Deck 10: Marketing Channels: Delivering Customer Value 

Question 1

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

Answer 1

D

Question 2

is a set of interdependent organizations that help make a product or service of a company available for use by consumers or business users.

A) An upstream channel
B) A marketing channel
C) A research and development channel
D) A raw materials supplier
E) A backward integration chain

Answer 2

B

Question 3

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

Answer 3

False

Question 4

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) "demand chain"
C) "production chain"
D) "market chain"
E) "downstream chain"

Question 5

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

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

Question 6

Mary Kay Cosmetics and The Pampered Chef sell their products through home and office sales parties, online websites, and social media. Both companies use a(n) _ channel to distribute their offerings.

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

Question 7

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

Question 8

A(n) is considered a marketing intermediary.

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

Question 9

All the institutions in a channel are connected by several types of flows. Canadian retailers like Sobey's and Loblaws provide key sales information to their wholesalers. This is an example of .

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

Question 10

Channel members add value by bridging the major time, place, and possession gaps that separate goods and services from those who use them.

Question 11

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

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

Question 12

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

Question 13

Intermediaries play a minimal role in matching supply and demand.

Question 14

Producers use marketing intermediaries because they .

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

Question 15

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

Question 16

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

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

Question 17

Canadian dairy production operates under a national supply management system, which controls the output of the thousands of Canadian dairy farmers. The purpose is to ensure a fair return for the farmers by controlling the output of dairy products to meet demand, thus avoiding any potential surpluses or shortages. This ensures stable and higher prices for the producer. This system also places restrictions on imports. The consequence of this is that _.

A) consumers pay a lower price for dairy products at the store
B) consumers pay a higher price for dairy products at the store
C) more dairy farmers have lower incomes
D) dairy farmers prefer to produce non-dairy products and convert their farms to other types of farming (wheat, corn, pork)
E) none of the above

Question 18

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 throughout Canada?

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

Question 19

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

Question 20

Using , a company uses one or more levels of intermediaries to help bring its products to final buyers. Examples: most of the things you buy-everything from toothpaste to cameras to cars.

A) direct marketing channels
B) wholesaler marketing channels
C) retailer marketing systems
D) indirect marketing channels
E) social media

Question 21

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

Question 22

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

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

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

Question 28

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 website to sell its books. This change in channel organization is called .

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

Question 29

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

Question 30

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

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

Question 31

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

A) It consists of producers selling their products directly to customers without the use of intermediaries.
B) It has each channel member acting as a separate business unit trying to maximize its own profits.
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 32

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

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

Question 33

Canadian bookselling retailer Indigo partners with Starbucks, to offer a store-within-store coffee shop. This 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) horizontal marketing system
B) contractual VMS
C) direct marketing system
D) corporate vertical marketing system
E) administered VMS

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

Question 35

When Dairy Queen entered the Canadian market in 1953 the company sold license agreements to individuals that covered a specific geographic area. The franchisee (the individual who purchased the franchise from Dairy Queen), was given exclusive rights to open Dairy Queen locations in that area. The company could not sell new franchises within that area. As the company sought to grow sales it could not increase market penetration because the franchisee alone could decide to add locations in that territory. Many of the franchisees were satisfied with just one location in a territory that could easily have supported three or more locations (compare this with Tim Hortons who only offer franchises for a specific location and not a territory). Because Dairy Queen wanted to grow the number of locations and the franchisees were satisfied with one in their area, _ _ resulted.

A) wholesale conflict
B) customer conflict
C) vertical conflict
D) same level conflict
E) horizontal conflict

Question 36

Founded in 2005, Canadian restaurant Freshii was established to help Canadians eat healthy food. The company has expanded to several hundred stores in North America, Europe, and Australia. Freshii has grown by franchising. This is an example of .

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

Question 37

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

Question 38

Olsen Canada is a retailer of international women's clothing and accessories. Olsen sells its products through its online website, boutique stores, factory outlets, and in dedicated areas at many Hudson Bay locations. Which kind of channel arrangement does Olsen employ to distribute its products?

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

Question 39

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

Question 40

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

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

Question 41

Explain multichannel distribution systems with an example.

Question 42

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) exclusive
C) vertical
D) horizontal
E) intensive

Question 43

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

Question 44

An administered VMS integrates successive stages of production and distribution under single ownership.

Question 45

Global marketers must usually adapt their channel strategies to the existing structures within each country.

Question 46

When setting channel objectives, it is important to first consider .

A) placement near or away from competitor products
B) targeted levels of customer service
C) which is the easiest to pursue
D) targeted profit levels
E) which is the least expensive

Question 47

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

A) intensive distribution
B) vertical distribution
C) horizontal conflict
D) exclusive distribution
E) disintermediation

Question 48

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

Question 49

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

Question 50

Compare a conventional distribution channel and a vertical marketing system.

Question 51

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

Question 52

Selective distribution is a strategy in which _.

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

Question 53

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

Question 54

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

Question 55

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

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

Question 56

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

Question 57

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

Question 58

Horizontal conflict occurs among firms at different levels of the channel.

Question 59

In a multichannel distribution system, a single firm sets up two or more marketing channels to reach one or more customer segments.

Question 60

Each channel member plays a specialized role in the channel.

Question 61

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

Question 62

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

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

Question 63

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

Question 64

Outbound logistics refers to moving .

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

Question 65

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

Question 66

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

Question 67

Many companies are now installing integrated high-tech partnership relationship management (PRM) systems to coordinate their whole-channel marketing efforts.

Question 68

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

Question 69

Selective distribution is a strategy in which producers of convenience goods stock their products in as many outlets as possible.

Question 70

Customer relationship management software is used for selecting, managing, and motivating individual channel members and evaluating their performance over time.

Question 71

What are the responsibilities of channel members?

Question 72

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

Question 73

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) vertical integration
C) horizontal integration
D) exclusive dealing
E) disintermediation

Question 74

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

Question 75

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

Question 76

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

Question 77

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

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

Question 78

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

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

Question 79

Given Coke's (Coca Cola) availability in many different locations, from restaurants to grocery stores, to vending machines, and the product availability at many major events, it is safe to suggest that Coke uses selective distribution.

Question 80

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