Question 1

Some retailers demand a _____ from a manufacturer before they will place its products on store shelves.
A) termination fee
B) distribution fee
C) service charge
D) slotting fee
E) failure-protection fee

Accepted Answer

Retailers often require a slotting fee from manufacturers as compensation for shelf space. This fee helps cover the retailer's costs associated with stocking new products and the risk of allocating shelf space to unproven items.

Question 2

The charging of slotting fees often leads to:
A) the development of wholesalers' brands.
B) violations of the Robinson-Patman Act.
C) price fixing.
D) vertical conflict.
E) scrambled merchandising.

Accepted Answer

Slotting fees can lead to vertical conflict as they may create tension between manufacturers and retailers over the cost and terms of product placement.

Question 3

When White House, a company famous for its applesauce, introduced Fruit-in-Juice, a new snack food, it more than likely had to pay a _____ before supermarkets and discount stores would place the product on their shelves.
A) termination fee
B) distribution fee
C) service charge
D) slotting fee
E) failure-protection fee

Accepted Answer

Slotting fees are payments made by manufacturers to retailers for shelf space, especially for new products. This is a common practice in the retail industry to secure prominent placement or entry into the market.

Question 4

When Del Monte foods introduced its Kibble 'n Bits Homestyle dog food, Del Monte more than likely had to pay a _____ to each supermarket that it wanted to carry its new product.
A) termination fee
B) distribution fee
C) service charge
D) slotting fee
E) failure-protection fee

Accepted Answer

A slotting fee is a charge that manufacturers pay to retailers to have their products placed on store shelves.

Question 5

Which of the following statements about slotting fees is True?
A) Manufacturers of every product on supermarket shelves have to pay a slotting fee.
B) Manufacturers contend that slotting fees stifle the introduction of new products.
C) Slotting fees are paid to a retailer who agrees to exclusive dealing.
D) As a group, retailers are opposed to slotting fees.
E) If Kellogg's introduces caramel-flavored Rice Krispies, it will definitely have to pay a slotting fee.

Accepted Answer

Manufacturers argue that slotting fees can hinder the introduction of new products because these fees represent a significant cost barrier to getting products onto store shelves, especially for smaller or new companies trying to enter the market.

Question 6

An effective weapon for a manufacturer to use if it wants to lessen its conflict with retailers is to:
A) avoid entanglements in any types of VMS.
B) implement an intensive distribution strategy.
C) adopt a policy of disintermediation.
D) form a retailer cooperative
E) build strong consumer brand loyalty.

Accepted Answer

Building strong consumer brand loyalty is an effective strategy for manufacturers to lessen conflict with retailers. When consumers are loyal to a brand, they specifically seek out its products, which can lead to retailers prioritizing the brand's products due to their popularity and demand. This dynamic can reduce conflict as both the manufacturer and retailer benefit from the strong demand for the brand's products.

Question 7

An effective weapon for a retailer to use in its conflict with manufacturers is to:
A) form a retail cooperative.
B) stop selling products under its own brand.
C) adopt a policy of scrambled merchandising.
D) enter into a franchise agreement with the manufacturer.
E) bypass the wholesaler.

Accepted Answer

A retail cooperative is an organization owned and operated by a group of retailers who have joined together to increase their buying power and improve their competitive position. By forming a retail cooperative, retailers can pool their resources and negotiate better terms with manufacturers.

Question 8

Which of the following is a possible source of channel power for a manufacturer?
A) the ability to provide financial benefits to cooperative channel members
B) federal legislation
C) scrambled merchandising
D) the ability to charge a slotting fee
E) stocking products without brand equity

Accepted Answer

A manufacturer can exert channel power by offering financial benefits to channel members, such as discounts, incentives, or cooperative advertising funds, which can motivate them to prioritize the manufacturer's products.

Question 9

Which of the following is a possible source of channel power?
A) an integrated Web site
B) authorizing uncooperative firms to be penalized
C) generic branding
D) channel shrinkage
E) a mechanistic organizational structure

Accepted Answer

Authorizing uncooperative firms to be penalized can be a source of channel power as it allows a firm to enforce compliance and cooperation within its distribution channels.

Question 10

ArvinMeritor is a company that manufactures parts for the motor vehicle industry. It once used 15,000 different suppliers around the world. In 2002, the company announced plans to reduce its number of global suppliers to 1,000 by 2010. The ability to determine which suppliers meet or exceed its performance requirements indicates ArvinMeritor has:
A) channel shrinkage.
B) channel power.
C) a disintermediation policy.
D) oligopolitic control.
E) tying contracts with its suppliers.

Accepted Answer

ArvinMeritor's ability to select suppliers that meet or exceed its performance requirements demonstrates channel power. This is because the company can influence the actions of its suppliers due to its position and importance as a customer.

Question 11

The Home Depot has _____ because when it agrees to buy from a vendor, it is rewarded with widespread distribution and a high probability of a large sales volume.
A) channel power
B) distribution control
C) empowerment potential
D) distribution dominance
E) channel direction

Accepted Answer

The Home Depot has channel power because its agreement to buy from a vendor results in widespread distribution and a high likelihood of significant sales volume, indicating its ability to influence the actions of the channel members.

Question 12

Which of the following statements about channel partnerships is True?
A) Developing and sustaining partnerships in a distribution channel requires communication beyond a salesperson and a purchasing agent.
B) Potential benefits of a distribution channel partnership are improved quality of goods and services and lower inventory and operating costs.
C)To facilitate partnerships within channels, many large firms have reduced the number of suppliers with which they do business.
D) Many channel partnerships are really part of a broader, more significant trend called relationship marketing.
E) All of the above statements about channel partnerships are True

Accepted Answer

All the statements provided about channel partnerships are true. They highlight the importance of communication beyond basic sales interactions, the benefits of improved quality and reduced costs, the trend of consolidating suppliers to strengthen partnerships, and the role of channel partnerships in the broader context of relationship marketing.

Question 13

7-Eleven convenience stores has installed technology in every store that will allow each store to order merchandise directly from suppliers and abandon a distribution system in which most of the ordering is done by its suppliers' route drivers. According to 7-Eleven's chief executive officer, "The collaborative use of information technology will allow the stores to take back purchasing responsibilities. Through the use of information technology, the corporation and the suppliers can better know what each individual store needs." 7-Eleven is:
A) opting for disintermediation.
B) establishing channel partnerships.
C) eliminating chargebacks.
D) entering into tying contracts.
E) abandoning its intensive distribution strategy.

Accepted Answer

The answer of 7-Eleven convenience stores has installed technology in...

Question 14

ArvinMeritor is a company that manufactures parts for the motor vehicle industry. It once used 15,000 different suppliers around the world. In 2002, the company announced plans to reduce its number of global suppliers to 1,000 by 2010. The remaining suppliers should be able to quickly collaborate with ArvinMeritor to improve quality, reduce prices, and solve problems. ArvinMeritor is planning to create:
A) channel partnerships.
B) routes for disintermediation.
C) merchandising synergy.
D) a corporate vertical marketing system.
E) a horizontal marketing system.

Accepted Answer

The answer of ArvinMeritor is a company that manufactures parts...

Question 15

_____ occurs when a manufacturer prohibits its dealers from carrying its competitor's products.
A) Exclusive dealing
B) An exclusive-territory policy
C) An intensive distribution strategy
D) A tying contract
E) Horizontal conflict

Accepted Answer

Exclusive dealing occurs when a manufacturer restricts its dealers from carrying products of its competitors, aiming to limit competition and ensure dealer loyalty to their brand.

Question 16

Suppose the manufacturer of Prince tennis equipment will not let retailers carry its product line if the stores also carry products made by any of Prince's competitors. This would be an example of:
A) a tying contract.
B) an exclusive-territory policy.
C) an intensive distribution strategy.
D) exclusive dealing.
E) horizontal conflict.

Accepted Answer

This is an example of exclusive dealing, where a supplier restricts the retailer from selling products from its competitors.

Question 17

If OceanView Flowers were to threaten to remove a retailer's right to distribute its line of lifelike silk flowers if the retailer carries any competing brands of silk flower, OceanView would be using:
A) a tying contract.
B) an exclusive-territory policy.
C) an intensive distribution strategy.
D) exclusive dealing.
E) horizontal conflict.

Accepted Answer

Exclusive dealing involves a supplier requiring that a retailer not carry products from competing suppliers. Threatening to remove a retailer's right to distribute its products if they carry competing brands fits this definition.

Question 18

When a manufacturer sells a product to a middleman only under the condition that the middleman buys another (possibly unwanted) product from the producer, the two parties have become involved in a(n):
A) exclusive dealing agreement.
B) exclusive-territory policy.
C) intensive distribution strategy.
D) tying contract.
E) horizontal conflict.

Accepted Answer

This is known as a tying contract, where the sale of one product (the tying product) is conditioned on the purchase of a second, distinct product (the tied product). This practice can be controversial and is often scrutinized under competition law.

Question 19

If a music store had to carry the complete line of records produced by Artemis Records in order to carry the latest Warren Zevon compilation CD, this would be an example of a(n):
A) exclusive dealing agreement.
B) exclusive-territory policy.
C) intensive distribution strategy.
D) tying contract.
E) horizontal conflict.

Accepted Answer

This scenario is an example of a tying contract, where the sale of one product (the latest Warren Zevon compilation CD) is conditioned on the buyer also purchasing another product (the complete line of records produced by Artemis Records).

Question 20

Suppose a paint manufacturer refuses to let a hardware store carry its line of mildew-proof latex paint until the storeowner also agrees to carry the manufacturer's less popular brand of enamel paint. This is an example of a(n):
A) exclusive dealing agreement.
B) exclusive-territory policy.
C) monopoly.
D) tying contract.
E) horizontal conflict.

Accepted Answer

This scenario is an example of a tying contract, where the sale of one product (the mildew-proof latex paint) is conditioned on the purchase of another product (the less popular brand of enamel paint).

Quiz 14: Channels of Distribution

Some retailers demand a _____ from a manufacturer before they will place its products on store shelves.

The charging of slotting fees often leads to:

When White House, a company famous for its applesauce, introduced Fruit-in-Juice, a new snack food, it more than likely had to pay a _____ before supermarkets and discount stores would place the product on their shelves.

When Del Monte foods introduced its Kibble 'n Bits Homestyle dog food, Del Monte more than likely had to pay a _____ to each supermarket that it wanted to carry its new product.

Which of the following statements about slotting fees is True?

An effective weapon for a manufacturer to use if it wants to lessen its conflict with retailers is to:

An effective weapon for a retailer to use in its conflict with manufacturers is to:

Which of the following is a possible source of channel power for a manufacturer?

Which of the following is a possible source of channel power?

The Home Depot has _____ because when it agrees to buy from a vendor, it is rewarded with widespread distribution and a high probability of a large sales volume.

Which of the following statements about channel partnerships is True?

_____ occurs when a manufacturer prohibits its dealers from carrying its competitor's products.

Suppose the manufacturer of Prince tennis equipment will not let retailers carry its product line if the stores also carry products made by any of Prince's competitors. This would be an example of:

If OceanView Flowers were to threaten to remove a retailer's right to distribute its line of lifelike silk flowers if the retailer carries any competing brands of silk flower, OceanView would be using:

When a manufacturer sells a product to a middleman only under the condition that the middleman buys another (possibly unwanted) product from the producer, the two parties have become involved in a(n) :

If a music store had to carry the complete line of records produced by Artemis Records in order to carry the latest Warren Zevon compilation CD, this would be an example of a(n) :

Suppose a paint manufacturer refuses to let a hardware store carry its line of mildew-proof latex paint until the storeowner also agrees to carry the manufacturer's less popular brand of enamel paint. This is an example of a(n) :