Deck 10: Marketing Channels: Delivering Customer Value

Question 1

Which of the following would be considered an upstream partner in a company's supply chain?

A) a firm that resells a finished product and shares the net sales with the producer
B) a firm that provides technical expertise in the production of a product
C) a firm that markets a product to consumers through social media
D) a firm that buys products at wholesale cost from the company
E) a firm that exclusively markets a product to other businesses

Answer 1

B

Question 2

Which of the following is an example of a horizontal conflict in a distribution channel?

A) a Nike shoe dealer complaining that the shoes provided to the dealer are defective
B) a Ford car dealer complaining that another Ford dealer is underpricing the same models
C) a FedEx agent complaining that a DHL agent is cutting off his business
D) a Walmart executive complaining to a Pepsi executive for not replenishing stocks on time
E) a Gucci executive complaining to Gucci's suppliers of delays in shipping consignments

Answer 2

B

Question 3

Most producers sell their goods directly to final users.

Answer 3

False

Question 4

All the institutions in a channel are connected by several types of flows. When a retailer conveys to a wholesaler that a new line of hip-hop clothing is not selling, this is an example of ________.

A) payment flow
B) flow of ownership
C) physical flow
D) information flow
E) promotion flow

Question 5

________ are sets of interdependent organizations that help make the product or service of a company available for use by consumers or business users.

A) Research and development channels
B) Upstream channels
C) Marketing channels
D) Raw materials suppliers
E) Backward integration chains

Question 6

Which of the following applies to a marketing intermediary who buys brand name toothpaste from 10 different manufacturers, consolidates offerings, and then resells the various brands to 500 supermarkets in Florida?

A) facilitate the production of products without direct customer feedback
B) help a company develop a direct channel selling system
C) buy small quantities of products from producers and break them down into narrow assortments for customers
D) increase the amount of work that must be done by producers and consumers
E) transform the assortments of products made by producers into the assortments wanted by consumers

Question 7

Producers use marketing intermediaries because they ________.

A) create greater efficiency in making goods available to target markets
B) supply inexpensive raw materials for manufacturing products
C) provide technical expertise for faster production
D) monitor day-to-day activities during production
E) form a part of the company's direct channel

Question 8

Kevin Pinker is a freelance computer programmer who writes computer algorithms for companies such as SoftStar and BlueHill. SoftStar and BlueHill use these algorithms to make specific programs based on online market research. These programs are then sold to the online retailer, Abundon, which then sells them to individual consumers and businesses. Which of the following is a marketing intermediary in this chain?

A) SoftStar
B) BlueHill
C) the consumer
D) Abundon
E) Kevin Pinker

Question 9

A firm that uses direct marketing would most likely sell its products through ________.

A) one marketing intermediary
B) big box retailers
C) large wholesalers
D) multiple intermediaries
E) the company Web site

Question 10

A(n)________ is considered a marketing intermediary.

A) customer
B) producer
C) manufacturer
D) wholesaler
E) advertiser

Question 11

Java Jane's first coffeehouse was very successful due to the unique flavors, on-site baked goods, and inviting ambiance. The owner, Jane Phillips, decided to franchise her operation when she was approached by several interested investors. Which type of marketing system has Java Jane's most likely adopted?

A) an administered marketing system
B) a contractual marketing system
C) a horizontal marketing channel
D) a direct marketing channel
E) a vertical marketing channel

Question 12

Direct marketing is the longest distribution channel between a producer and consumer.

Question 13

Introducing intermediaries into a distribution chain increases the number of direct channel transactions between a manufacturer and its customers.

Question 14

What are the different functions of the members of a marketing channel?

Question 15

The USA Cotton Growers Cooperative sells unfinished cotton to The Weaving Experts who refine the raw material for sale to The Sheet Factory. It's then used in the manufacturing process of 300, 400, and 500 thread count bed sheet sets. The Sheet Factory distributes their products through a number of wholesalers, including Linen Traders. Linen Traders then resells the bed sheet sets to retailer Bedding Plus who markets the products to consumers. Which of the following represents a marketing intermediary transaction?

A) only Linen Traders
B) only Bedding Plus
C) only The Weaving Experts
D) Linen Traders selling to Bedding Plus
E) The Weaving Experts selling to Linen Traders

Question 16

From a producer's point of view, a greater number of levels in a supply chain means less control and greater channel complexity.

Question 17

Mary Kay Cosmetics and Amway sell their products through home and office sales parties, online Web sites, and social media. Both companies use a(n)________ channel to distribute their offerings.

A) functional
B) indirect
C) direct
D) layered
E) behavioral

Question 18

The authors suggest that the term "supply chain" may be too limited because it takes a "make-and-sell" view of the business. They believe the term ________ is more appropriate because it suggests a "sense-and-respond" view of the market.

A) "upstream chain"
B) "downstream chain"
C) "market chain"
D) "production chain"
E) "demand chain"

Question 19

In which of the following situations is a producer guaranteed full control over product sales?

A) a corporate marketing channel
B) a direct marketing channel
C) a contractual distribution channel
D) a horizontal marketing system
E) an administered marketing system

Question 20

A ________ is made up of a company, its suppliers, distributors, and, ultimately, customers who "partner" with each other to improve the performance of the entire system.

A) manufacturing chain
B) distribution center
C) marketing intermediary
D) value delivery network
E) disintermediation system

Question 21

Which of the following is true of a vertical marketing system?

A) It is formed when two or more companies at one level join together to follow a new marketing opportunity.
B) It is formed when a single firm sets up two or more marketing channels to reach one or more customer segments.
C) It does not give overall power to any one member in the channel.
D) It has each channel member acting as a separate business unit trying to maximize its own profits.
E) It has one channel member owning all the other channel members or has contracts with all other channel members.

Question 22

Performance Inc. sells its newest athletic shoe styles to The Sneaker Store and distributes dated or slightly defective merchandise through Sports Discounters. Performance Inc.'s main competitor is Topnotch Manufacturers. Performance Inc. also markets its products through the company Web site. They decide to offer a short-term online promotion to encourage consumers to buy their newest athletic shoes, promoting a 20 percent discount off current retail prices. In such a distribution channel, which of the following would be considered a vertical conflict?

A) a conflict between Performance Inc. and The Sneaker Store
B) a conflict among Performance Inc., The Sneaker Store, and Sports Discounters
C) a conflict between The Sneaker Store and Sports Discounters
D) a conflict between Performance Inc. and Sports Discounters
E) a conflict between Performance Inc. and Topnotch Manufacturers

Question 23

Faber Motors manufactures three lines of cars: high-end security cars for government agencies, commercial cars for consumers and individuals, and professional racing cars. The high-end security cars are sold directly to government buyers by the company. The consumer cars are sold through dedicated dealers who only sell Faber's lines at their outlets. For its professional racing cars, Faber collaborates with Radium Tires, an innovative and renowned tire manufacturer. Faber provides the engine and body, while Radium provides the tires and its expertise on the racing industry. Which term best describes Faber's channel arrangements?

A) direct distribution system
B) horizontal marketing system
C) corporate vertical franchise system
D) multichannel distribution system
E) administered vertical marketing system

Question 24

Which of the following is true of a conventional distribution channel?

A) It has each channel member acting as a separate business unit trying to maximize its own profits.
B) It consists of producers selling their products directly to customers without the use of intermediaries.
C) It has one channel member owning the other channel members.
D) It is a distribution channel where a producer is owner of all the other channel members.
E) It has all members of the channel working together as a single organization.

Question 25

Luccia's is a restaurant based in Illinois that exclusively sells Italian food. Luccia's sells the rights to its recipes to a British firm, Clover Trading, which then opens an outlet in London under the Luccia's brand name. Which kind of channel arrangement does Luccia's most likely have with Clover Trading?

A) a horizontal marketing system
B) a direct marketing system
C) an administered vertical marketing system
D) a contractual vertical marketing system
E) a corporate vertical marketing system

Question 26

In a(n)________ marketing system, leadership over production and distribution is assumed through the size and power of one or a few dominant channel members.

A) direct
B) contractual vertical
C) horizontal
D) corporate vertical
E) administered vertical

Question 27

Rage, a leading motor vehicle manufacturer, introduces a new superbike model. It invites proposals from independent dealers who are willing to set up exclusive showrooms that only sell Rage's superbikes. Chosen dealers will sell and service the superbikes, and Rage will oversee national advertising. This is most likely an example of a(n)________.

A) administered vertical marketing system
B) horizontal manufacturing marketing system
C) manufacturer-sponsored retailer franchise system
D) manufacturer-sponsored wholesaler franchise system
E) direct marketing system

Question 28

More than 80 percent of McDonald's restaurants worldwide are owned and operated by franchisees. This illustrates a(n)________ marketing system.

A) corporate vertical
B) horizontal
C) contractual vertical
D) administered vertical
E) direct

Question 29

Sonic Shack, an audio equipment retailer, signs an agreement with PineWire, a renowned electronics company, to sell PineWire products. The deal requires Sonic Shack to provide PineWire products with superior displays, shelf space, and promotion compared to competing products. Sonic agrees to these terms as PineWire products command a huge share in the market. Which of the following types of channel arrangements do PineWire and Sonic Shack most likely have?

A) administered vertical marketing system
B) corporate vertical marketing system
C) indirect marketing system
D) wholesaler franchise system
E) horizontal marketing system

Question 30

Historically, conventional distribution channels have provided channel leadership and have had the power to assign roles and manage conflict.

Question 31

For over 10 years, Erudite, a publishing and educational company that produces college textbooks, has been selling its books online through studysmart.com, a popular online retailer that sells textbooks published by different companies. Recently, Erudite stopped selling its books through studysmart.com and set up its own Web site to sell its books. This change in channel organization is called ________.

A) disintermediation
B) intensive distribution
C) brokering
D) franchising
E) selective distribution

Question 32

Brandy's, a national candy store chain, decides to open both a coffee house and ice cream shop within their stores to create a multi-faceted experience for shoppers. The company decides to enter into deals with two well-known retailers - The Beanery and Creamy Creations. As stipulated in their respective contracts, The Beanery and Creamy Creations cannot enter into the same type of agreement with any other candy retailers. All three companies will enjoy greater sales, and ultimately profits, from the arrangement. This is most likely an example of a(n)________ marketing system.

A) direct
B) administered vertical
C) corporate vertical
D) contractual vertical
E) horizontal

Question 33

A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity is referred to as a(n)________.

A) corporate vertical marketing system
B) contractual vertical marketing system
C) direct marketing system
D) horizontal marketing system
E) administered vertical marketing system

Question 34

A ________ consists of producers, wholesalers, and retailers acting as a unified system. The system can be dominated by any one of the interdependent members.

A) direct marketing system
B) horizontal distribution channel
C) lateral marketing system
D) conventional distribution channel
E) vertical marketing system

Question 35

Victoria's Closet, a manufacturer of bohemian-style clothing and accessories, sells its products through its online Web site, a catalogue, and specialty boutiques that target women. Which kind of channel arrangement does Victoria's Closet employ to distribute its products?

A) horizontal marketing system
B) multichannel distribution system
C) administered vertical marketing system
D) contractual vertical marketing system
E) corporate vertical marketing system

Question 36

Changes in technology and the explosive growth of direct and online marketing are having a profound impact on the nature and design of marketing channels. One major trend is toward ________ insofar as product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones.

A) intermediation
B) disintermediation
C) vertical marketing systems
D) horizontal marketing systems
E) corporate vertical marketing systems

Question 37

Which type of channel arrangement is a retailer like Home Depot likely to follow?

A) administered vertical marketing system
B) horizontal marketing system
C) contractual vertical marketing system
D) corporate vertical marketing system
E) direct marketing system

Question 38

Integrating the entire distribution chain - from its own design and manufacturing operations to distribution through its own managed stores - has turned Spanish clothing chain Zara into the world's fastest-growing fast-fashion retailer. This is an example of a(n)________ marketing system.

A) contractual vertical
B) corporate vertical
C) administered vertical
D) horizontal
E) direct

Question 39

Jupiter Steel is the chief provider of metals to Greystone Motors. Greystone Motors has two models of cars - one for commercial and regular consumers and another for professional car racing teams. Greystone Motors has designated dealers to sell its commercial cars to consumers, while racing cars are sold directly to the racing teams. In such a distribution channel, which of the following would be considered a horizontal conflict?

A) a conflict between Jupiter Steel and Greystone Motors
B) a conflict between Jupiter Steel and Greystone dealers
C) a conflict between two Greystone Motors car dealerships
D) a conflict between a Greystone Motors car dealership and a racing team
E) a conflict between Greystone Motors and its car dealerships

Question 40

Vertical conflicts in distribution channels are conflicts that occur between ________.

A) same levels in the same channel
B) different levels of the same channel
C) same levels of different channels
D) different levels of different channels
E) retailers and customers

Question 41

Explain multichannel distribution systems with an example.

Question 42

In an administered VMS, the producer assumes the leadership position in a distribution channel by default.

Question 43

Differentiate between the three types of franchises and provide examples of each type.

Question 44

Producers of convenience products and common raw materials typically seek ________ distribution - a strategy in which they stock their products in as many outlets as possible

A) selective
B) exclusive
C) intensive
D) exponential
E) comprehensive

Question 45

A multichannel marketing system is one in which a producer sells to multiple markets using the same distributional channel.

Question 46

Which of the following is true of an intensive distribution strategy?

A) It gives sole rights to select dealers in a given area.
B) It strives to make products available where and when consumers want them.
C) Compared with other distribution strategies, it uses the least number of intermediaries to sell products.
D) Compared with other distribution strategies, it provides the best support for dealers of luxury products.
E) It discards traditional intermediaries and uses direct marketing to reach customers.

Question 47

Disintermediation occurs when product or service producers cut out intermediaries and sell directly to final buyers.

Question 48

The franchise organization is an example of a corporate vertical marketing system.

Question 49

________ distribution typically allows manufacturers to develop good working relationships with intermediaries and expect a better-than-average selling effort. It also gives producers good market coverage with more control and less cost than intensive distribution.

A) Vertical
B) Selective
C) Horizontal
D) Comprehensive
E) Inclusive

Question 50

What is a contractual vertical marketing system? Give an example of a type of business that works as a contractual VMS.

Question 51

What are the advantages and disadvantages of using a multichannel distribution system?

Question 52

What is disintermediation? With a suitable example, explain the opportunities and problems that disintermediation presents for producers and resellers.

Question 53

A vertical marketing system consists of producers, wholesalers, and retailers acting as a unified system.

Question 54

Compare a conventional distribution channel and a vertical marketing system.

Question 55

Marketing channel design calls for analyzing consumer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives.

Question 56

Companies selling perishable products generally prefer direct marketing, which minimizes delays.

Question 57

A horizontal marketing system can develop between a company and its competitor.

Question 58

An administered vertical marketing system integrates successive stages of production and distribution under single ownership.

Question 59

High-end luxury brands like Bentley for cars, Louis Vuitton for handbags, and Rolex for watches use ________ distribution, giving a limited number of dealers the sole right to sell products in a specified geographic territory.

A) inclusive
B) horizontal
C) intensive
D) exclusive
E) vertical

Question 60

Selective distribution is a strategy in which ________.

A) more than one, but fewer than all, willing intermediaries are used by a seller
B) products are stocked in as many outlets as possible by a seller
C) products are not sold through intermediaries but directly to customers from producers
D) all willing intermediaries are given rights to sell a product
E) common household goods are preferred over luxury products by intermediaries

Question 61

What criteria should a firm consider before choosing a channel alternative?

Question 62

How does a company determine its channel objectives? What factors influence the channel objectives of a company?

Question 63

Moving products and materials from suppliers to the factory is known as ________ logistics.

A) outbound
B) reverse
C) inbound
D) downstream
E) inventory

Question 64

Exclusive dealing that creates a monopoly comes under the scope of the Clayton Act of 1914.

Question 65

Which of the following is true of an exclusive dealing arrangement between a producer and a dealer?

A) It prohibits the producer from selling outside the dealer's territory.
B) It prevents the producer from using any other dealer to sell its products regardless of geographical area.
C) It gives the producer's products more shelf power compared to a competitor's products being sold by the dealer.
D) It can be considered illegal if it increases competition substantially.
E) It does not allow other producers to sell to that dealer.

Question 66

Full-line forcing is considered an illegal arrangement that violates the Clayton Act.

Question 67

Which of the following is an advantage of exclusive dealing between a seller and a dealer?

A) The seller gains more shelf power compared to competitors' products.
B) The seller can avoid using any intermediary and sell the product directly to customers.
C) Customers get more loyal and dependable outlets.
D) The seller's distinctive position is reinforced through customer service and the dealer obtains steady support from the seller.
E) The dealer can freely choose what products to sell without any interference from the seller.

Question 68

Differentiate between intensive distribution, exclusive distribution, and selective distribution strategies. Provide examples of products that would be appropriate for each.

Question 69

Bateman Gray Motors sells the cars it produces using dedicated dealers who only sell Bateman Gray's products at their outlets. What kind of marketing strategy has Bateman Gray adopted with its car dealers?

A) direct marketing
B) exclusive dealing
C) disintermediation
D) horizontal integration
E) vertical integration

Question 70

When a seller requires that only certain dealers carry its products, its strategy is known as ________.

A) horizontal restraint of trade
B) intensive distribution
C) vertical distribution
D) disintermediation
E) exclusive distribution

Question 71

Marketing logistics involves getting the right product to the right customer in the right place at the right time profitably.

Question 72

Describe the legal aspects of exclusive arrangements such as exclusive dealing and exclusive distribution.

Question 73

Many athletic stadiums enter into contractual agreements with national beverage companies and food franchises to distribute only their brand-name products at the respective venues. This is an example of ________.

A) horizontal price fixing
B) disintermediation
C) exclusive dealing
D) selective distribution
E) horizontal integration

Question 74

Outbound logistics refers to moving ________.

A) unwanted, excess products from resellers to producers
B) raw materials from suppliers to the factory
C) excess materials from the factory to suppliers
D) products from the factory to resellers and ultimately to customers
E) broken, damaged products from customers to producers

Question 75

What are the responsibilities of channel members?

Question 76

In exclusive dealing, a producer may agree not to sell to other dealers in a given area.

Question 77

How do companies generally manage and motivate their channel members? What technological tools are available to help with this task?

Question 78

Managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers is known as ________.

A) marketing logistics
B) distribution system management
C) supply chain management
D) full-line forcing
E) physical distribution

Question 79

Intensive distribution occurs when only one intermediary is used by a producer to sell all its products.

Question 80

________ is a practice whereby a producer agrees to sell a brand to a dealer only if the dealer agrees to sell some or all of the rest of the producer's merchandise.

A) Horizontal price fixing
B) Horizontal integration
C) Full-line forcing
D) Direct marketing
E) Disintermediation