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Marketing Channels & Distribution Exam 1 Ch. 3

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The primary purpose of auditing marketing channels is to ________.
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Assess each channel member’s ability to provide service outputs efficiently
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Which term refers to channel member activities that produce the service outputs demanded by end-users?
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Channel Functions
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What is the most likely benefit of auditing channel functions?
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Identifying gaps in desired service outputs
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Which term refers to the process the marketing channel uses to handle returned merchandise?
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Reverse logistics
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It is most likely appropriate to remove a channel member from the marketing channel system if the channel member _____.
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Performs redundant service output activities
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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.
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Physical possession
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Which of the following statements is most likely true about physical possession in a marketing channel system?
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Decreasing inventory holding time typically lowers physical possession costs
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The combined costs of physical possession and ownership in a channel system are known as ________ costs.
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Inventory holding
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What is the LEAST likely reason for holding inventory?
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Shifts in service output needs
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All of the following would most likely be described in an efficiency template EXCEPT the ________.
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Number and significance of service and cost gaps caused by each channel member
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A(n) ________ indicates the share of total channel profits that each channel member is responsible for generating.
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Normative Profit Share
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According to the equity principle, the compensation of each channel member should be based on the ________.
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Value created by the channel member
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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.
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Zero-based
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What is the best method for controlling inventory holding costs?
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Extending the life of goods
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Which term refers to the decreasing predictability of end-user demand as the channel member’s distance from the end-user increases?
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Bullwhip effect
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Which of the following questions is LEAST relevant to establishing a zero-based channel?
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What information sharing activities occur between channel members and customers?
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Which term refers to the idea that compensation should reflect the normative profit shares of each channel member?
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Equity principle
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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 ________.
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Zero-based
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Which term refers to limitations that create channel gaps and prevent the establishment of a zero-based channel?
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Bounds
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Legal constraints in the local marketplace that hinder the establishment of a zero-based channel are known as ________.
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Environmental bounds
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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 ________.
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Environmental bounds
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Which term refers to constraints on distribution structures that arise from rules within a company?
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Managerial bounds
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What is the typical source of managerial bounds?
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Manufacturer
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Which of the following most likely occurs if the amount of a service supplied is less than the service demanded?
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Service gap
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Which of the following statements is most likely FALSE?
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Channel efficient occurs if service output supply exceeds service output demand
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Which of the following is most important when determining how to close service gaps?
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Identifying the segment for which a service output is appealing
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When the total cost of performing all channel functions is too high, a(n) _______ most likely occurs.
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Cost gap
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Which of the following statements about cost gaps is most likely true?
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A cost gap occurs when the performance of channel functions is jointly inefficient
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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 ________.
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Postponement
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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?
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Creating a service gap
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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 ________.
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Speculation
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What is the most likely benefit of speculation?
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Increased economies of scale
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A Service Gap Analysis Template is used to identify service gaps based on ________.
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Targeted end-user segments
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What is the LEAST likely result of a cost gap analysis?
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Segmenting end-users by cost gap responses
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How does CDW implement the equity principle?
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Compensating salespeople with the same commission rate for online and personal sales
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Which of the following statements about product returns is most likely FALSE?
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Processing Web returns costs significantly less than handling store returns
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Which of the following is most likely a true statement about reverse logistics?
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Accounting cost transparency is low because of inconsistent tracking
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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?
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Eliminating unnecessary intermediaries
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Which of the following most likely indicates the existence of a cost gap?
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Service levels are too low, and the costs are too high
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When using an efficiency template, the first step is to ________.
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Determine the weights of each channel function
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Physical possession costs are non-existent for service providers because of the lack of a tangible product.
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False
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It is best to create a separate efficiency template for each channel that distributes the product and for each targeted segment of end-users.
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True
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Violations of the equity principle are a common cause of channel conflicts.
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True
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Speculation involves delaying production until orders are received to eliminate the costs of holding expensive inventory.
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False
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Service gaps occur when the amount of a service supplied is less than the service demanded.
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True
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How do environmental channel bounds and managerial channel bounds differ? What are the potential causes and effects of each?
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Environmental bounds are rules outside of the company and constrain channel members from establishing a zero-based channel causes: – local legal restraints – complexity of retailing infrastructure effects: – can’t offer needed lvl of service outputs – high costs for channel members Managerial bounds also constrain distribution b/c of rules in the company causes: – desire to control the customer – lack of trust between channel members effects: – prevents managers from implementing less bounded channel design
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What are the uses and benefits of efficiency templates? What qualitative and quantitative cost information is necessary to complete an efficiency template?
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uses & benefits: – reveals how costs of channel functions are shared among channel members – how much each member helps with value-creation – shows how important each function is to the performance of the channel overall Quantitative: – need measures of costs of every activity performed by channel members Qualitative: – can be used to estimate cost weights