Deck 10: Place and Development of Channel Systems

Question 1

Product classes help marketing managers understand how much market exposure will be needed in each geographic area.

Answer 1

True
Explanation: The product classes help marketing managers decide how much market exposure will be need in each geographic area.

Question 2

The terms "direct marketing" and "direct distribution" mean the same thing.

Answer 2

False
Explanation: Direct distribution refers to firms distributing directly to the final customer or consumer. Direct marketing refers to direct communication between a seller and an individual customer using a promotion method other than face-to-face personal selling.

Question 3

A producer who wants to reach certain customers may have no choice about which wholesaler to use.

Answer 3

True
Explanation: If contractors or customers like to make all of their purchases in one convenient stop, i.e., at a local wholesaler, the only practical way to reach them is through a wholesaler.

Question 4

With the Internet, even very small specialized firms can draw customers from all over the world.

Question 5

Some firms are forced to use direct distribution when they can't find intermediaries willing to carry innovative, new products.

Question 6

Selling direct-to-customer is more common with business products than consumer products.

Question 7

Many business products are sold direct, but hardly any services are.

Question 8

Firms that use direct marketing promotion may or may not use direct distribution.

Question 9

Place is concerned with the selection and use of marketing specialists-intermediaries and collaborators-and making goods and services available in the right quantities and locations when customers want them.

Question 10

Direct marketing is primarily concerned with Promotion, not Place.

Question 11

Place decisions make goods and services available in the right quantities and locations, when customers want them.

Question 12

A wholesaler might help a producer by reducing the producer's need to carry large inventory stocks.

Question 13

The Internet gives large firms access to repeat customers, but it does little for small firms trying to develop an initial base of customers.

Question 14

Direct-to-customer channels are rarely used in business markets because they are much more expensive and less efficient than using intermediaries.

Question 15

A channel of distribution is a series of firms or individuals participating in the flow of products from the producer to the consumer.

Question 16

Consumer product companies such as Tupperware that appear to be selling direct may not be because their salespeople are independent distributors, not company employees.

Question 17

Firms that use direct distribution can usually adjust their marketing mixes faster than firms that use indirect distribution.

Question 18

The Internet is making it possible for firms to reach customers that were impossible to reach before.

Question 19

Place decisions are easier to change in the short-run than Product, Price, and Promotion decisions.

Question 20

Aggressive, market-oriented intermediaries are almost always available and eager to handle the distribution of innovative, new products.

Question 21

When a warehouse is rearranged to speed up order processing, "regrouping activities" are being performed.

Question 22

Discrepancy of quantity means the difference between the lines a typical producer makes and the assortment final consumers want.

Question 23

Discrepancies of quantity and assortment occur because individual producers find it economical to produce and sell small quantities of a large assortment of products while individual consumers prefer to buy large quantities of a small assortment of products.

Question 24

Discrepancies of quantity occur because individual producers want to produce large quantities of products while individual consumers prefer to buy products in small quantities.

Question 25

Digital products cost more to distribute than physical products.

Question 26

A new channel is more likely to prompt conflict if it focuses on segments not already served by current channels.

Question 27

Assorting activities involve putting together a variety of products to give a target market what it wants.

Question 28

"Regrouping activities" involve adjusting the quantities or assortments of products handled at each level in a channel of distribution.

Question 29

"Sorting" means separating products into grades and qualities desired by different target markets.

Question 30

One way for a producer to reduce conflict with channel partners is to offer different products in each different channel.

Question 31

Accumulating involves dividing larger quantities into smaller quantities as products get closer to the final market.

Question 32

A wholesaler might help a producer by reducing the producer's need for market research.

Question 33

Discrepancies of assortment occur because individual producers tend to specialize in producing a large assortment of products while individual consumers prefer to buy a small assortment of products.

Question 34

Channel conflict often results when a manufacturer opens a new distribution channel, especially if it directly competes with its existing intermediaries.

Question 35

Distribution costs can be very low for digital products because there is often no physical good to distribute.

Question 36

The most important reason to use indirect channels is if intermediaries can help serve customers better and at lower cost.

Question 37

In an indirect channel of distribution, both vertical conflict and horizontal conflict may arise.

Question 38

Assorting means separating products into grades and qualities desired by different target markets.

Question 39

Bulk-breaking means separating products into grades and qualities as desired by different target markets.

Question 40

Accumulating involves collecting products from many small producers-often as a way to get lower transportation rates.

Question 41

Selective distribution is growing in popularity because it provides 100 percent coverage of the market.

Question 42

Selective distribution is becoming more popular than intensive distribution as firms see that they do not need 100 percent coverage of a market to support national advertising.

Question 43

Vertical marketing systems are growing in the U.S., but declining in the rest of the world.

Question 44

Intensive distribution is selling a product through all responsible and suitable wholesalers or retailers who will stock or sell the product.

Question 45

Most traditional channel systems don't have a channel captain.

Question 46

Traditional channel systems are growing faster than vertical marketing systems.

Question 47

Any contractual channel system-by definition-is also an administered channel system.

Question 48

A "channel captain" is a manager who helps direct the activities of a whole channel.

Question 49

"Ideal market exposure" means selling a product through all intermediaries willing to stock and sell it.

Question 50

Because wholesalers and retailers are closer to the final user, they are in an ideal position to assume the channel captain role.

Question 51

Intensive distribution is selling through only those intermediaries who will give the product special attention.

Question 52

Administered and contractual channel systems are vertical marketing systems which depend on informal agreements-or contracts between channel members-to cooperate.

Question 53

"Ideal market exposure" should make a product widely enough available to satisfy target customers' needs, but not exceed them.

Question 54

Firms that cooperate to build vertical marketing systems typically share a longer-term commitment.

Question 55

Horizontal marketing systems are channel systems in which the whole channel focuses on the same target market at the end of the channel.

Question 56

Vertical marketing systems account for a majority of U.S. retail sales.

Question 57

A channel captain helps direct the activities of a whole channel and tries to avoid or solve channel conflicts.

Question 58

According to the text, it's best for the "channel captain" to be a producer rather than a wholesaler or retailer.

Question 59

Intensive distribution covers the broad area of market exposure between selective and exclusive distribution.

Question 60

In administered channel systems, vertical cooperation is achieved by acquiring firms at different levels of activity.

Question 61

Vertical agreements to limit sales by customer or territory are always illegal, while horizontal agreements may be legal sometimes.

Question 62

Horizontal agreements to limit sales by territory or customer are always illegal according to the Supreme Court.

Question 63

Exporters usually work with specialists who can handle international problems such as customs, taxes, exchange rates, and shipping.

Question 64

Compared to intensive distribution, selective distribution gives a producer a greater opportunity for profit but usually makes it more difficult for intermediaries to make a profit.

Question 65

Exporting is often the first step into international marketing.

Question 66

The "80/20 rule" is more likely to apply to a firm that uses intensive distribution than a firm that uses selective distribution.

Question 67

Reverse channels are used when multichannel distribution fails.

Question 68

Of the five basic kinds of involvement in international marketing, exporting is the least permanent.

Question 69

In a licensing agreement, the licensee takes most of the risk because it must invest some capital to use the right granted by the licensor.

Question 70

Exporting has an advantage compared to other types of international involvement, because it is usually easier to drop or change arrangements as the firm's needs change.

Question 71

Multichannel distribution occurs when a producer uses several competing channels to reach the same target market perhaps using several intermediaries in addition to selling directly.

Question 72

General Motors (GM), a U.S. automotive manufacturer, has an arrangement with Isuzu Motors of Japan in which the Isuzu Ascender is produced at the same GM manufacturing plant as the Chevrolet TrailBlazer and GMC Envoy. All three vehicles use the same basic platform and engine. This is an example of licensing.

Question 73

Exclusive distribution is selling through only one intermediary in each geographic area.

Question 74

Exclusive distribution is more likely to involve a more formal arrangement than is selective or intensive distribution.

Question 75

A manufacturer that uses several competing channels to reach the same target market is using "multichannel distribution."

Question 76

Exporting is sometimes just a way for a firm to get rid of surplus products.

Question 77

Manufacturers are sometimes forced to use "multichannel distribution" because their present channels are doing a poor job or are not reaching some potential customers.

Question 78

Reverse channels may provide a way to retrieve unwanted products from intermediaries, business customers, or final consumers.

Question 79

A manufacturer may be forced to use multichannel distribution because a big retail chain wants to deal directly with it instead of wholesalers.

Question 80

Channels used to retrieve products that customers no longer want are called collection channels.