Question 1

When developing a distribution strategy, marketers should avoid the anticompetitive attempts to eliminate wholesalers or retailers if they want to avoid the possibility of violating the __________ provisions of the Clayton Act or the Sherman Act.

Accepted Answer

The answer of When developing a distribution strategy, marketers should...

Question 2

Sports Port, a motorcycle and fishing boat retailer located in a small northern Minnesota town, was the world's largest dealer for Crestliner fishing boats. To meet the demand of his many customers, the owner of Sports Port works with a wide variety of channel members, ranging from the manufacturer of the boats to trucking firms, other retailers, and even detailers (firms that clean, polish, and wax boats). Such a diverse channel of distribution often resulted in channel conflict. However, due to his strong consumer following, the owner of Sports Port had the power to resolve disputes between channel members. The owner of Sports Port serves as the __________ in the channel of distribution.

Accepted Answer

The owner of Sports Port serves as the channel captain in this channel of distribution, as he coordinates and manages relationships between various channel members to meet the demands of his customers. He has the power to resolve disputes between channel members due to his strong consumer following, but he primarily serves as the leader or captain of the channel. The other options (wholesaler, producer, channel spokesperson, and channel arbitrator) do not accurately describe the role played by the owner of Sports Port in this scenario.

Question 3

The Federal Trade Commission and the Justice Department monitor channel practices that __________, create monopolies, or otherwise represent unfair methods of competition under the Sherman Act (1890) and the Clayton Act (1914).

Accepted Answer

The Federal Trade Commission and the Justice Department monitor channel practices that restrain competition or otherwise represent unfair methods of competition under the Sherman Act (1890) and the Clayton Act (1914). Patent infringement, connecting channel members, using coercive or suggestive advertising, and manipulating public opinion may be monitored by other regulatory bodies, but not specifically by the FTC and the Justice Department in relation to competition and antitrust laws.

Question 4

__________ is a special kind of tying arrangement. This practice involves a supplier requiring that a channel member carry its full line of products in order to sell a specific item in the supplier's line.

Accepted Answer

Full-line forcing is a practice where a supplier obligates a channel member to offer its complete range of products in order to sell a specific product within the supplier's line. This promotes the supplier's products over those of its competitors and can result in increased sales of the supplier's product line.

Question 5

Bombardier is the leading marketer of corporate jets. Its brand name is well known and respected in the corporate jet market. The aircraft company relies on outside suppliers for design support and to share development costs and market risks, but Bombardier is considered the leader in determining design and marketing of its planes. For its newest plane, Bombardier has about 30 prime suppliers, and about 10 of those have been involved since the initial design phase. Bombardier is an example of a

Accepted Answer

Bombardier is an example of a channel captain, as it relies on outside suppliers for design support and development cost sharing, but still maintains leadership in determining design and marketing of its planes.

Question 6

The __________ specifically prohibits exclusive dealing and tying arrangements when they lessen competition or create monopolies.

Accepted Answer

The Clayton Act specifically prohibits exclusive dealing and tying arrangements when they lessen competition or create monopolies, among other anticompetitive behaviors.

Question 7

The __________ and the Justice Department monitor channel practices that restrain competition, create monopolies, or otherwise represent unfair methods of competition under the provisions of the Clayton Act or the Sherman Act.

Accepted Answer

The Federal Trade Commission (FTC) and the Justice Department are responsible for monitoring channel practices that restrain competition or create monopolies under the provisions of the Clayton Act or the Sherman Act. The other options listed do not have this specific responsibility.

Question 8

The Clayton Act prohibits, restricts, or influences all of the following channel strategies and practices except

Accepted Answer

The answer of The Clayton Act prohibits, restricts, or influences...

Question 9

The __________ has been used to prosecute resale restrictions, which are a supplier's attempt to stipulate to whom distributors may resell the supplier's products and in what specific geographical areas or territories they may be sold.

Accepted Answer

The answer of The __________ has been used to prosecute...

Question 10

Vertical integration can lead to legal prosecution if

Accepted Answer

Vertical integration can lead to legal prosecution if there is potential to lessen competition or create a monopoly. This violates antitrust laws and can lead to government intervention and legal action against the company.

Question 11

American Hospital Supply helps its customers (hospitals) manage inventory and streamline order processing for hundreds of medical supplies. The source of American Hospital Supply's power is its

Accepted Answer

American Hospital Supply's power comes from its expertise in managing inventory and order processing for medical supplies, which is valuable to its customers (hospitals).

Question 12

Neiman Marcus is a retailer with which many small manufacturers would like to be associated. A product placement in Neiman Marcus will increase the prestige of a smaller brand. The source of Neiman Marcus' power is its

Accepted Answer

The answer of Neiman Marcus is a retailer with which...

Question 13

Dual distribution can violate the Sherman Act and the Clayton Act if the

Accepted Answer

Dual distribution can violate the Sherman Act and the Clayton Act if the manufacturer's behavior is viewed as lessening competition by eliminating wholesalers or retailers. This is because it may lead to a reduction in the number of players in the market, limiting consumer choice and price competition, which is against antitrust laws.

Question 14

Full-line forcing is a special kind of __________. This practice involves a supplier requiring that a channel member carry its full line of products in order to sell a specific item in the supplier's line.

Accepted Answer

The answer of Full-line forcing is a special kind of...

Question 15

Walmart is a channel captain because of its strong image, number of outlets, and purchasing volume. The source of Walmart's power is its

Accepted Answer

Walmart's power as a channel captain comes from its economic influence, which is based on its large purchasing volume and number of outlets. This enables Walmart to negotiate favorable terms with suppliers and exert significant influence over the entire supply chain. Expertise, identification with a particular channel member, legitimate rights, and political connections may also contribute to some extent, but economic influence is the primary source of Walmart's power.

Question 16

Some manufacturers have tried to use the brand loyalty of their consumers to force retailers to carry only their products and none from their competitors. These manufacturers were trying to force retailers to participate in a practice known as

Accepted Answer

Exclusive dealing is when manufacturers require retailers to only carry their products and not those of competitors.

Question 17

A firm becomes a channel captain because it is the channel member with the ability to influence the behavior of other members. Influence can take four forms, one of which is

Accepted Answer

Identification with a particular channel member can provide influence as it aligns interests and goals, allowing the channel captain to lead effectively.

Question 18

A tying arrangement exists if a supplier requires

Accepted Answer

A tying arrangement exists when a supplier forces a buyer to purchase one product only if they also purchase another product from the supplier. This can be seen in choice A, where the supplier requires the distributor purchasing some products to buy others from the supplier.

Question 19

A fast-food franchisee is required by its franchisor to buy unmarked plastic eating utensils from the franchisor if the franchisee wants to use the cups, napkins, and other paper products with the franchise logo. The franchisee can buy the identical utensils from a local supplier for half the price. This requirement would be an example of

Accepted Answer

This requirement by the franchisor to buy unmarked plastic eating utensils if the franchisee wants to use paper products with the franchise logo is an example of a tying arrangement. The franchisor is "tying" the purchase of one product (unmarked utensils) to the purchase of another product (paper products with the franchise logo).

Question 20

Dual distribution is considered illegal if

Accepted Answer

Dual distribution becomes illegal if a manufacturer attempts to lessen competition by eliminating wholesalers or retailers. This is known as exclusive dealing or tying arrangements, where the manufacturer binds a buyer to purchase a specific product or service as a condition to purchase another product or service. This type of behavior harms competition and violates anti-trust laws. The other options (A, B, C, and E) are not necessarily factors in determining the legality of dual distribution.

Quiz 15: Managing Marketing Channels and Supply Chains