Chapter 12 Marketing Channels: Delivering Customer Value

1) Which of the following is NOT a typical supply chain member?

A) resellers
B) customers
C) intermediaries
D) government agencies
E) raw materials supplier

2) ________ the manufacturer or service provider is the set of firms that supply the raw
materials, components, parts, information, finances, and expertise needed to create a product or
service.
A) Downstream from
B) Upstream from
C) Separated from
D) Congruous to
E) Parallel with
3) Another term for the supply chain that suggests a sense and respond view of the market is
________.
A) supply and demand chain
B) demand chain
C) channel of distribution
D) distribution channel
E) physical distribution

4) When suppliers, distributors, and customers partner with each other to improve the
performance of the entire system, they are participating in a ________.
A) value delivery network
B) channel of distribution
C) supply chain
D) demand chain
E) all of the above

5) Most producers today sell their goods to ________.

A) final users
B) final users and marketing members
C) intermediaries
D) the government at various levels
E) competitors

6) A company's channel decisions directly affect every ________.

A) channel member
B) marketing decision
C) customer's choices
D) employee in the channel
E) competitor's actions

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7) Distribution channel decisions often involve ________ with other firms, particularly those that
involve contracts or relationships with channel partners.
A) short-term commitments
B) long-term commitments
C) major problems
D) financial losses
E) disagreements

8) Joe Blanco, like other producers, has discovered that his intermediaries usually offer his firm
more than it can achieve on its own. Which of the following is most likely an advantage that Joe
creates by working with intermediaries?
A) financial support
B) fast service
C) scale of operation
D) working relationships with foreign distributors
E) promotional assistance

9) From the economic system's point of view, the role of marketing intermediaries is to
transform the assortment of products made by producers into the assortment of products wanted
by ________.
A) channel members
B) distributors
C) consumers
D) manufacturers
E) marketers

10) Producers benefit from using intermediaries because they ________.

A) offer greater efficiency in making goods available to target markets
B) bring a fresh point of view to strategy development
C) eliminate risk
D) are generally backlogged with orders
E) refuse to store products for longer than a few days

11) Intermediaries play an important role in matching ________.

A) dealer with customer
B) supply and demand
C) product to region
D) manufacturer to product
E) information and promotion

12) Channel members add value by bridging the major gaps of ________ that separate goods and
services from those who would use them.
A) time, place, and form
B) place, possession, and form
C) time, place, and possession
D) place, time, and need

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E) place, need, and distribution
13) Which of the following is NOT a key function that intermediaries play in completing
transactions?
A) promotion
B) information
C) matching
D) financing
E) negotiation

14) Which of the following is NOT a key function that intermediaries play in helping to fulfill a
completed transaction?
A) physical distribution
B) promotion
C) financing
D) risk taking
E) storing goods

15) In marketing terms, we say that the number of intermediary levels indicates the ________ of
a channel.
A) depth
B) complexity
C) involvement
D) length
E) width
16) To a producer of goods, a greater number of channel levels means ________ and greater
channel complexity.
A) less distance between producer and end consumer
B) less control
C) more potential ideas
D) higher taxes
E) fewer channel partners

17) All of the institutions in a channel are connected by various flows. These include physical
flow, flow of ownership, payment flow, information flow, and ________ flow.
A) promotion
B) acquisition
C) customer
D) return product
E) by-product

18) A distribution channel is more than a collection of firms connected by various flows; it is
a(n) ________ in which people and companies interact to accomplish individual, company, and
channel goals.
A) added value chain
B) complex behavioral system
C) corporate marketing system

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D) vertical marketing system
E) multichannel system

19) An advantage of a channel of distribution over selling direct to consumers is that each
channel member plays a ________ in the channel.
A) time-saving part
B) specialized role
C) decisional role
D) informational role
E) disciplinary role

20) ________ conflict, which occurs between different levels of the same channel, is more
common than ________ conflict, which occurs among firms at the same level of the channel.
A) Horizontal; vertical
B) Vertical; horizontal
C) Contractual; corporate
D) Corporate; franchise
E) Wholesaler; retailer

21) Historically, conventional channels have lacked the leadership to ________.

A) assign channel member roles and attain efficiency
B) attain efficiency and assign member roles
C) assign member roles and manage conflict
D) set standard pricing and promotions
E) set standard pricing and packaging

22) A conventional distribution channel consists of one or more ________ producers,

wholesalers, and retailers.
A) product-related
B) independent
C) contract
D) estranged
E) merchant

23) A channel consisting of one or more independent producers, wholesalers, or retailers that
seek to maximize their own profitseven at the expense of profits for the channel as a
wholeis a(n) ________.
A) vertical marketing system
B) conventional distribution channel
C) independent channel allocation
D) corporate VMS
E) administered vertical marketing system

24) An advantage of a vertical marketing system (VMS) is that it acts as a ________ system.
A) unified
B) more efficient

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C) modern
D) customer-driven
E) task-driven
25) A corporate VMS has the advantage of controlling the entire distribution chain under
________.
A) a profit-maximizing strategic plan
B) single ownership
C) mass distribution
D) a few intermediaries
E) little control

26) Which of the following are the three major types of vertical marketing systems?
A) corporate, contractual, and chain
B) contractual, corporate, and independent
C) contractual, corporate, and administered
D) administered, independent, and franchised
E) contractual, corporate, and task

27) A distinguishing feature of a contractual VMS is that coordination and conflict management
among the independent members of the channel are attained through ________.
A) agents and brokers
B) working partnerships
C) limited liability incorporation
D) contractual agreements
E) natural competitive forces

28) The most common type of contractual agreement in business is the ________.
A) franchise organization
B) vertical marketing system
C) conventional marketing channel
D) corporate VMS
E) administered VMS

29) Leadership in which type of marketing system is assumed not through common ownership or
contractual ties but through the size and power of one or a few dominant channel members?
A) horizontal marketing system
B) administered VMS
C) corporate VMS
D) multichannel distribution system
E) conventional marketing channel

30) In a ________, two or more companies at one level join together to develop a new marketing
opportunity.
A) franchise
B) horizontal marketing system
C) corporate VMS

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D) multichannel distribution system
E) conventional distribution channel

31) Hybrid marketing systems are also called ________.

A) dual distribution systems
B) multichannel distribution systems
C) administered franchises
D) horizontal multichannel systems
E) contractual marketing systems

32) As marketing manager for Globe Imports and Exports, you want to start reaping the benefits
of a multichannel distribution system. You will likely enjoy all of the following EXCEPT which
one?
A) expanded sales
B) expanded market coverage
C) selling at a higher gross margin
D) opportunities to tailor products and services to the needs of diverse segments
E) A and C

33) The use of multichannel systems in the United States is ________.

A) decreasing
B) increasing
C) holding steady
D) spreading abroad fast
E) declining abroad

34) The major disadvantage of a multichannel system is that it is harder to control and it can
generate ________.
A) channel conflict
B) less net profit
C) fewer domestic sales
D) inefficiencies
E) declining employee morale

35) Due in a large part to advances in technology, ________ is a major trend whereby product
and service producers are bypassing intermediaries and going directly to final buyers, or
radically new types of channel intermediaries are emerging to displace traditional ones.
A) the vertical marketing system
B) the corporate marketing system
C) disintermediation
D) the corporate merger
E) the hostile takeover

36) In many industries, traditional intermediaries are dropping by the wayside because of
changes in ________ and the growth of ________ marketing.
A) federal laws; business-to-business

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B) state and local laws; target
C) franchise structure; independent
D) technology; direct and online
E) channel design; retail

37) Designing a channel system calls for analyzing consumer needs, setting channel objectives,
________ and evaluation.
A) establishing a budget
B) identifying major channel alternatives
C) seeking regulatory approval
D) seeking legal advice
E) measuring objectives

38) Which of the following should be the first step in designing a marketing channel?
A) identifying channel objectives
B) identifying what consumers want from the channel
C) analyzing channel alternatives
D) evaluating intermediaries
E) exploring international opportunities

39) To increase a channel's service level, it must provide a greater assortment of products, more
add-on services, and ________.
A) lower prices
B) more efficiency
C) faster delivery
D) better terms
E) follow-up

40) Companies should state their channel objectives in terms of targeted levels of ________.
A) co-op advertising
B) efficiency
C) customer service
D) conflict reduction
E) profitability

41) When a company is identifying its major channel alternatives, it should consider its choices
in terms of types, number, and ________ of intermediaries.
A) size
B) power
C) responsibilities
D) capacity
E) none of the above

42) Which type of product might require a more direct marketing channel to avoid delays and too
much handling?
A) lower-priced products

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B) perishable products
C) high-priced products
D) products in their maturity stage
E) products in their decline stage

43) When determining the number of channel members to use at each level, three strategies are
available: intensive, exclusive, and ________ distribution.
A) multichannel
B) selective
C) international
D) direct
E) extensive

44) Sometimes a producer chooses only a few dealers in a territory to distribute its products or
services. Generally these dealers are given a right to ________ distribution.
A) exclusive
B) selective
C) intensive
D) administered
E) corporate
45) Which type of distribution is used when the producer wants more than one, but fewer than
all, of the intermediaries who are willing to carry its products?
A) exclusive
B) selective
C) intensive
D) administered
E) corporate

46) When establishing the responsibilities of channel members, the producer establishes a list
price, sets discounts for intermediaries, and defines each channel member's ________.
A) sales volume
B) territory
C) legal rights
D) customers
E) mission

47) Channel members should be evaluated using all of the following criteria EXCEPT which
one?
A) economic factors
B) control
C) adaptive criteria
D) channel leadership
E) none of the above

48) When a company compares the likely sales, costs, and profitability of different channel
alternatives, it is using ________ criteria to evaluate its channel options.

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A) selective
B) adaptive
C) economic
D) control
E) distribution

49) It is common for international marketers to ________ their channel strategies for each
country.
A) extend
B) adapt
C) restrict
D) seek approval for
E) eliminate

50) China and India each contain more than one billion people. However, companies can access
only a small percentage of these potential markets due to ________.
A) inadequate distribution systems
B) indifference toward Western products
C) high regional taxes
D) the religious caste system
E) insurmountable language barriers

51) Marketing channel management calls for selecting, managing, ________, and evaluating
channel members over time.
A) reducing conflict
B) reducing waste
C) motivating
D) pruning
E) all of the above

52) A company should think of its intermediaries as both its ________ and ________.
A) competitors; partners
B) customers; partners
C) competitors; marketers
D) customers; employees
E) competitors; customers

53) Most companies practice strong PRM to forge long-term relationships with channel
members. What does PRM stand for?
A) primary relationship management
B) potential relationship management
C) perennial relationship management
D) partner relationship management
E) personnel roster maintenance

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54) Sometimes a seller requires its dealers to abstain from handling competitors' products in an
arrangement called ________.
A) exclusive distribution
B) exclusive dealing
C) selective distribution
D) exclusive pricing
E) disintermediation

55) Exclusive dealing is legal as long as it does not ________ or tend to create a monopoly and
as long as both parties enter into the agreement ________.
A) substantially lessen competition; coercively
B) restrict trade; for a cause
C) substantially lessen competition; voluntarily
D) interfere with competitors; forcefully
E) create a smaller market; permanently

56) Exclusive territorial agreements are normal in ________.

A) vertical marketing systems
B) franchises
C) integrated marketing systems
D) horizontal marketing systems
E) supply chain management

57) If the producer of a strong brand agrees to sell its brand to a dealer only if the dealer will take
some or all of the rest of the line, the result is ________.
A) exclusive distribution
B) exclusive dealing
C) always illegal
D) a tying agreement
E) disintermediation

58) Marketing logistics involves getting the right product to the right customer in the right place
at the right time. Which one of the following is NOT included in this process?
A) planning the physical flow of goods and services
B) implementing the plan for the flow of goods and services
C) controlling the physical flow of goods, services, and information
D) gathering customer's ideas for new products
E) A and C

59) Marketing logistics involves which of the following distribution flows?

A) outbound and inbound
B) outbound, inbound, and reverse
C) inbound and reverse
D) outbound and reverse
E) outbound

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60) Which of the following is NOT an area of responsibility for a logistics manager?
A) information systems
B) warehousing
C) marketing
D) inventory
E) purchasing
61) Which of the following innovations has created opportunities for significant gains in
distribution efficiency?
A) tying agreements
B) Web-based logistics systems
C) partner relationship management
D) contractual vertical marketing systems
E) storage warehouses

62) The goal of marketing logistics should be to provide a ________ level of customer service at
the least cost.
A) maximum
B) targeted
C) moderate
D) minimum
E) competitive

63) The difference between distribution centers and storage warehouses is that the former are
designed to ________.
A) store goods for longer periods
B) hold larger volumes
C) move goods rather than just store them
D) primarily be owned by the manufacturer
E) be automated

64) To reduce inventory management costs, many companies use a system called ________,
which involves carrying only small inventories of parts or merchandise, often only enough for a
few days of operation.
A) reduction-inventory management
B) just-in-time logistics
C) limited inventory logistics
D) supply chain management
E) economic order quantity

65) Through the use of ________, or "smart tag" technology, a company is able to locate exactly
where a product is within the supply chain.
A) RFID
B) PRM
C) VMS
D) IT
E) 3PL

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66) Which of the following transportation modes is used for digital products?
A) trucks
B) rail
C) the Internet
D) air
E) ship

67) In choosing a transportation mode for a product, shippers must balance the considerations of
speed, dependability, cost, and ________.
A) weight
B) customer choice
C) availability
D) distance
E) company reputation

68) In the proper order, identify the correct terms for these intermodal transportation
combinations: rail and truck, water and truck, water and rail.
A) fishyback; airtruck; trainship
B) piggyback; airtruck; fishyback
C) trainship; fishyback; piggyback
D) piggyback; fishyback; trainship
E) piggyback, fishyback; birdyback

69) Companies manage their supply chains through ________.

A) skilled operators
B) information
C) the Internet
D) transportation modes
E) competitors

70) Using ________, retailers can share real-time data on sales and current inventory levels with
suppliers who take responsibility for ordering and delivering products to retailers, thereby saving
time and money.
A) dual distribution modes
B) continuous inventory replenishment systems
C) the Internet
D) their own trucking and distribution systems
E) integrated distribution

71) Lancaster Box Company wants to provide better customer service while trimming
distribution costs through teamwork, both inside the company and among all the marketing
channel organizations. Lancaster Box is thinking of ________.
A) integrated logistics management
B) supply chain management
C) customer relationship management

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D) horizontal marketing system
E) disintermediation

72) What is the goal of integrated supply chain management?

A) to reduce costs
B) to increase services with minimal cost through teamwork
C) to harmonize all of the company's logistics decisions
D) to reduce conflict and increase cooperation among channel members
E) all of the above

73) Smart companies coordinate their logistics strategies and forge strong partnerships with
suppliers and customers to improve customer service and reduce channel costs through
________.
A) cross-functional teams
B) cross-company teams
C) partnering
D) cross-functional, cross-company teams
E) segregated departmentalization

74) The success of each channel member depends on the performance of ________.
A) key channel members
B) the entire supply chain
C) the channel captain
D) the manufacturer
E) the wholesaler

75) Today, a growing number of firms now outsource some or all of their logistics to ________.
A) cross-functional teams
B) disintermediaries
C) channel members
D) third-party logistics providers
E) competitors

76) In designing its marketing channel, Chairs for Every Occasion has moved from a make-and-
sell view of its business, which focused on productive inputs and factory capacity as a starting
point for marketing planning, to a sense-and respond view, which begins instead with the needs
of target customers. With this new view, Chairs for Every Occasion is developing its ________.
A) supply chain
B) wholesaler chain
C) demand chain
D) logistics
E) vertical marketing system

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77) Proud Pets, a producer of clothing and accessories for pets, has recently partnered with a
regional chain of pet stores. Which of the following would Proud Pets be LEAST likely to expect
from its new channel member?
A) promoting its products through advertising
B) assembling and packaging its products for final sale
C) distributing relevant marketing research information
D) identifying raw materials and other productive inputs
E) negotiating on its products' prices

78) Steve's Physco Skates sells its products to Wal-Mart, who then sells them to the consumer.
This is an example of a(n) ________.
A) direct marketing channel
B) producer channel
C) indirect marketing channel
D) retailer channel
E) corporate vertical marketing system

79) Joanie Calvert is experiencing a disagreement with intermediaries in the channel over who
should do what and for what rewards. Joanie is experiencing ________.
A) channel delusion
B) channel conflict
C) channel disintermediation
D) channel mismanagement
E) channel intermediation

80) When two Taco Bell restaurants have a disagreement over who should be able to sell in
quantity at a discount to the local high school band, they are in a ________ conflict.
A) vertical
B) problematic
C) no-win
D) horizontal
E) functional

81) Staples Office Supply opened an online store that created competition with many of its
dealers. The corporate office created a ________ conflict.
A) vertical
B) problematic
C) no-win
D) horizontal
E) intermediation

82) Which of the following is an example of horizontal channel conflict?

A) managers of two separate Holiday Inns disagreeing over what constitutes poor service
B) United Airlines competing with Northwest Airlines for customers
C) disgruntled factory workers complaining about a small pay raise
D) the BMW dealership in Fort Wayne complaining that the BMW dealership in Indianapolis is

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situated too close
E) A and D

83) Which of the following is an example of a manufacturer-sponsored retailer franchise system?

A) fast-food restaurants such as McDonald's and Burger King
B) Starbucks operating within Target stores
C) Ford and its network of independent franchised dealers
D) licensed bottlers that bottle and sell Coca-Cola to retailers
E) motels such as Holiday Inn and Ramada Inn

84) When McDonald's offers its products inside of a Wal-Mart store, it is following a ________.
A) conventional distribution channel
B) corporate VMS
C) contractual VMS
D) administered VMS
E) horizontal marketing system

85) Which of the following is an example of a multichannel distribution system?

A) Wal-Mart locating to several countries
B) J. C. Penney's catalog and retail store sales
C) Avon's door-to-door distribution
D) Starbuck's location inside of book stores
E) a hotel providing guest privileges at a health spa across the street

86) Blockbuster offers DVD rentals through its Total Access online rental service and through its
bricks-and-mortar stores. This is an example of a(n)________.
A) contractual VMS
B) administered VMS
C) horizontal marketing system
D) conventional distribution channel
E) multichannel distribution system

87) When Netflix began delivering DVDs directly to customers through the mail instead of using
a brick-and-mortar system, Netflix was following the trend of ________.
A) indirect marketing
B) disintermediation
C) a franchise system
D) exclusive distribution
E) selective distribution

88) Chewing gum is stocked in many outlets in the same market or community; in fact, it is
placed in as many outlets as possible. This is an example of ________ distribution.
A) exclusive
B) selective
C) multichannel
D) intensive

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E) disintermediated

89) Which product(s) will most likely be intensively distributed?

A) Olympus digital cameras
B) BMW cars
C) Guess blue jeans
D) Coca Cola
E) Nike running shoes

90) Which product will most likely be exclusively distributed?

A) BMW cars
B) Levi's blue jeans
C) Bazooka bubble gum
D) Prairie Farms yogurt
E) Coca-Cola

91) Tiffany & Co jewelry can only be found in a limited number of intermediaries. This is an
example of ________ distribution.
A) exclusive
B) intensive
C) quality
D) high-end
E) independent

92) Why is it important for manufacturers to be sensitive to the needs of their dealers?
A) Dealers have few legal rights.
B) Poorly performing dealers will be replaced.
C) Dealers fail to provide value to the entire channel system.
D) Dealer support is essential to creating value for the customer.
E) Manufacturers cannot break commitments to channel.

93) Caterpillar, the famous heavy equipment manufacturer, has a reputation for working in
harmony with its worldwide distribution network of independent dealers. Caterpillar has shared
its successes with its dealers and protected its dealers during difficult economic times. This is an
example of ________.
A) intensive distribution
B) integrated logistics management
C) disintermediation
D) third-party logistics
E) partner relationship management

94) Max Samuelson is a high-end fashion designer who markets his clothing lines through a
limited number of highly reputable retailers. Max uses ________.
A) exclusive distribution
B) exclusive dealing
C) exclusive territorial agreements

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D) full-line forcing
E) tying agreements

95) Jewels for the Rich and Famous sells very exclusive jewelry with a minimum price of
$25,000 to customers around the world. Speed of delivery to distant markets is a must.
Management should consider using ________ as its main carrier.
A) rail
B) air
C) truck
D) the Internet
E) water

96) Grayville Rock and Gravel, located in a seaport town, sells rock, gravel, and sand to local
markets. It has just been awarded a contract with a company 500 miles down the coast.
Management should consider switching from truck to ________ transport.
A) water
B) rail
C) pipeline
D) air
E) none of the above

97) When Home Depot allows key suppliers to use its stores as a testing ground for new
merchandising programs, it is implementing a ________.
A) shared services
B) partnership management
C) shared projects
D) third-party project
E) cross-functional, cross-company team

98) UPS Supply Chain Solutions, which handles all of its clients' "grunt work" associated with
logistics, is an example of ________.
A) integrated logistics management
B) a distribution center
C) selective distribution
D) a third-party logistics provider
E) a cross-functional, cross-company team

Refer to the scenario below to answer the following questions.

Miller Meat Company contracts with several Midwestern farmers to raise beef and pork
for its meat processing center. To guarantee freshness, Miller Meat Company relies on a vast
distribution network. For delivery to local grocers in Indiana, Miller Meat uses its own fleet of
refrigerated trucks; delivery to these Indiana grocers constitutes 65 percent of Miller Meat's
business. For deliveries in Illinois, Wisconsin, and points directly west of the Mississippi River,
Miller Meat Company contracts with a refrigerated fleet that specializes in expediting smaller
shipments. For faster delivery during peak times, Miller Meat Company often uses its own trucks

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to deliver to the expedited fleet's consolidation point from its distribution warehouse in Indiana.
During the holiday season, however, several specialty distributors contract with Miller Meat
Company to package specialty meats in gift boxes, then ship them directly to the recipients. For
these specialty shipments within Indiana, Illinois, and Wisconsin, Miller uses its normal delivery
mode. For all other specialty shipments, Miller ships from its distribution warehouse via air, then
contracts with expedited carriers in various cities to deliver to the recipients.

99) Which of the following is one of Miller Meat Company's upstream partners?
A) local grocers in Indiana who sell the company's products
B) Midwestern farmers who raise beef and pork for the meat processing center
C) the refrigerated fleet that expedites small shipments
D) air carriers that take Miller's specialty shipments
E) recipients of Miller's gift boxes

100) In using air transportation and then expedited truck carriers to deliver specialty items to
customers outside of a designated delivery range, Miller Meats is using ________.
A) all of its supply chain
B) all of its value delivery network
C) indirect marketing channels
D) intermodal transportation
E) a vertical marketing system

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