customers,especially for those who have implemented just-in-time delivery?

A)Dependability
B)Reaction time
C)Order-cycle time
D)Communication

Question 31

Middlemen who sell goods directly to final consumers for their personal non-business use are known as:

A)wholesalers.
B)agent middlemen.
C)sales agents.
D)retailers.

Question 32

When a company measures a supermarket's display of its product in terms of the percentage of available shelf space devoted to the product weighted by the importance of the store,it is measuring:

A)retail coverage.
B)promotion scope.
C)in-store positioning.
D)display frequency.

Question 33

The main purpose of _____ is to bring buyers and sellers together for an exchange.

A)sales agents
B)manufacturers' agents
C)brokers
D)intermediaries

Question 34

Referent power stems from a perception that one channel member has special knowledge or expertise that can benefit other members of the system.

Question 35

Reciprocity and tying contracts are legally accepted practices.

Question 36

_____ specialize in the selling function and represent client manufacturers on a commission basis.

A)Merchant wholesalers
B)Agent middlemen
C)Retailers
D)Jobbers

Question 37

Neil worked as an agent for an organization that produced ballet shoes,another that produced ballet tights,and other organizations that produced ballet tutus,ballet socks,and other ballet accessories.This implies that Neil is a _____.

A)broker.
B)sales agent.
C)full-service wholesaler.
D)manufacturer's agent.

Question 38

Manufacturer-wholesaler franchise systems account for the largest number of franchisees and the largest volume of sales and are common in the automotive and petroleum industries.

Question 39

The most important objective of any distribution channel is to:

A)provide a high customer service.
B)make the product conveniently available.
C)attain feedback on market information.
D)provide cost-effectiveness.

Question 40

Territorial restrictions involve the granting of a geographical monopoly to a buyer for a given product.

Question 41

_____ retailers differentiate themselves with unique assortments,quality merchandise,good customer service,and a prestigious store image.

A)High-margin
B)High-turnover
C)Low-margin
D)Low-cost

Question 42

Which of the following is the easiest way to enter a foreign market?

A)Sole ownership
B)Franchising
C)Exporting
D)Contractual entry modes

Question 43

The primary advantage of an intensive distribution strategy is that:

A)there is better retailer support as more retailers are involved in the channel.
B)the company doesn't rely on a single channel member for success.
C)product availability is maximized.
D)the manufacturer can choose retailers whose clientele match its target market.

Question 44

Which of the following channels is most common for low cost,frequently purchased items?

A)Producer-consumer
B)Producer-retailer-consumer
C)Producer-wholesaler-retailer-consumer
D)Producer-agent-wholesaler-retailer-consumer

Question 45

Which of the following is true of high-margin/low-turnover stores?

A)They usually concentrate on fast-moving items.
B)They focus on standardized,prepackaged merchandise that helps lower personnel costs by reducing or eliminating in-store sales assistance.
C)They carry a relatively limited selection in each product category.
D)They emphasize prestigious national brands or exclusive goods unavailable elsewhere.

Question 46

Splurge Inc. ,sells exquisite perfumes,bags,and designer wear.It is associated with high quality,prestige,and excellent customer service.Which of the following forms of distribution would be most appropriate for Splurge Inc.?

A)Cost-effective distribution
B)Intensive distribution
C)Selective distribution
D)Exclusive distribution

Question 47

Which of the following grants the right to use the company's name,trademarks,and technology?

A)Exporting
B)Franchising
C)Contract manufacturing
D)Coproduction

Question 48

In _____,a firm offers the right to use its intangible assets in exchange for royalties or some other form of payment.

A)licensing
B)exporting
C)contract manufacturing
D)coproduction

Question 49

Harper Inc.manufactures microwave ovens,washing machines,iron boxes,and coffee makers.Which of the following strategies would be most appropriate for the distribution of their products?

A)Intensive distribution
B)Selective distribution
C)High-involvement product distribution
D)Exclusive distribution

Question 50

Which of the following is a popular channel,particularly for products targeted at two-wage-earner households?

A)Producer-retailer-consumer
B)Producer-agent-retailer-user
C)Producer-agent-user
D)Producer-consumer

Question 51

Moon Art Inc. ,a publisher of graphic novels,comics,and humor books,uses mobile messages to promote its books to consumers.Which of the following retailing channel is Moon Art Inc.employing here?

A)Direct selling
B)Catalog selling
C)TV home shopping
D)Internet selling

Question 52

Which of the following strategies uses the maximum possible number of retailers and is most appropriate for low-involvement,frequently purchased convenience goods?

A)Cost-effective distribution
B)Intensive distribution
C)Exclusive distribution
D)Selective distribution

Question 53

Which of the following statements is true of promotional effort and market information?

A)It is easy to control the behaviors of many independent middlemen.
B)It is easy to find acceptable replacements for those who perform poorly.
C)It is easier to control a company salesforce and company-owned warehouses,retail outlets,or websites.
D)Firms can control activities relating to achieving high levels of promotional effort within a channel by using indirect and horizontally integrated channels.

Question 54

Which of the following is an example of nonstore retailing?

A)Costco
B)Lands' End
C)Walmart
D)Ikea

Question 55

_____ stores usually concentrate on fast-moving items and carry a relatively limited selection in each product category.

A)Department
B)High-turnover
C)High-margin
D)Specialty goods

Question 56

The theory of transaction cost analysis (TCA)argues that when substantial transaction specific assets are involved:

A)the cost of using independent channel members is lower than the cost of managing a company salesforce.
B)the cost of using independent channel members is higher than the cost of managing a company salesforce.
C)cost is not a consideration.
D)cost should be evaluated for each individual transaction.

Question 57

Which of the following is true of low-margin/high-turnover stores?

A)They differentiate themselves with unique assortments and a prestigious store image.
B)They focus on shopping or specialty goods.
C)They focus on standardized,prepackaged merchandise.
D)They emphasize prestigious national brands or exclusive goods unavailable elsewhere.

Question 58

Which of the following channels is used when the manufacturer is too small,or its product line too narrow?

A)Producer-consumer
B)Producer-retailer-consumer
C)Producer-agent-user
D)Producer-agent-wholesaler-retailer-consumer

Question 59

The major disadvantage of using an exclusive distribution strategy from the viewpoint of the manufacturer is the:

A)risk involved in relying on a single retailer for success of the product's distribution.
B)high cost of maintaining customer service in this strategy.
C)lack of market coverage.
D)lack of cooperation between retailer and manufacturer once the relationship has been establisheD.

Question 60

Which of the following has limited retail coverage and is an appropriate strategy for shopping goods?

A)Intensive distribution
B)Exclusive distribution
C)High-involvement product distribution
D)Selective distribution

Question 61

Identify and define the basic types of contractual VMSs.

Question 62

Briefly describe the ways in which firms develop and manage integrated distribution systems.

Question 63

Describe three major ways of entering a foreign country.

Question 64

A _____ entry strategy involves setting up a production facility in a foreign country.

A)licensing
B)sole ownership investment
C)countertrade
D)franchising

Question 65

List and explain the basic sources of power within a channel relationship.

Question 66

Which of the following merchant middlemen takes physical possession of the goods which are mostly manufactured?

A)Export merchant
B)Export jobber
C)Trading company
D)Agent middleman

Question 67

Which of the following franchise systems are the most familiar to consumers?

A)Manufacturer-wholesaler franchise systems
B)Manufacturer-retailer franchise systems
C)Service sponsor-retailer franchise systems
D)Wholesaler-retailer franchise systems

Question 68

What are the types of agent middlemen? Briefly explain each.

Question 69

Cheese Burst,an American fast food chain penetrated into the Italian market by providing a firm in Italy the rights to use the company's name,trademarks,and technology.Which of the following contractual entry modes would have been used by Cheese Burst?

A)Joint venture
B)Coproduction
C)Contract manufacturing
D)Franchising

Question 70

One incentive used to increase personal selling effort in the channel is to:

A)increase promotional allowances.
B)provide display racks and signs.
C)ensure exclusive territories.
D)institute push money.

Question 71

Manufacturer-wholesaler franchise systems are exemplified by the ______ industry.

A)automotive
B)petroleum
C)fast-food
D)soft-drink

Question 72

When a manufacturer requires that an independent retailer sell only the manufacturer's products it is called a(n):

A)refusal to deal.
B)tying contract.
C)exclusive dealing.
D)promotional allowance.

Question 73

Channel power of member A is best defined as:

A)A's ability to get B to do what A wants.
B)A's ability to get B to do something that B would not do if left alone.
C)A's ability to reward B so B will do what A wants.
D)A's ability to find what it wants independent of B's ability to deliver it.

Question 74

Identify some of the incentives that can be provided to increase personal selling effort.

Question 75

Mention the objectives to be accomplished by the distribution channels designed by managers.

Question 76

Describe the aspects of product availability for consumer goods and industrial goods.

Question 77

Chestnut Ltd. ,a Canadian firm produces mobile phones,laptops,and music players.The final assembly of these instruments is done at a firm called Abstract Track,which is based in Germany.The contract between the two firms requires the German firm to have the instruments operating before they are released to Chestnut Ltd.Which of the following has been entered into between the two firms?

A)Licensing
B)Coproduction
C)Turnkey construction contract
D)Franchising

Question 78

Describe the service requirements that might be targeted for consumers,industrial end users,or other members of the distribution channel.

Question 79

Goodlife supermarket charges Dolphin Inc. ,a candy manufacturer,$20,000 to "rent" shelf space for its new product in Goodlife.The fee paid by Dolphin Inc.is referred to as _____.

A)push money
B)pull money
C)slotting allowance
D)odd pricing

Question 80

What are the advantages and disadvantages of an intensive distribution strategy?