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Marketing Management Chapter 12: Distribution (Test Bank Questions)

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The system through which customers have access to your product or service to be able to purchase it represents: A) the channels of distribution. B) sales promotion. C) advertising. D) public relations.
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A) the channels of distribution Page Ref: 341
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With reference to a value-added chain, the beginning of the chain consists of: A) intermediaries. B) buyers. C) suppliers. D) customers.
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C) suppliers. Page Ref: 341
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Activities of channel management that require motivating customers to ask for your brand by name are referred to as ________ activities. A) vertical B) push C) horizontal D) pull
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B) push Page Ref: 341
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Which of the following indicates physical distribution of goods from one location to another? A) procurement B) logistics C) segmentation D) inventory management
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B) logistics Page Ref: 341
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Activities of channel management that requires getting channels to carry and sell the product are known as ________ activities. A) vertical B) push C) horizontal D) pull
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D) pull Page Ref: 341
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Which of the following statements is true regarding channels? A) It stops at the loading platform and what happens afterward is the buyer’s responsibility. B) It’s members are considered as a substitute of the firm. C) Customers do not associate problems in the channel with the firm. D) Pull activities of channel management require getting channels to carry and sell the product.
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D) Pull activities of channel management require getting channels to carry and sell the product. Page Ref: 341
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According to the text, channels of distribution must be treated like: A) partners of the organization. B) customers. C) competitors of the firm. D) marketers of the firms products.
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B) customers. Page Ref: 341
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Which of the following is one of the components of the value-added chain of distribution channels? A) government B) customers C) competitors D) marketers
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B) customers Page Ref: 342
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Which of the following statements is true regarding the value-added chain of distribution channels? A) The value-added chain of distribution channels begins with the customer. B) Distribution channels establish a connection between the firm and the customers. C) One of the components of the value-added chain of distribution channels is the government. D) Distribution channels connect suppliers to the firm.
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B) Distribution channels establish a connection between the firm and the customers. Page Ref: 342
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Which of the following marketing intermediaries is a business that assists in the performance of distribution tasks other than buying, selling, and transferring title? A) merchant middleman B) jobber C) retailer D) facilitating agent
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D) facilitating agent Page Ref: 343
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Which of the following describes a business unit that negotiates purchases or sales but does not take title to the goods? A) retailer B) merchant middleman C) agent D) wholesaler
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C) agent Page Ref: 343
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Which of the following best describes an agent who generally operates on an extended contractual basis, often sells within an exclusive territory and handles non-competing but related lines of goods? A) broker B) manufacturer’s agent C) distributor D) facilitating agent
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B) manufacturer’s agent Page Ref: 343
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A middleman who buys from manufacturers and sells to retailers is called a: A) broker. B) manufacturer’s agent. C) facilitating agent. D) jobber.
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D) jobber. Page Ref: 343
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A merchant establishment operated by a concern that is engaged primarily in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods (usually in smaller quantities) to retail or to industrial or business users is known as a(n): A) agent. B) wholesaler. C) facilitating agent. D) broker.
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B) wholesaler. Page Ref: 343
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Identify the individual who serves as a go-between for the buyer and seller, but is not seen as a permanent representative of the buyer or seller. A) broker B) manufacturer’s agent C) distributor D) retailer
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A) broker Page Ref: 343
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A merchant middleman who is engaged primarily in selling to ultimate consumers is known as a: A) broker. B) facilitating agent. C) distributor. D) retailer
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D) retailer. Page Ref: 343
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Which of the following statements is true regarding changes in the distribution channel? A) Once the distribution channel system is designed, the basic structure remains constant. B) Innovation in distribution can create new marketing opportunities. C) Distribution channels are not affected by structural changes to the industry. D) Channel structures are independent of the changes in the environment.
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B) Innovation in distribution can create new marketing opportunities. Page Ref: 344
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Because channel members often have direct contact with customers, it is an ideal situation for collecting information about customer and competitor behavior. Which of the following channel functions best describes this event? A) marketing research B) communications C) negotiation D) relationship management
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A) marketing research Page Ref: 347
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Some channel members seek out and interact with customers. Independent agents and wholesalers develop retail accounts for products. This channel function is known as: A) contact. B) communications. C) negotiation. D) risk taking
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A) contact. Page Ref: 348
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Wholesalers try to deliver products to customers in lot sizes that match their needs. Identify this channel function. A) communications B) matching/customizing C) risk taking D) relationship management
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B) matching/customizing Page Ref: 348
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When providing basic logistical services, the channel member is providing the function of: A) marketing research. B) physical distribution. C) risk taking. D) negotiation.
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B) physical distribution Page Ref: 348
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Sales literature and product brochures are distributed through wholesalers and retailers. Identify this channel function. A) communication B) marketing research C) risk taking D) negotiation
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A) communication Page Ref: 348
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When the distribution system is characterized by the channel member purchasing and therefore taking title to the products, it performs the: A) financing function. B) risk taking function. C) service function. D) relationship management function.
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B) risk taking function. Page Ref: 348
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When the channel member can enhance (or harm) the quality of the relationship between the selling firm and the customer, the channel member is engaging in: A) marketing research. B) risk taking. C) service. D) relationship management.
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D) relationship management. Page Ref: 349
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For some products, channels may actually be part of the manufacturing process by performing certain production functions. Identify this channel function. A) financing B) risk taking C) relationship management D) product assembly
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D) product assembly Page Ref: 349
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Which of the following statements is true about a direct channel? A) A company may have independent parties participate in a direct channel. B) The channel members have direct contact with the end customers. C) Usually, direct channels can reach more customers than indirect channels. D) Microsoft selling its products through Best Buy is an example of a direct channel.
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A) A company may have independent parties participate in a direct channel. Page Ref: 353
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Which of the following statements is true about an indirect channel? A) The company has a direct contact with the end customers. B) The product or service remains under the control of the company from production to customer. C) Indirect channels can reach more customers and perform functions that the sales force cannot. D) The message given to the customers by the channel is entirely controlled by the organization.
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C) Indirect channels can reach more customers and perform functions that the sales force cannot. Page Ref: 353
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When does a direct channel appear to be better than an indirect channel? A) When product customization is important. B) When one-stop shopping for many products is important. C) When availability is important. D) When after-sale service is important.
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A) When product customization is important. Page Ref: 354
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Identify the situation where indirect channels are more useful than direct channels. A) When product customization is important. B) When after-sale service is important. C) When purchase orders are large. D) When transportation and storage are complex.
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B) When after-sale service is important. Page Ref: 354
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Walmart used its investments in information technology to create direct links between its own warehouses and manufacturers, thereby eliminating the need for independent wholesalers in its system. This is an example of: A) reintermediation. B) disintermediation. C) hybrid system. D) channel conflict.
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B) disintermediation Page Ref: 354
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Retailers have category managers who are empowered to: A) operate their categories as separate businesses. B) merge with other companies as they see fit. C) make significant investments in international countries. D) relocate their retail locations to meet their satisfaction.
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A) operate their categories as separate businesses Page Ref: 354
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Which of the following statements is true about a multiple-channel system? A) It reduces the cost of distribution. B) It is a type of a direct channel where intermediaries are eliminated through the use of information technology. C) It simplifies coordination and management of the channel of distribution. D) Loss of control is a typical problem associated with a multiple-channel system.
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D) Loss of control is a typical problem associated with a multiple-channel system Page Ref: 355
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In order to compete with “category killer” stores, local stores must offer ________ to warrant customer loyalty. A) lower price B) sufficient service C) higher price D) less service
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B) sufficient service Page Ref: 356
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Identify the multiple channel system in which channel members perform complementary functions, often for the same customer thereby allowing for specialization and better levels of performance. A) direct marketing system B) hybrid system C) vertical system D) horizontal system
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B) hybrid system Page Ref: 357
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A modification of the multiple-channel system is the ________ system. A) direct channel B) indirect channel C) hybrid D) vertical
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C) hybrid Page Ref: 357
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Identify the situation where channel members have significant bargaining power over the marketing manager. A) When the channel’s sales volume is low relative to the product’s total sales volume. B) When the product is well differentiated from competitors. C) When the channel poses a credible threat of backward integration. D) When the channel has high switching costs.
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C) When the channel poses a credible threat of backward integration Page Ref: 359
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Which of the following statements is true regarding a “category killer”? A) They sell products belonging to multiple categories. B) They deal with companies through intermediaries. C) Smaller retailers posses a significant threat to category killers. D) They are also known as big box retailers.
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D) They are also known as big box retailers. Page Ref: 359
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The sales force is rewarded on a commission basis. It wants to sell quantity and is willing to be flexible on price, whereas the organizations strategy is high quality, high price. Identify this source of conflict. A) goal divergence B) domain dissensus C) differing perceptions of reality D) misuse of power
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A) goal divergence Page Ref: 360
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Identify the source of conflict when the perception of who owns a particular sector differs from channel participants. A) goal divergence B) domain dissensus C) differing perceptions of reality D) misuse of power
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B) domain dissensus Page Ref: 360
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A retailer may not think that the manufacturer’s support in terms of cooperative advertising and training is sufficient while the manufacturer believes that it is offering the same level to that retailer as to others that have been successful. Identify this source of conflict. A) goal divergence B) domain dissensus C) differing perceptions of reality D) misuse of power
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C) differing perceptions of reality Page Ref: 360
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Supermarkets that have gained power now charge fees for stocking products, called slotting allowances. This is a large problem for small companies trying to break into the channel. Identify the source of conflict. A) goal divergence B) domain dissensus C) differing perceptions of reality D) misuse of power
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D) misuse of power Page Ref: 360
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Which of the following is particularly a problem with multiple channels? A) goal divergence B) domain dissensus C) differing perceptions of reality D) misuse of power
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B) domain dissensus Page Ref: 361
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Which of the following can be used to resolve conflict? A) Offering all products to all channels. B) Reducing the money spent on push and pull activities. C) Charging higher prices in the direct channel. D) Working with the channel members to develop joint solutions.
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D) Working with the channel members to develop joint solutions Page Ref: 362
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A company typically uses ________ when an ingredient is used in or as part of another company’s products. A) VARs B) OEMs C) APIs D) SCMs
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B) OEMs Page Ref: 363
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Which of the following statements is true regarding an original equipment manufacturer (OEM)? A) OEMs sell a product on a stand alone basis to end customers. B) Brand name is highly visible in OEM marketing. C) A customer is usually not aware of the cost structure of an OEM. D) Knowledge of technical aspects of the product is important for OEM marketing.
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D) Knowledge of technical aspects of the product is important for OEM marketing. Page Ref: 363
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Which of the following best describes organizations that buy products from a variety of vendors, assemble them in packages, and resell the packages to specialized segments? A) an original equipment manufacturer B) a manufacturing agent C) a value-added reseller D) a broker
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C) a value-added reseller Page Ref: 363
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T/F Logistic refers to physical distribution of goods from one location to another.
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True Page Ref: 341
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T/F Companies that are marketing services must solve the same distribution problems as those that market tangible products.
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True Page Ref: 341
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T/F The channel stops at the loading platform and what happens afterward is the buyer’s responsibility.
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False Page Ref: 341
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T/F A middleman who buys from manufacturers and sells to retailers is known as facilitating agent.
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False Page Ref: 343
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T/F A broker assumes title risk and usually takes physical custody of products.
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False Page Ref: 343
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T/F A jobber is a middleman who buys from manufacturers and sells to retailers.
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True Page Ref: 343
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T/F A business that assists in the performance of distribution tasks other than buying, selling, and transferring title is referred to as merchant middleman.
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False Page Ref: 343
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T/F A merchant middleman who is engaged primarily in selling to ultimate consumers is referred to as broker.
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False Page Ref: 343
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T/F A merchant establishment operated by a concern that is engaged primarily in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods to retail or to industrial or business users is known as wholesaler.
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True Page Ref: 343
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T/F A direct channel is one where the product or service remains under the control of the company from production to customer.
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True Page Ref: 353
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T/F There are two broad categories of channels: direct and indirect channels.
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True Page Ref: 353
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T/F In case of an indirect channel, the company has direct contact with the end-customer.
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False Page Ref: 353
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T/F Indirect channels can reach more customers and perform functions that the sales force cannot.
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True Page Ref: 353
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T/F A direct channel appears to be better than an indirect channel when after-sale service is important.
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False Page Ref: 354
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T/F An indirect channel appears to be better than a direct channel when product customization is important.
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False Page Ref: 354
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T/F One of the problems with using a variety of channels (multiple-channel system) is loss of control over some part of the system.
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True Page Ref: 355
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T/F In today’s marketing environment, designing channel systems with multiple channels is the exception, not the norm.
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False Page Ref: 355
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T/F A hybrid system is a modification of the multiple-channel system in which members of the channel system perform complementary functions.
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True Page Ref: 357
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T/F The key difference between hybrid and more conventional multiple-channel systems is that hybrids are more vertical.
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False Page Ref: 357
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T/F Channel power is the ability of one channel member to get another channel member to do what it otherwise would not do.
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True Page Ref: 359
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T/F Channel members have significant bargaining power over the marketing manager when the channel has high switching costs.
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False Page Ref: 359
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T/F “Category killers” are large retailers selling products in a particular product category at a discount.
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True Page Ref: 359
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T/F One of the major sources of channel conflict is goal divergence.
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True Page Ref: 360
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T/F Developing financial arrangements such as commissions and higher margins is a way to resolve channel conflicts.
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True Page Ref: 362
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T/F Canon sells laser printer engines to Hewlett-Packard for its LaserJet line. Here Canon acts as a value-added reseller.
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False Page Ref: 363
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T/F Organizations that buy products from a variety of vendors, assemble them in packages, and resell the packages to specialized segments are known as original equipment manufacturers.
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False Page Ref: 363
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List and briefly describe the major channel functions.
answer

a. Marketing research – because channel members often have direct contact with customers, it is an ideal situation for collecting information about customers and competitor behavior. b. Communications – an important role of the channels is to communicate information about the product or service to customers. c. Contact – some channel members seek out and interact with customers. Independent agents and wholesalers develop retail accounts for products. d. Matching/customizing – a valuable service provided by the channels is matching or attempting to tailor the product to a customer’s needs. e. Negotiation – in many cases, channels also negotiate price. f. Physical distribution – for product with physical characteristics, channels also provide basic logistical services. g. Financing – for durable goods such as TV and video cameras, an advantage of using a retail system is that the burden of financing falls on the retailers rather than the manufacturers. h. Risk-taking – when the distribution system is characterized by channel members purchasing and therefore taking title to a product, risk is shifted from the manufacturer to the channel member. i. Service – channels can also provide repair service, answer customers’ questions about how to use the product, and provide warranty support. j. Relationship management – the channel member can enhance (or harm) the quality of the relationship between the selling firm and the customer. k. Product assembly – for some products, the channel may actually be part of the manufacturing process, performing assembly or other “finishing” parts of the process. Page Ref: 347-349
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List and briefly describe the situations in which channel members are likely to have significant bargaining power over the marketing manager.
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a. The channel’s sales volume is large relative to the product’s total sales volume; in this case, channel members with high sales volumes are going to be more effective in extracting terms such as delivery and push promotions. b. The product is not well differentiated from competitors; if the product is perceived to be a commodity by customers, then channel members can play your product against others; that is, they can appear to be (or actually be) indifferent to keeping your brand on the shelf. c. The channel has low switching costs (i.e., it is easy to find an alternative to replace your product). d. The channel poses a credible threat of backward integration or competing with you. e. The channel has better information than you about market conditions. Page Ref: 359
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List and briefly describe the four major sources of channel conflict.
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a. Goal divergence – your objective and the objectives of channel members can differ. b. Domain dissensus – conflict can arise when the perception of who owns a particular domain differs among channel participants. c. Differing perceptions of reality – this is a basic human frailty; one side believes it has been wronged and the other believes it has acted in good faith. d. Misuse of power – supermarkets that have gained power now charge fees for stocking products, called slotting allowances. This is a nuisance for large companies but a big problem for small ones trying to break into the channel. Page Ref: 360
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List alternative ways to resolve channel conflicts.
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a. Demarcating product lines. b. Working with channel members to develop joint solutions. c. Putting more money into push and pull activities. d. Developing financial arrangements such as commissions and higher margins. e. Charging higher prices in the direct channel. Page Ref: 362