Question 1

Which of the following is an example of backward integration?
A) A coffee producer acquiring a chain of coffee shops
B) A car dealer acquiring an automobile spare parts manufacturer
C) A cigarette manufacturer buying a convenience store
D) A fleece fabric manufacturer buying a maker of winter clothing

Accepted Answer

Backward integration involves a company acquiring a supplier or manufacturer of inputs. In this case, a car dealer acquiring an automobile spare parts manufacturer is an example of backward integration.

Question 2

Which of the following is an advantage of franchising?
A) Franchisees tend to function as independent sub units with autonomy.
B) Franchisors tend to have complete control of franchisees in gaining financial success.
C) Franchisees tend to have greater motivation to make the business a success than employees of a company-owned store.
D) Franchisors tend to protect franchisees from possible legal exposure to illegal activities.

Accepted Answer

Franchisees tend to have greater motivation to make the business a success than employees of a company-owned store. As owners of their own business, franchisees have a personal stake in the success of the franchise and are therefore more likely to work harder and take greater responsibility in making the business a success.

Question 3

Backward integration is typically evident when a:
A) manufacturer purchases wholesalers.
B) wholesaler purchases channel members above it.
C) producer purchases distributors below it.
D) manufacturer holds ownership of retailers.

Accepted Answer

Backward integration occurs when a company acquires or merges with a company that supplies products or services to it, essentially moving backward in the supply chain. In this context, a wholesaler purchasing channel members above it (such as suppliers or manufacturers) is an example of backward integration, as it is acquiring control over its supply source.

Question 4

One of the limitations of franchising is that it:
A) provides less opportunities for additional profits through supplies sold to franchisees.
B) depends heavily on franchisees for financial success without full control of them.
C) requires many company managers and employees, thus increasing costs.
D) prevents expansion requiring more capital resulting in slower market penetration.

Accepted Answer

Franchising relies heavily on the success of franchisees, but the franchisor does not have full control over them, which can limit financial success.

Question 5

Which of the following is an example of a specialty store?
A) Single-line stores
B) Supercenter outlets
C) Discount stores
D) Department stores

Accepted Answer

Specialty stores are single-line stores that focus on a specific product category or niche market. Examples include stores that only sell shoes, jewelry, or sporting goods. Supercenter outlets, discount stores, and department stores are not specialty stores as they offer a variety of products across multiple categories.

Question 6

Which of the following best describes category killers?
A) They are small retailers who handle deep assortments in a limited number of product categories.
B) They are single-line stores that emphasize a single product and effectively market it.
C) They are off-price retailers who compete more on the basis of offering large assortments at lower prices.
D) They are large, low-priced limited-line retail chains that attempt to dominate a particular product category.

Accepted Answer

Category killers are large retail chains that focus on dominating a particular product category, often offering deep assortments at low prices to drive competitors out of business. They are also known for using aggressive advertising and marketing tactics to establish themselves as the go-to retailer for a specific product category.

Question 7

In which of the following stores is a narrow but very deep product assortment found?
A) A hypermarket
B) A category killer
C) A mass merchandiser
D) A convenience store

Accepted Answer

A category killer specializes in a narrow range of products but offers a deep assortment within that category, dominating the market for that specific product type.

Question 8

_____ typically compete with other retailers on the basis of offering lower prices on products in their large assortments.
A) Warehouse clubs
B) Convenience stores
C) Department stores
D) Supermarkets

Accepted Answer

Warehouse clubs are known for offering lower prices on their large assortments of products, competing with other retailers on the basis of price. They achieve this by buying in bulk and operating in no-frills, warehouse-like facilities where costs are kept low.

Question 9

_____ carry broad product assortments and compete on the basis of offering a good selection in different product categories and offering lower prices on products in their large assortments.
A) Specialty stores
B) Mass merchandisers
C) Convenience stores
D) Category killers

Accepted Answer

Mass merchandisers such as Walmart or Target carry a wide range of products and compete through offering lower prices on products within their large assortments.

Question 10

Which of the following is true of wholesalers?
A) Owing to the distribution functions they perform, wholesalers do not need to actively seek out producers.
B) Agents, brokers, and manufacturers' representatives are types of wholesalers that take title to the merchandise they sell.
C) Wholesalers with track records that carry directly competing products and brands can more easily attract manufacturers of successful products.
D) Wholesalers tend to lower costs for other channel members by assuming the risk of managing large inventories.

Accepted Answer

Wholesalers take on the risk of managing large inventories and can therefore lower costs for other channel members. Option A is incorrect, as wholesalers actively seek out producers to buy products from. Option B is incorrect, as agents, brokers, and manufacturers' representatives do not take title to the merchandise they sell. Option C is incorrect, as manufacturers are less likely to work with wholesalers carrying directly competing products and brands.

Question 11

_____ handle deep assortments in a limited number of product categories.
A) Specialty stores
B) Mass merchandisers
C) Convenience stores
D) Warehouse clubs

Accepted Answer

Specialty stores typically focus on a narrow range of product categories and offer a deep assortment within those categories, often carrying a wider variety of specialized products compared to other retailers.

Question 12

_____ involves wholesalers purchasing channel members above them.
A) Backward integration
B) Contractual marketing
C) Parallel ownership
D) Franchising system

Accepted Answer

Backward integration involves a company or organization acquiring or merging with a company in the production or distribution chain at a previous stage. In this case, wholesalers purchasing channel members above them is an example of backward integration.

Question 13

Which of the following is true of mass merchandisers?
A) They handle deep assortments in a limited number of product categories.
B) They compete on the basis of providing variety in different product categories and low-priced products in their large assortments.
C) They are retailers whose primary advantages to consumers are suitable location, close-in parking, and easy entry and exit.
D) They are large, low-priced limited-line retail chains that attempt to capitalize and establish themselves in a single product category.

Accepted Answer

Mass merchandisers compete by offering a large assortment of products across different categories at low prices. This is their primary advantage to consumers. Option A describes category killers, option C describes convenience stores, and option D describes category specialists.

Question 14

Which of the following is a store-based method of retailing?
A) Television home shopping
B) Vending machines
C) Electronic exchanges
D) Category killers

Accepted Answer

Category killers are stores that specialize in a particular category of merchandise and offer a large selection of products within that category. This is a store-based method of retailing as it requires a physical location for customers to visit and browse the selection of products. The other options listed do not require a physical store location for customers to make purchases.

Question 15

Merchants that are primarily engaged in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods to retailers or to industrial or business users are called _____.
A) agents
B) franchisors
C) wholesalers
D) vendors

Accepted Answer

Wholesalers are the merchants who buy goods in bulk, store them, and sell them in smaller quantities to retailers or industrial/business users. Agents are intermediaries who connect buyers and sellers and earn commissions for their services. Franchisors are businesses that sell the right to use their brand and business processes to independent operators. Vendors are individuals or companies that sell goods or services directly to buyers.

Question 16

Which of the following is a benefit wholesalers bring to manufacturers?
A) They reduce potential losses by assuming risks.
B) They increase the product alternatives available in local markets.
C) They reduce retail prices by the effectiveness contributed to the channel.
D) They provide information about industries and other retailers.

Accepted Answer

The answer of Which of the following is a benefit...

Question 17

Firms may choose to develop corporate vertical marketing systems in order to:
A) obtain scale economies.
B) acquire location convenience.
C) concentrate sales in category killer chains.
D) decrease diversification costs.

Accepted Answer

Developing corporate vertical marketing systems can help firms obtain scale economies, which can lead to cost savings and improved efficiency in operations. This is because the different stages of production and distribution are all controlled by the same corporate entity, allowing for streamlined coordination and potentially lower costs.

Question 18

_____ are retailers whose primary advantages to consumers are suitable location, close-in parking, and easy entry and exit.
A) Specialty stores
B) Mass merchandisers
C) Convenience stores
D) Category killers

Accepted Answer

Convenience stores are retailers that offer convenient location, close-in parking and easy entry and exit as their primary advantages. They generally offer a limited selection of products such as snacks, beverages, cigarettes, and lottery tickets, with a focus on providing quick and easy access for customers on-the-go.

Question 19

Which of the following is a benefit of wholesalers for end users?
A) They reduce retail prices by the efficiency and effectiveness contributed to the channel.
B) They reduce potential losses by assuming risks and offering expertise.
C) They provide the ability to reach diverse geographic markets cost effectively.
D) They provide potentially profitable products otherwise unavailable for resale in retail area.

Accepted Answer

Wholesalers have the ability to purchase goods in large quantities from manufacturers at discounted prices, and then distribute them to retailers who sell them to end users. This contributes to the efficiency and effectiveness of the channel, resulting in lower retail prices for end users.

Question 20

_____ compete with other retailers on the basis of offering a good selection in a number of different categories.
A) Warehouse clubs
B) Convenience stores
C) Department stores
D) Supercenters

Accepted Answer

Department stores are known for offering a wide variety of products across multiple categories, such as clothing, home goods, and electronics. They often try to differentiate themselves from other retailers by having a large selection of products within each category. Warehouse clubs and supercenters may also offer a good selection of products, but they generally focus on specific categories (such as groceries or electronics) rather than offering a broad range of items. Convenience stores, on the other hand, are known for offering a small selection of items that are convenient for customers to grab on-the-go.

Quiz 10: Distribution Strategy

Which of the following is an example of backward integration?

Which of the following is an advantage of franchising?

Backward integration is typically evident when a:

One of the limitations of franchising is that it:

Which of the following is an example of a specialty store?

Which of the following best describes category killers?

In which of the following stores is a narrow but very deep product assortment found?

_____ typically compete with other retailers on the basis of offering lower prices on products in their large assortments.

_____ carry broad product assortments and compete on the basis of offering a good selection in different product categories and offering lower prices on products in their large assortments.

Which of the following is true of wholesalers?

_____ handle deep assortments in a limited number of product categories.

_____ involves wholesalers purchasing channel members above them.

Which of the following is true of mass merchandisers?

Which of the following is a store-based method of retailing?

Merchants that are primarily engaged in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods to retailers or to industrial or business users are called _____.

Which of the following is a benefit wholesalers bring to manufacturers?

Firms may choose to develop corporate vertical marketing systems in order to:

_____ are retailers whose primary advantages to consumers are suitable location, close-in parking, and easy entry and exit.

Which of the following is a benefit of wholesalers for end users?

_____ compete with other retailers on the basis of offering a good selection in a number of different categories.