Multiple Choice
Which statement about channel systems is true?
A) Contractual channel systems completely lack the flexibility of a traditional channel system.
B) Channel members informally agree to cooperate with each other in administered channel systems.
C) All vertical marketing systems are also contractual channel systems.
D) In vertical marketing systems, channel members focus on different target markets at the end of the channel.
E) Corporate channel systems are less expensive to build and maintain than administered channel systems.
B) Channel members informally agree to cooperate with each other in administered channel systems.
Accumulating, bulk-breaking, sorting, and assorting are ________ activities performed by channel specialists to adjust discrepancies.
regrouping
Why is the assortment process beneficial to consumers?
A) Producers can save money by producing items in large quantities, but consumers often want to buy goods in small quantities.
B) Selling directly to consumers saves money for producers and helps them to control the marketing message.
C) Different target markets are typically looking for goods of varying quality.
D) Consumers often find it convenient to shop for products created by many different firms all in one place.
E) Gathering similar products together from many small producers creates bulk quantities that are attractive to many buyers.
D) Consumers often find it convenient to shop for products created by many different firms all in one place.
A channel captain is best described as a manager who
A) holds the largest market share in the whole channel.
B) performs vendor analysis for channel members.
C) heads the labor union of all channel members.
D) assigns wholesalers and retailers to manufacturing firms.
E) helps direct the activities of a whole channel.
E) helps direct the activities of a whole channel.
A company has a new product that is in the market introduction stage of the product life cycle. What distribution channel decision needs to be made at this point?
A) Focus should be on Promotion, not Place.
B) All distribution channels should be considered at this point.
C) Distribution should be limited and selective.
D) Distribution should be widespread and intensive.
E) Focus should be on Product, not Place.
C) Distribution should be limited and selective.
A cell phone manufacturer, expects its retailers to not sell other brands of cell phones in their stores. However, most retailers disagree with this, arguing that their profitability is reduced when they carry only one brand. These kinds of disagreements are referred to as ________ conflicts.
Vertical
In the market environment, discrepancies of quantity occur because
A) consumers demand more product variety than producers can make.
B) some consumers have more money than others.
C) individual producers tend to focus on quality, while individual consumers only want large quantities of products at low prices.
D) individual producers often make larger quantities of products than individual consumers normally want to buy.
E) there are more consumers in the marketplace than producers.
D) individual producers often make larger quantities of products than individual consumers normally want to buy.
What is a channel of distribution?
A) a series of firms or individuals who participate in the flow of products from producer to final user or consumer
B) the method through which a product is shipped to a customer
C) a model that helps manufacturers track how final consumers distribute their income among various needs
D) the means of transportation (water, rail, air) chosen to move the product from producer to consumer
E) the Promotion element of the marketing mix
A) a series of firms or individuals who participate in the flow of products from producer to final user or consumer
Which statement best explains the concept of “discrepancies” in the marketplace?
A) The assortment and quantity of products required by a customer may be different from those produced by a manufacturer.
B) Firms produce what they want to sell rather than what customers want to buy.
C) Supply and demand is no longer determined by market forces because “big business” is more powerful than the individual consumer.
D) Price is not always a reliable measure of a product’s quality.
E) There are many more consumers than producers in the marketplace.
A) The assortment and quantity of products required by a customer may be different from those produced by a manufacturer
Sweet Confections produces a variety of different candies. Sweet Confections wants its candies to be available anywhere a consumer might look for them and as a result uses a wide variety of intermediaries to distribute them, including grocery stores, drugstores, convenience stores, gas stations, and vending machines. This is an example of ________ distribution.
Intensive
Although some intermediaries may resent this approach, a manufacturer may have to use "multichannel distribution" because
A) present channel members are doing a poor job.
B) big retail chains want to avoid selling directly to consumers.
C) the original channel wants to reach different target markets.
D) antitrust regulations prohibit relying on just one channel system.
E) some channel members require it.
A) present channel members are doing a poor job.
Traditional channel systems are characterized by channel partners who
A) seek cooperation among all members.
B) lack a shared product-market commitment.
C) pursue a common set of objectives.
D) do not view other members as competitors.
E) do not buy and sell from each other.
B) lack a shared product-market commitment.
For a product, market exposure beyond the ideal level
A) decreases the total cost of marketing first and then increases it.
B) decreases the total cost of marketing.
C) results in continued economies of scale.
D) has no effect on the total cost of distribution.
E) increases the total cost of marketing.
E) increases the total cost of marketing.
When a firm chooses only one wholesaler or retailer to sell its products in each geographic area, this is known as _______ distribution
Exclusive
Producers who consider handling the entire distribution job themselves may be especially inclined to do so because
A) many customers have established buying patterns that don’t include buying direct from producers.
B) many customers have a preference for shopping at their favorite locations and won’t be likely to change.
C) direct distribution usually requires a significant investment in facilities, people, and information technology.
D) a channel partner (intermediary) is not available or will not cooperate.
E) intermediaries often serve customer needs better than producers and at lower cost.
D) a channel partner (intermediary) is not available or will not cooperate.
When a channel has a shared “product-market commitment,”
A) channel members focus on the same target market at the end of the channel.
B) channel members need not cooperate with each other.
C) competition among channel members is completely absent.
D) marketers of consumer products compete against service companies.
E) channel members share the financial burden of transporting products.
A) channel members focus on the same target market at the end of the channel.
When franchisees demand protected markets, which approach is most appropriate?
A) selective distribution
B) multichannel distribution
C) exclusive distribution
D) special distribution
E) intensive distribution
C) exclusive distribution
Firms are likely to prefer selective distribution when intermediaries
A) offer added support in return for exclusivity.
B) place small orders.
C) make frequent returns.
D) need extensive service.
E) have poor credit ratings.
A) offer added support in return for exclusivity.
Janie is an Internet shopper. She likes to order clothing in several sizes and then send back the ones that don’t fit. This demonstrates that marketing managers need to plan for ________ so that companies can retrieve products that customers no longer want.
reverse channels
If Penn Hills Mfg. Corp. gives the Johnstown Distributing Co. the exclusive right to distribute Penn Hills’ products in Ohio, with the understanding that Johnstown can’t sell Penn Hills’ products outside Ohio or to other wholesalers in Ohio, the arrangement
A) would be illegal, because the courts have ruled that all vertical arrangements between producers and intermediaries are illegal.
B) might or might not be considered legal. The courts would weigh the possible good effects of this vertical arrangement against possible restrictions on competition.
C) would be legal, because the courts have ruled that all vertical arrangements between producers and intermediaries are legal.
D) would be illegal, because the courts have ruled that all horizontal arrangements between competitors are illegal.
E) would be legal, because the courts have ruled that all horizontal arrangements between competitors are legal.
B) might or might not be considered legal. The courts would weigh the possible good effects of this vertical arrangement against possible restrictions on competition.
An automobile company is expanding and also looking for ways to have more control over distribution, so it has acquired one of its major distributors. This is referred to as
vertical integration
In which distribution channel is the firm most likely to maintain control of the marketing mix?
Direct