Question 1

What occurs when a selective distribution strategy is chosen by a firm?

Accepted Answer

Selective distribution involves choosing a limited number of retailers in a market area to sell a company's products. This strategy allows for a balance between broad accessibility and maintaining a certain level of exclusivity or control over the brand's positioning.

Question 2

What is a common characteristic of a channel when the unit price of the product is low?

Accepted Answer

When the unit price of a product is low, it often necessitates a longer channel to distribute the product efficiently and cost-effectively, reaching a wider market without significantly increasing the price per unit. This is because the costs and logistics of distributing low-cost items directly from producer to consumer can be prohibitive, making intermediaries like wholesalers and retailers necessary to achieve economies of scale.

Question 3

Sherwin-Williams Paint Company sells the paint it manufactures through its company-owned retail paint stores. What type of marketing system is the company's marketing channel?

Accepted Answer

Sherwin-Williams uses a corporate marketing system because it involves the integration of production and distribution processes under a single ownership, which in this case is the company owning both the manufacturing and retail aspects of its business.

Question 4

Who is primarily responsible for achieving cooperation that resolves conflict among marketing channel members?

Accepted Answer

The channel captain, often a dominant firm within the channel, is primarily responsible for achieving cooperation that resolves conflict among marketing channel members. This entity leads channel activities and coordinates efforts for mutual benefit.

Question 5

What term refers to a planned marketing channel system that is designed to improve distribution efficiency and cost-effectiveness through functional integration?

Accepted Answer

A vertical marketing system (VMS) integrates successive stages of production and distribution, typically under a single ownership or through contracts or agreements, to improve efficiency and reduce costs in the distribution channel.

Question 6

What type of channel conflict is between two or more wholesalers or two or more retailers?

Accepted Answer

Horizontal conflict occurs between entities at the same level in a distribution channel, such as between two wholesalers or two retailers.

Question 7

Who are marketing intermediaries very beneficial to?

Accepted Answer

Marketing intermediaries are particularly beneficial to small producers trying to sell to large customers because they can provide the scale, contacts, and expertise needed to bridge the gap between small producers and their large potential markets.

Question 8

What does distribution intensity refer to?

Accepted Answer

Distribution intensity refers to the number of intermediaries (such as retailers, wholesalers, or agents) through which a producer distributes its products in a particular market. This can range from intensive distribution (aiming for maximum market coverage and using as many outlets as possible) to exclusive distribution (selecting only a few intermediaries).

Question 9

Lakeview Industries contracts with Marine Motor Distributors to carry its newly patented outboard engine. In exchange for exclusive dealership rights, Marine Motor has agreed to carry the full line of nautical clothing accessories offered by Lakeview. What term best describes this type of arrangement?

Accepted Answer

A tying agreement occurs when a seller with a strong product (the tying product, in this case, the patented outboard engine) requires buyers to purchase a second product (the tied product, here, the nautical clothing accessories) as a condition of sale. This arrangement is exactly what is described between Lakeview Industries and Marine Motor Distributors.

Question 10

What are goods called when they are manufactured abroad under license from a Canadian manufacturer, and then sold in the Canadian market in competition with Canadian-produced goods from the Canadian manufacturer?

Accepted Answer

These are referred to as grey goods, which are legally produced abroad under license but sold within a market in competition with domestically produced items, often without the consent of the primary manufacturer.

Question 11

What must a wholesaler do to grow profitably in a competitive environment?

Accepted Answer

Wholesalers can grow profitably in a competitive environment by providing better service at a lower cost than manufacturers or retailers can do themselves. This approach allows them to add value in the supply chain, making them an attractive partner for manufacturers and retailers.

Question 12

While exclusive distribution is legal for companies first entering a market, what does such an agreement violate if used by firms with a sizable market share seeking to bar competitors from the market?

Accepted Answer

Exclusive distribution agreements by firms with significant market share aiming to exclude competitors can violate the Competition Act. This act is designed to prevent anti-competitive practices that harm the market and consumer choice.

Question 13

What type of distribution has a limited number of marketing intermediaries in a geographic region?

Accepted Answer

Selective distribution involves using a limited number of intermediaries in a geographic region to maintain a certain level of control and service.

Question 14

What is one factor that would ordinarily result in a longer marketing channel?

Accepted Answer

The answer of What is one factor that would ordinarily...

Question 15

What type of marketing channel conflict can result when identically branded products are carried in competing retail pharmacies, discount houses, department stores, convenience stores, and mail-order houses?

Accepted Answer

Horizontal conflict occurs when organizations at the same level of the marketing channel, such as competing retailers, are in disagreement or competition, for example, when identically branded products are available through various retail formats.

Question 16

Who is the dominant and controlling member of a marketing channel?

Accepted Answer

The channel captain is the dominant and controlling member of a marketing channel, often determining the terms and conditions of channel membership, and leading the channel in terms of strategy and conflict resolution.

Question 17

What would occur between KitchenAid and retailers if KitchenAid established an electronic storefront where customers could purchase mixers and accessories from the company's website?

Accepted Answer

Vertical channel conflicts would occur because KitchenAid's direct sales to customers through its electronic storefront could compete with its existing retailers, potentially leading to disagreements or competition between the manufacturer (KitchenAid) and its retailers.

Question 18

When can an intermediary be eliminated from a marketing channel?

Accepted Answer

An intermediary can be eliminated from a marketing channel when another intermediary or a new system replaces it, making the channel more efficient or cost-effective.

Question 19

Which product would NOT be sold through a short channel?

Accepted Answer

The answer of Which product would NOT be sold through...

Question 20

What type of distribution is the process of using every channel available to bring a product to market?

Accepted Answer

Intensive distribution is the strategy of using every channel available to bring a product to market, aiming for widespread market coverage.

Quiz 12: Marketing Channels and Supply Chain Management