Deck 3: Channel Analysis: Auditing Marketing Channels

Question 1

A(n)________ indicates the share of total channel profits that each channel member is responsible for generating.

A) holding cost
B) safety stock
C) equitable margin
D) service output share
E) normative profit share

Answer 1

E

Question 2

What is the most likely benefit of auditing channel functions?

A) identifying gaps in desired service outputs
B) establishing channel oversight teams
C) conducting data mining activities
D) gathering end-user feedback
E) segmenting the market

Answer 2

A

Question 3

What is the LEAST likely reason for holding inventory?

A) anticipated demand surges
B) shifts in service output needs
C) supply and demand uncertainty
D) economies of scale in production
E) lengthy shipment transportation time

Answer 3

B

Question 4

What is the best method for controlling inventory holding costs?

A) increasing product variety
B) extending the life of goods
C) using multiple vendors
D) changing warehouse locations
E) monitoring factory processes

Question 5

Which of the following questions is LEAST relevant to establishing a zero-based channel?

A) Can information systems be modified to reduce the costs of generating quotes and placing orders?
B) Is it possible to eliminate, combine, or redefine certain tasks to reduce the steps for a sale?
C) What non-valued functions can be eliminated without damaging customer satisfaction?
D) What information sharing activities occur between channel members and customers?
E) What redundant activities exist and can be eliminated?

Question 6

The primary purpose of auditing marketing channels is to ________.

A) evaluate the long-term service output solutions established by the manufacturer
B) assess each channel member's ability to provide service outputs efficiently
C) examine the necessity of service intermediaries in the overall channel
D) identify the short-run service output demands of targeted markets
E) determine how to modify and shorten the channel structure

Question 7

All of the following would most likely be described in an efficiency template EXCEPT the ________.

A) share of total channel profits that each channel member should reap
B) types of work done by each channel member to perform the marketing functions
C) number and significance of service and cost gaps caused by each channel member
D) amount of work done by each channel member to perform the marketing functions
E) importance of each channel function to the provision of end-user service outputs

Question 8

Which term refers to the idea that compensation should reflect the normative profit shares of each channel member?

A) equity principle
B) speculative selling
C) productive activity
D) channel gap
E) postponement

Question 9

Fab Furniture,a furniture wholesaler,owns a 500,000 square-foot warehouse that houses large volumes of home furniture that the firm purchases from multiple manufacturers.The expenses associated with shipping furniture to retailers around the U.S.and running the warehouse are most likely examples of ________ costs.

A) financing
B) negotiation
C) order processing
D) physical possession
E) information sharing

Question 10

It is most likely appropriate to remove a channel member from the marketing channel system if the channel member ________.

A) engages in both bulk breaking and information sharing
B) conducts most of the channel's service output activities
C) avoids channel conflicts by asserting channel power
D) holds less channel power than other members
E) performs redundant service output activities

Question 11

Which term refers to limitations that create channel gaps and prevent the establishment of a zero-based channel?

A) gaps
B) bounds
C) outputs
D) variables
E) weaknesses

Question 12

Which term refers to channel member activities that produce the service outputs demanded by end-users?

A) information sharing
B) channel segmentation
C) reverse logistics
D) channel functions
E) bulk breaking

Question 13

A(n)________ channel meets the target market segment's service output demands at the minimum cost of performing the channel functions that produce those service outputs.

A) service-oriented
B) promotional
C) zero-based
D) equitable
E) generic

Question 14

Which term refers to the process the marketing channel uses to handle returned merchandise?

A) service outputs
B) bulk breaking
C) reverse logistics
D) activity-based costing
E) inventory holding

Question 15

According to the equity principle,the compensation of each channel member should be based on the ________.

A) power of the channel captain
B) equal division of channel profits
C) external competitive environment
D) value created by the channel member
E) promotional efforts of the channel member

Question 16

Which term refers to the decreasing predictability of end-user demand as the channel member's distance from the end-user increases?

A) capacity utilization
B) environmental bounds
C) service gap
D) zero-sum gain
E) bullwhip effect

Question 17

Which of the following statements is most likely true about physical possession in a marketing channel system?

A) Physical possession costs are not an issue for service providers.
B) Decreasing inventory holding time typically lowers physical possession costs.
C) Physical possession costs stem from taking title to goods and tying up capital.
D) Ownership and physical possession always move together through channel systems.
E) Handling product returns is a component of consignment selling rather than physical possession.

Question 18

Tyrone,the channel manager for Federated Batteries,has built a channel that meets service output demands at a minimum cost,and he has closed all service and cost gaps.The channel created by Tyrone is best described as ________.

A) functional
B) speculative
C) free riding
D) zero-based
E) fully integrated

Question 19

Legal constraints in the local marketplace that hinder the establishment of a zero-based channel are known as ________.

A) inefficient channel functions
B) product and service gaps
C) environmental bounds
D) service output gaps
E) managerial bounds

Question 20

The combined costs of physical possession and ownership in a channel system are known as ________ costs.

A) inventory holding
B) service output
C) safety stock
D) consignment
E) promotion

Question 21

Which of the following statements is most likely FALSE?

A) Channel efficiency occurs if service output supply exceeds service output demand.
B) Cost gaps occur when one or more channel functions are performed at high costs.
C) Service gaps occur when service output demand exceeds service output supply.
D) Environmental bounds are constraints that stem from outside the channel
E) Managerial bounds are restrictions imposed from inside the channel.

Question 22

Which of the following statements about cost gaps is most likely true?

A) A cost gap typically is indicated through negative feedback from end-users in a segment.
B) Cost gaps exist when a single channel function is performed at a price that fluctuates.
C) A cost gap occurs when the performance of channel functions is jointly inefficient.
D) Cost gaps usually trigger high compensation expenses for channel members.
E) Low costs typically indicate both cost gaps and service gaps.

Question 23

When the total cost of performing all channel functions is too high,a(n)________ most likely occurs.

A) speculative sale
B) cost gap
C) postponement sale
D) service gap
E) environmental bound

Question 24

What is the most likely benefit of speculation?

A) decreased inventory holding costs
B) increased economies of scale
C) decreased reliance on intermediaries
D) increased demand by end-users
E) decreased industry competition

Question 25

Outside-In,an outdoor apparel firm,loses money each month because of returned merchandise.Which of the following actions should Outside-In LEAST likely consider?

A) contracting with third-party logistics specialists
B) providing tools to help prescreen customer orders
C) assigning customer service reps to assist buyers
D) investing in better demand forecasting methods
E) eliminating unnecessary intermediaries

Question 26

When using an efficiency template,the first step is to ________.

A) compare the compensation of channel members
B) determine the weights of each channel function
C) distinguish between environmental and managerial bounds
D) calculate a weighted average of function performance levels
E) quantify retail and wholesale price points using gap analysis

Question 27

Which term refers to constraints on distribution structures that arise from rules within a company?

A) service gaps
B) managerial bounds
C) physical infrastructure
D) environmental bounds
E) channel function gaps

Question 28

Which of the following statements about product returns is most likely FALSE?

A) Restocking fees are intended to offset the costs of handling returns.
B) Processing Web returns costs significantly less than handling store returns.
C) Most firms take 1-2 months to move a returned product back into the market.
D) Third-party logistics firms handle receiving, checking, and repackaging returned products.
E) Retailers tend to invest more than manufacturers in reverse logistics management technologies.

Question 29

Managers at Global-Tech,a manufacturer of electronic components,want to delay the start of production until the firm receives orders to eliminate inventory holding costs.Global-Tech is most likely engaging in ________.

A) generic channel functions
B) service output design
C) channel gap analysis
D) postponement
E) speculation

Question 30

Which of the following most likely occurs if the amount of a service supplied is less than the service demanded?

A) environmental bound
B) managerial bound
C) service segment
D) service gap
E) cost gap

Question 31

Country X requires that at least 40% of all suppliers to government agencies be either small or medium-sized vendors.For a large vendor trying to gain a government contract in Country X,this requirement is most likely an example of ________.

A) illegal constraints
B) managerial bounds
C) service output gaps
D) environmental bounds
E) affirmative action laws

Question 32

Which of the following most likely indicates the existence of a cost gap?

A) The price/value proposition is appropriate for a less demanding segment.
B) The price/value proposition is appropriate for a more demanding segment.
C) Service levels are too low, and the costs are too high.
D) Service levels are right, but the costs are too low.
E) Service demands meet service output levels.

Question 33

What is the LEAST likely result of a cost gap analysis?

A) identifying cost gaps in a marketing channel
B) segmenting end-users by cost gap responses
C) determining potential actions to close cost gaps
D) identifying environmental and managerial bounds
E) assessing whether potential actions will create other gaps

Question 34

Which of the following is most important when determining how to close service gaps?

A) assessing the service outputs of other industries
B) providing higher levels of all service and cost outputs
C) substituting one service output for another service output
D) considering a global change in service outputs for all segments
E) identifying the segment for which a service output is appealing

Question 35

What is the typical source of managerial bounds?

A) manufacturer
B) wholesaler
C) retailer
D) end-user
E) government

Question 36

Managers at Global-Tech,a manufacturer of electronic components,want to delay the start of production until the firm receives orders.What is the most likely risk of this strategy?

A) producing beyond demand
B) engaging in speculation
C) segmenting the market
D) establishing a cost gap
E) creating a service gap

Question 37

Which of the following is most likely a true statement about reverse logistics?

A) Accounting cost transparency is low because of inconsistent tracking.
B) Low channel risk exists because of significant market demand.
C) Economies of scale are gained by shipping items in bulk.
D) Volume forecasting is simple for most new products.
E) Product packaging and product quality are uniform.

Question 38

Managers at Fido's Finest,a pet apparel firm,are expecting a large number of orders for dog sweaters because winter is approaching.In anticipation of these orders,the firm has started manufacturing large batch lots of dog sweaters.Fido's Finest is most likely engaging in ________.

A) promotion
B) marketing
C) speculation
D) segmentation
E) postponement

Question 39

A Service Gap Analysis Template is used to identify service gaps based on ________.

A) over-compensated intermediaries
B) segmented channel functions
C) correlated generic channels
D) demanded service outputs
E) targeted end-user segments

Question 40

How does CDW implement the equity principle?

A) offering customers a choice in the cost of channel functions
B) sharing information with customers to reduce purchasing risks
C) performing the same financing functions for all levels of customers
D) compensating salespeople with the same commission rate for online and personal sales
E) negotiating with channel intermediaries to eliminate the potential for service and cost gaps

Question 41

Speculation involves delaying production until orders are received to eliminate the costs of holding expensive inventory.

Question 42

How do environmental channel bounds and managerial channel bounds differ? What are the potential causes and effects of each?

Question 43

What are physical possession costs? What types of physical possession costs are experienced by service providers? How do physical possession costs affect a channel's success?

Question 44

What are the uses and benefits of efficiency templates? What qualitative and quantitative cost information is necessary to complete an efficiency template?

Question 45

What is a zero-based channel? What role does inventory management play in achieving a zero-based channel? What methods are available for reducing inventory?

Question 46

What are the causes and effects of both service gaps and cost gaps?

Question 47

Violations of the equity principle are a common cause of channel conflicts.

Question 48

Physical possession costs are non-existent for service providers because of the lack of a tangible product.

Question 49

It is best to create a separate efficiency template for each channel that distributes the product and for each targeted segment of end-users.

Question 50

Service gaps occur when the amount of a service supplied is less than the service demanded.