Chapter 13 MANAGING MARKETING CHANNELS AND SUPPLY CHAINS Test Item Table

Major Section of the Chapter Level 1: Definition (Knows Basic Terms & Facts) Avon’s Makeover is More than Cosmetic (pp. 281) Nature and Importance of Marketing Channels (pp. 282-283) Channel Structure and Organization (pp. 284-289) 5, 9, 10, 11, 13, 17, 18, 19, 20, 21, 24, 25, 26, Level of Learning Level 2: Conceptual (Understands Concepts & Principles) 4 Level 3: Application (Applies Principles) 1, 2, 3

8, 14, 16, 28, 29, 156, 157

6, 7, 12, 15, 22, 23, 27, 30, 31,

33, 39, 44, 47, 50, 53, 58, 62, 64, 67, 69, 71, 72, 73, 75, 76, 77, 78, 79, 160

34, 36, 40, 41, 42, 43, 46, 51, 52, 54, 59, 60, 68, 80, 158, 159

32, 35, 37, 38, 45, 48, 49, 55, 56, 57, 61, 63, 65, 66, 70, 74, 81,

Channel Choice and Management (pp. 290-293)

85, 87, 91, 103, 104, 105, 107, 110, 111,

82, 83, 90, 92, 93, 94, 96, 101, 102, 106, 113, 161, 162, 163, 164

84, 86, 88, 89, 95, 97, 98, 99, 100, 108, 109, 112, 114,

Logistics and Supply Chain Management (pp. 294-297)

115, 117, 118, 119, 120, 121, 124, 127, 128, 166

122, 123, 125, 165, 167

116, 126, 168, 169

Two Concepts of Logistics Management in a Supply Chain (pp. 297-298)

131, 132, 135, 136, 137, 138, 140, 142, 143, 144, 145, 149, 150,

129, 130, 133, 134, 139, 151, 170

141, 146, 147, 148, 152,

Video Case: Creston Vineyards (pp. 300-301)

155,

153, 154,

Note: Bold numbers indicate short essay questions.

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CHAPTER 13 MANAGING MARKETING CHANNELS AND SUPPLY CHAINS MULTIPLE CHOICE QUESTIONS
13-1 CHAPTER OPENING EXAMPLE: AVON Avon is most closely associated with which type of distribution strategy? a. b. c. d. e. intensive indirect distribution direct distribution dual distribution selective indirect distribution electronic distribution Page: 281 APPLICATION

Answer: c

Rationale: Avon's system of independent representatives is an example of direct distribution, while its website (www.avon.com) is an electronic channel and the shop-within-a-store format is used in selected JCPenney stores. 13-2 CHAPTER OPENING EXAMPLE: AVON APPLICATION

Avon's research showed that 59 percent of women who don't buy Avon products would if they were more accessible. These women were saying that Avon's distribution system that used only independent representatives did not create adequate __________ utilities. a. b. c. d. e. time and creation place and time form and place possession and form application and time

Answer: b Page: 281 Rationale: Avon's independent representatives did not make the cosmetics available when and where its potential customers wanted them.

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d. provided: a. c. and on its website. bimodal positioning. not the same people that our representatives are serving directly. distribution mix. dual targeting. Answer: b Page: 282 Rationale: Key term definition—marketing channel . environmental factors supplier factors product factors competitor factors consumer factors Answer: e Page: 281 Rationale: Avon's research showed that 59 percent of women who don't buy Avon products would if they were more accessible. Avon expanded its channels. consortium. 13-4 CHAPTER OPENING EXAMPLE CONCEPTUAL Which of the following factors had the greatest impact on Avon's channel choice? a. d. Answer: c Page: 281 Rationale: Avon’s marketing research indicated that 59 percent of women who don’t buy Avon products would if they were more accessible. cartel. b. at JCPenney stores. 13-5 MARKETING CHANNEL DEFINITION Individuals and firms involved in the process of making a good or service available are considered members of a: a. indirect placement. e. off peak pricing. marketing channel. Thus. b. e. access to new customers. JCPenney stores and online shopping provide access to new customers. e. distribution line.13-3 CHAPTER OPENING EXAMPLE: AVON APPLICATION Avon’s decision to make its cosmetics available through independent sales representatives. b. c. d. c.

consumer market. to a buyer. c. d. b. it is highly likely you purchased those jeans at retail stores located in a shopping mall. Marketing channels make possible the flow of goods from a producer. b. d. through intermediaries. He is the ultimate consumer in a pipeline from the producer through intermediaries including the grocery store. marketing intermediary. e. which consists of individuals and firms involved in the process of making a product or service available for our use as consumers. most of the products we purchase are made available to us by a marketing channel. Further. transactional function. It is quite unlikely you bought the jeans directly from the manufacturer. A marketing channel is a series of individuals and firms involved in the process of making a product or service available to a buyer. c. a. organizational chain of command organizational hierarchy marketing channel marketing hierarchy marketing chain of command Answer: c Page: 282 Other Location: web Rationale: From automobiles to blue jeans. logistical function. marketing channel. e.13-6 MARKETING CHANNEL APPLICATION Rob stops at the supermarket to purchase a package of Oreos and other groceries. Answer: c Page: 282 Other Location: web Rationale: Marketing channels can be compared with a pipeline through which water flows from a source to an endpoint. most goods are brought to you via a(n) __________. In fact. 831 . 13-7 MARKETING CHANNEL APPLICATION You probably own several pairs of blue jeans. This pipeline is actually a: a.

dealer agent or broker retailer wholesaler middleman Answer: e Page: 282. d. the products we buy would cost a lot less!" After contemplating Nick's statement. an agent or broker is any intermediary with legal authority to act on behalf of the manufacturer. b. e. 13-9 MIDDLEMAN DEFINITION A(n) __________ is any intermediary between a manufacturer and end-user markets. While studying the chapter on marketing channels and wholesalers. . We learned in class that channel intermediaries actually make marketing more efficient by minimizing the number of transactions necessary to sell products. an inaccurate statement by Lee. a. a middleman is any intermediary between manufacturer and end-user markets. d. d. Figure 13-1 Rationale: As shown in Figure 13-1. Nick and Lee. c. c.13-8 VALUE CREATED BY INTERMEDIARIES CONCEPTUAL Two students. were studying for an upcoming exam in their introduction to marketing course. 13-10 AGENT DEFINITION A(n) __________ is any intermediary with legal authority to act on behalf of the manufacturer. dealer agent or broker retailer wholesaler disintermediary Answer: b Page: 282. logistical and facilitating. channel intermediary promotional efforts. Figure 13-1 Rationale: As shown in Figure 13-1." Lee's statement refers to: a. Nick was correct. Figure 13-2 Rationale: Intermediaries make possible the flow of products from producers to ultimate consumers by performing three basic functions: transactional. value created by channel intermediaries. b. a. c. price inflation by channel intermediaries. e. Nick made the following statement: "If it weren't for wholesalers and other intermediaries in the channel of distribution. b. Answer: a Page: 282. "Wait a minute. Lee said. e. channel intermediary development.

a dealer is an imprecise term that can mean the same as distributor. and usually in consumer markets. and so on. Figure 13-1 Rationale: As shown in Figure 13-1. South Carolina. ultimate consumer. c. b. c. Each artist takes a turn acting as the sales clerk at the gallery. a. and usually in consumer markets. d. retailer. They have set up an art gallery in downtown Charleston so tourists and art-lovers can look at their paintings and buy the ones they like. usually to retailers. dealer agent or broker retailer wholesaler disintermediary Answer: d Page: 282. Figure 13-1 Rationale: A retailer is any intermediary (the artist on duty) who sells to consumers (tourists and art-lovers). 13-13 DEALER Which type of an intermediary is a dealer? a. wholesaler. end user. 833 . e. e. a wholesaler is any intermediary who sells to other intermediaries. Figure 13-1 Rationale: As shown in Figure 13-1. d. e. the artist who is on duty in the gallery is acting as a(n): a. b. c. usually to retailers. b. a middleman a wholesaler a retailer a distributor any of the above DEFINITION Answer: e Page: 282. brokerage firm. have created an arrangement to sell their paintings. retailer.13-11 WHOLESALER DEFINITION A(n) __________ is any intermediary who sells to other intermediaries. wholesaler. 13-12 RETAILER APPLICATION Several artists in Charleston. Answer: b Page: 282. In terms of the marketing channel. d.

An agent has legal authority to act on behalf of a manufacturer. maximizing the number of contacts necessary between producer and consumer. b. reducing manufacturing costs. The most precise terms used to describe marketing intermediaries are dealer and distributor. A broker is a synonym for a dealer. e. identifying target markets. Answer: d Page: 282-283 Rationale: Producers (such as General Mills) recognize that intermediaries (the wholesalers and supermarkets) make selling goods and services (breakfast cereals) more efficient because they minimize the number of sales contacts necessary to reach a target market. b. A broker is an intermediary similar to an agent. A middleman is any intermediary between a manufacturer and end-user markets. Answer: d Page: 282. d. eliminating inventory costs. A retailer sells to ultimate consumers. Figure 13-1 Rationale: Dealer and distributor are described as the two least precise terms. A retailer sells to business markets. minimizing the number of sales contacts between producer and consumer. . An agent has no legal authority to act on behalf of a manufacturer. 13-15 INTERMEDIARIES APPLICATION Most producers will not sell to consumers.13-14 INTERMEDIARIES CONCEPTUAL Which of the following statements about the terms used for marketing intermediaries is true? a. Alternative d is correct—a middleman is any intermediary between a manufacturer and end-user markets. By including the wholesalers and supermarkets in the marketing channel. consumers interested in purchasing their cereals would have to go to a factory to purchase just a few boxes! Clearly this would be very inefficient. for example. c. If General Mills tried to sell to consumers rather than wholesalers and supermarkets. d. General Mills assures consumers of time and place utility and obtains an advantage itself since it deals with far fewer individuals in order to get its cereals into consumer’s homes. c. It is far too expensive and time-consuming for the producer to sell one or a few items to a consumer on credit. Intermediaries such as the wholesalers and supermarkets make the selling of goods more efficient by: a. e.

835 . contractual functions. transporting and(3) facilitating—making goods and services more attractive to buyers through financing. CONCEPTUAL accommodating functions. e. and marketing information and research. and risk taking—assuming business risks in the ownership of inventory that can become obsolete or deteriorate. b. d. logistical functions. buying. and seeking orders. logistical functions. (2) logistical—assorting. and: a. 13-18 TRANSACTIONAL FUNCTION Transactional function activities involve: a. b. e. liaising. Figure 13-2 Rationale: Intermediaries make possible the flow of products from producers to buyers by performing three basic functions. transportation. risk taking. storing. transactional functions include buying—purchasing products for resale or as an agent for supply of a product. c. implementation functions. and risk taking—assuming business risks in the ownership of inventory that can become obsolete or deteriorate. and contractual functions. selling. d. channeling. c. selling—contacting potential customers. and facilitating functions. Figure 13-2 Rationale: As shown in Figure 13-2. grading. c. assorting. selling. and transactional functions. and implementation functions. selling—contacting potential customers. b. Answer: d Page: 283. e. and risk taking. 13-17 TRANSACTIONAL FUNCTION DEFINITION Intermediaries performing a transactional function in distribution are engaged in buying. facilitating functions. strategizing. accommodating functions. marketing information and research. Answer: e Page: 283. merchandising. and logistical functions. promoting products. financing and grading. and storing.13-16 INTERMEDIARIES The three basic functions performed by intermediaries are: a. and risk taking. and seeking orders. DEFINITION Answer: a Page: 283. accommodating functions. selling. sorting. d. facilitating functions. transactional functions. transactional functions include buying—purchasing products for resale or as an agent for supply of a product. They are (1) transactional--buying. sorting. promoting products. Figure 13-2 Rationale: As shown in Figure 13-2.

they are performing __________ functions. selling—contacting potential customers. when marketing channel members are engaged in buying. storing. b. a. and risk taking—assuming business risks in the ownership of inventory that can become obsolete or deteriorate.13-19 TRANSACTIONAL FUNCTION DEFINITION In terms of distribution. c. sorting. DEFINITION Answer: b Page: 283. and transporting financing and grading. d. Figure 13-2 Rationale: As shown in Figure 13-2. and transporting—physically moving a product to customers. risk taking. e. buying and selling. Figure 13-2 Rationale: As shown in Figure 13-2. . assorting. marketing information and research. b. e. promoting products. d. logistical transformational facilitating implementing transactional Answer: e Page: 283. and risk taking. storing—assembling and protecting products at a convenient location to offer better customer service. 13-20 LOGISTICAL FUNCTION Logistical function activities include: a. transactional functions include buying—purchasing products for resale or as an agent for supply of a product. selling. sorting—purchasing in large quantities and breaking into smaller amounts desired by customers. c. logistical functions include assorting—creating product assortments from several sources to serve customers. and seeking orders.

Figure 13-2 Rationale: As shown in Figure 13-2. d. 837 . and transporting. they are performing __________ functions. when marketing channel members are engaged in assorting. (not having trees available at their garden location which is 30 miles outside of town). (not requiring customers to purchase at least ten trees). which is 30 miles outside of town specializing in selling a single type of tree from only one grower requiring customers to provide their own transportation for items they buy Answer: b Page: 283. 13-22 LOGISTICAL FUNCTION APPLICATION Which of the following is a logistical function that a lawn and garden center provides? a. and transporting— physically moving a product to customers (not requiring customers to provide their own transportation for items they buy). selling only ten or more trees at a time to consumers providing a summer patio collection of items from various producers for consumers to buy having trees available at their garden location. sorting—purchasing in large quantities and breaking into smaller amounts desired by customers. (not specializing in selling a single type of tree from only one grower). storing. and transporting—physically moving a product to customers. storing—assembling and protecting products at a convenient location to offer better customer service. e. sorting—purchasing in large quantities and breaking into smaller amounts desired by customers. storing—assembling and protecting products at a convenient location to offer better customer service. c. they are creating product assortments from several sources to serve customers—the assorting part of the logistical function. sorting. e. logistical functions include assorting—creating product assortments from several sources to serve customers. c. b. a. b. d. Alternative b is correct because by making a patio collection available from a number of producers for consumers.13-21 LOGISTICAL FUNCTION DEFINITION In terms of distribution. logistical transformational facilitating implementing transactional Answer: a Page: 283. Figure 13-2 Rationale: As shown in Figure 13-2. logistical functions include assorting—creating product assortments from several sources to serve customers. not their store.

c. and marketing information and research—providing information to customers and suppliers. Which logistical function did the hardware store perform for Hunter? a. d. e. logistical functions include assorting—creating product assortments from several sources to serve customers. and storing. testing. DEFINITION Answer: c Page: 283. e. Function 13-2 Rationale: As shown in Figure 13-2. he bought one pair because that was all he needed. buying and selling. b. it purchased a case containing 100 pairs of identical gloves. Figure 13-2 Rationale: As shown in Figure 13-2. sorting. financing.13-23 LOGISTICAL FUNCTION APPLICATION When Hunter went to the hardware stare looking for gloves to wear while refinishing a table. d. transportation. b. . 13-24 FACILITATING FUNCTION Facilitating function activities include: a. including competitive conditions and trends. marketing buying sorting assorting risk taking Answer: c Page: 283. grading. c. sorting—purchasing in large quantities and breaking into smaller amounts desired by customers (in this case buying 100 pairs of identical gloves and offering 1 pair of gloves for Hunter). storing—assembling and protecting products at a convenient location to offer better customer service. and transporting—physically moving a product to customers. assorting. facilitating functions include financing—extending credit to customers. but when the hardware store purchased the gloves. or judging products. grading—inspecting. and marketing information and research. risk taking. and assigning them quality grades.

producing. grading. and risk taking. e. 13-26 FACILITATING FUNCTION DEFINITION Intermediaries perform facilitating function activities. sorting—purchasing in large quantities and breaking into smaller amounts desired by customers. Figure 13-2 Other Location: web Rationale: As shown in Figure 13-2. and transporting—physically moving a product to customers. when marketing channel members are engaged in financing. grading. they are performing the __________ function. logistical functions include assorting—creating product assortments from several sources to serve customers. d. Figure 13-2 Other Location: web Rationale: As shown in Figure 13-2. assembling. and transporting—physically moving a product to customers. a. buying. b. sorting—purchasing in large quantities and breaking into smaller amounts desired by customers. and marketing information and research. logistical functions include assorting—creating product assortments from several sources to serve customers. assorting. marketing information and research.13-25 FACILITATING FUNCTION DEFINITION In terms of distribution. sorting—assembling and protecting products at a convenient location to offer better customer service. These activities include: a. e. and storing. and distributing. sorting—assembling and protecting products at a convenient location to offer better customer service. d. financing. logistical transformational facilitating implementing transactional Answer: c Page: 283. selling. c. which assist producers in making goods and services more attractive to buyers. 839 . sorting. transportation and distribution. b. Answer: e Page: 283. c.

when they want them (time). 13-28 VALUE CREATED BY INTERMEDIARIES CONCEPTUAL Marketing channels create customer value from all of the following utilities EXCEPT: a. and transporting—physically moving a product to customers. quality. place. d. perishability. Answer: c Page: 283 Rationale: Marketing channels help create value for consumers by providing goods and services they want (possession). c. Figure 13-2 Rationale: As shown in Figure 13-2. the four environmental dichotomies. place. and possession. where they want them (place). 13-29 FOUR UTILITIES CONCEPTUAL Marketing channels help create value for consumers through four utilities. b. logistical functions include assorting—creating product assortments from several sources to serve customers. Quality is not a utility although it does have an effect on customer value. b. Answer: c Page: 283 Rationale: Marketing channels help create value for consumers through the four utilities: time. product.13-27 FACILITATING FUNCTION APPLICATION Before consumers see a movie. e. c. b. d. place. intangibility. grading sorting risk taking marketing assorting Answer: a Page: 283. form. price. This rating system is most closely related to which facilitating function activity performed by marketing intermediaries? a. time. possession. e. sorting—purchasing in large quantities and breaking into smaller amounts desired by customers. c. it is assigned a rating such as G or PG based on its language and content. form. heterogeneity. and possession. and marketing. e. and consistency. and place. time. . d. transactional. logistical. and in the form they want them (form). sorting—assembling and protecting products at a convenient location to offer better customer service. promotion. facilitating. form. The utilities are: a.

By decorating the pieces and increasing their aesthetic value. glaze (paint) them. a. M. the artist decorated the blank dishes and figurines to make them more appealing to buyers. In this case.) and place (the motel) it was needed.M. and are hungry. possession and form e. application and time Answer: b Page: 283 Rationale: The vending machine made the snack ready at the time (2 A. c. time and creation b. b. 841 . and sell the finished work to customers. 13-31 FOUR UTILITIES APPLICATION An artist can buy white blank dishes and figurines.13-30 FOUR UTILITIES APPLICATION When you arrive at a motel at 2 A. the artist creates __________ utility. form application possession time place Answer: a Page: 283 Rationale: Form utility involves enhancing a product or service to make it more appealing to buyers. e. a snack vending machine located in the motel creates __________ utility. fire the glazed pieces in a kiln. a. place and time c. d. form and place d.

CONCEPTUAL Answer: c Page: 284 Rationale: In a direct channel the producer and ultimate consumer deal directly with each other. d. wholesalers. all channel functions are performed by: a. professional studio model components.13-32 MARKETING CHANNELS FOR CONSUMER GOODS APPLICATION A small electronics company manufactures a line of low to moderate quality stereo components that are distributed through wholesalers to mass market retailers such as Wal-Mart. c. 13-33 DIRECT CHANNEL DEFINITION A(n) __________ exists when producers and ultimate consumers deal directly with each other. strategic channel alliance direct channel subsidiary channel indirect channel dual distribution channel Answer: b Page: 284. . retailers. and there is no indication that the new products warrant creating such a sales force. b. but the electronics company does not have the sales force to call on thousands of specialty stores. d. use its established channel distribute directly to mass market retailers distribute through agents who sell to specialty electronics stores who will feature the new line sell directly to specialty electronics stores who will feature the new line cannot be determined from the information given Answer: c Page: 284 Rationale: The new products need an up-scale outlet. Figure 13-3 Rationale: Text term definition—direct channel 13-34 DIRECT CHANNEL In a direct channel. How should the small electronics company distribute its new products? a. e. e. producers. b. the producer must perform all channel functions. a. The electronics company has begun production of a small line of high quality. Because there are no intermediaries in a direct channel. brokers and agents. c. d. c. e. b. middlemen.

the producer must perform all channel functions. c. the producer must perform all channel functions. d. informal channel of distribution. c. indirect channel. including sales as in this situation. two local farmers were selling the produce they grew on their farms from the back of their pickup trucks to local people that drove by on the road. roadside channel of distribution. Answer: a Page: 284 Rationale: A direct channel is one in which the producer and ultimate consumers deal directly with each other. c. the producer must perform all channel functions. e. b. intermediate channel of distribution. b. 843 . Because there are no intermediaries with a direct channel. 13-36 DIRECT CHANNEL CONCEPTUAL Schwan's Sales Enterprises of Marshall. direct channel indirect channel strategic channel alliances marketing channel dual distributive channel Answer: a Page: 284. facilitated channel.13-35 DIRECT CHANNEL APPLICATION World Book Educational Products performs all of the channel functions including selling door to door so that the salesperson can fully explain the benefits of owning these books. markets a full line of frozen foods in 48 states and parts of Canada using door-to-door salespeople who sell from refrigerated trucks. Figure 13-3 Rationale: A direct channel is one in which the producer and ultimate consumers deal directly with each other. Answer: e Page: 284 Rationale: A direct channel is one in which the producer and ultimate consumers deal directly with each other. direct channel. Because there are no intermediaries with a direct channel. e. traveling channel of distribution. The farmers selling their products without wholesalers or retailers were an example of a: a. direct channel of distribution. 13-37 DIRECT CHANNEL APPLICATION In an episode of the Andy Griffith television series. Because there are no intermediaries with a direct channel. including sales as in this situation. d. Minnesota. e. truck jobber channel. customer-service channel. d. This particular method of distribution is called a: a. b. What type of marketing channel should World Book Educational Products use to distribute its books? a. including sales as in this situation.

occur when one firm's marketing channels are used to sell another firm's products. Longaberger uses which type of marketing channel? a. b. are arrangements whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product. the producer must perform all channel functions. e. 13-39 INDIRECT CHANNELS Indirect channels for consumer goods: a. clustering direct channel indirect channels marketing channel strategic channel alliances Answer: b Page: 284 Rationale: A direct channel is one in which the producer and ultimate consumers deal directly with each other. include intermediaries that are between the producer and consumer and perform numerous channel functions. c. DEFINITION Answer: c Page: 284 Other Location: web Rationale: Text term definition—indirect channels . c. including sales as in this situation. In return. include producers and end-users dealing directly with each other. b. are accurately described by none of the above. d. Because there are no intermediaries with a direct channel. e. the hostess is able to purchase the baskets at a discount. d.13-38 DIRECT CHANNEL APPLICATION Longaberger baskets are sold at parties. A hostess invites friends and neighbors to admire the baskets the company has sent to display and takes orders.

d. any item regardless of cost as long as there is sufficient product variety. b. b. e. 845 . d. e. Answer: c Page: 285 Rationale: The most indirect channel is used when there are many small manufacturers and many small retailers and an agent is used to help coordinate a large supply of the product. 13-42 INDIRECT CHANNELS CONCEPTUAL The most indirect channel for consumer goods incorporates agents. there are low-cost. c. the cost of inventory makes it too expensive to use a wholesaler. there is too large an inventory to be carried by wholesalers. low unit volume goods. there are so many product variations that a wholesaler could not carry them all in sufficient quantity. In addition this type of indirect channel is used when there are so many variations in the product that it would be impossible for a wholesaler to stock all the models required to satisfy buyers. high unit value items. and retailers and is most commonly used when: a. e. high unit value items. low unit value items. b. high-cost.13-40 INDIRECT CHANNELS CONCEPTUAL The most common indirect channel moves product from producer to retailer to consumer. 13-41 INDIRECT CHANNELS CONCEPTUAL Adding a wholesaler to the marketing channel for consumer goods is most common for: a. wholesalers. c. all of the above conditions exist. c. high-cost. the retailer is large and can buy in large quantities. there are only a few large manufacturers but many small retailers. there are many small manufacturers and many small retailers. the cost of maintaining inventory is high. low unit value items. low-unit value items that are frequently purchased by consumers such as candy. there are many manufacturers with a limited inventory competing for a small group of retailers. and magazines. low-cost. confectionery items. Answer: e Page: 284 Other Location: web Rationale: A retailer is most commonly added when the retailer is large and can buy in large quantities from a producer or when the cost of inventory makes it too expensive to use a wholesaler. Answer: a Page: 285 Rationale: Adding a wholesaler is most common for low-cost. This type of channel is most likely to exist when: a. low-cost. d.

and delivering a full product assortment and financing. Which of the following is true regarding the difference(s) between these two types of channels? a. 13-44 INDUSTRIAL DISTRIBUTOR DEFINITION A(n) __________ is an intermediary that performs a variety of marketing channel functions involving selling. d. Business channels typically are shorter than consumer channels. d. In many ways industrial distributors are similar to wholesalers in consumer channels. agent wholesaler disintermediary channel captain industrial distributor Answer: e Page: 285 Rationale: Text term definition—industrial distributor . Answer: e Page: 285 Rationale: In contrast with channels for consumer products. Business channels use industrial distributors and consumer channels don’t. Both business and consumer channels may use agents that represent the supplier or producer to the customer. All of the above statements are true. and delivering a full product assortment as well as providing financing for industrial goods and services. Both business and consumer channels may use agents.13-43 CONSUMER AND BUSINESS CHANNELS CONCEPTUAL Consumer and business channels are somewhat different. stocking. b. b. c. e. e. including selling. and buy in larger quantities. a. Business channels have fewer intermediaries than consumer channels. stocking. tend to be more concentrated geographically. An industrial distributor performs a variety of marketing channel functions. business channels typically are shorter and rely on one intermediary or none at all because business users are fewer in number. c.

disintermediary. 13-46 INDUSTRIAL DISTRIBUTOR CONCEPTUAL Industrial distributors perform functions that are most like which intermediary in the consumer goods marketing channel? a. stock. e. b. a Burlington. e. stocking. c. and deliver a full assortment of products to the Chinese market. dealer agent retailer wholesaler industrial distributor Answer: b Page: 286. b. 13-47 AGENT DEFINITION A(n) __________ is the independent selling arm of producers. agent. a. hospitals and labs in China. e. Asia Marketing & Management is an example of a(n): a. d. and delivering a full product assortment and financing. In many ways. Figure 13-5 Rationale: Text term definition—agent 847 . retailer.13-45 INDUSTRIAL DISTRIBUTOR APPLICATION International Products. manufacturers retailers agents wholesalers brokers Answer: d Page: 285 Rationale: An industrial distributor performs a variety of marketing channel functions. but it did not have the necessary expertise. d. stocking. and delivering a full product assortment as well as providing financing for industrial goods and services. As a result International Products hired Asia Marketing & Management to sell. b. c. industrial distributors are like wholesalers in consumer channels. firm that sells industrial cleansers and lubricants wanted to sell its product to factories. including selling. Answer: e Page: 285 Rationale: An industrial distributor is an intermediary that performs a variety of marketing channel functions involving selling. c. New Jersey. and represents a producer to industrial users. wholesaler. d. industrial distributor.

where the creation of marketing channel relationships is expensive and time consuming. The General Mills-Nestle strategic alliance is also likely to increase the worldwide ready-to-eat market share of these companies to 20 percent worldwide. 13-50 DUAL DISTRIBUTION DEFINITION __________ is an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product. distributors. c. A strategic channel alliance Multiple level selling Parallel distribution Dual distribution Multi-layered distribution Answer: d Page: 287 Rationale: Key term definition—dual distribution . consumer-responsive channel. CPW illustrates which recent innovation in marketing channels? a.500 distributors of new equipment. a. d. e. virtual marketing channel. and 650 dealers of used inventory for sale at the website. d. and machinery dealers to provide the merchandise that is sold through this: a. MachineTools.S. 2. Answer: b Page: 286 Rationale: Electronic marketing channels employ the Internet to make goods and services available to consumers or business buyers.com sells grinders. 13-49 MARKETING NEWSNET APPLICATION Cereal Partners Worldwide (CPW) joined the manufacturing and marketing capabilities of U. d. boring mills.based General Mills with the worldwide distribution of Swiss-based Nestlé.com relies on a well-established channel of manufacturers. e. electronic marketing channel. b. internet distribution channel. b. c. c. dual distribution multi-channel distribution cooperative distribution a strategic alliance bilateral trade agreement Answer: d Page: 287 Other Location: web Rationale: Strategic alliances are popular in global marketing. e. Thus. b. The website has listed goods from over 700 machinery manufacturers. in Paris your breakfast can include Nestlé Cheerios miel armandes as well as coffee and a croissant.13-48 ELECTRONIC MARKETING CHANNELS APPLICATION MachineTools. product-driven channel. and engine lathes.

13-51 DUAL DISTRIBUTION CONCEPTUAL Pharmaceutical companies sell to hospitals and clinics directly. multi-channel distribution. cooperative distribution. Answer: b Page: 287 Rationale: Text term definition—strategic channel alliances 849 .S. c. What method of distribution is used by pharmaceutical companies? a. d. e. 13-53 STRATEGIC CHANNEL ALLIANCES DEFINITION A recent innovation in marketing channels whereby one firm's marketing channel is used to sell another firm's products is called a(n): a. d. dual distribution vertical distribution horizontal distribution direct distribution exclusive distribution Answer: a Page: 287 Rationale: Dual distribution is an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same product. b. d. c. e. Answer: d Page: 287 Rationale: Dual distribution is an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product. multi-product distribution. b. e. They market their products to large retail chains that distribute the medicines to their stores across the nation. dual distribution. parallel distribution. dual distribution. b. a strategic channel alliance. 13-52 DUAL DISTRIBUTION CONCEPTUAL The channel strategy demonstrated when Black & Decker sells its tools in the consumer market under the Black & Decker name and basically the same tool to the business market using the Dewalt brand name. strategic channel alliance. c. Black & Decker is using: a. a integrated channel alliance. a multi-channel venture. They also sell to drug wholesalers that sell to the remaining independent drugstores in the U.

c. Answer: d Page: 287 Other Location: web Rationale: A strategic channel alliance occurs when one firm's marketing channel is used to sell another firm's products. a direct marketing channel. Strategic channel alliances are popular in global marketing. c. a dual distribution agreement. warehouses and delivers all of 3M's medical and surgical products to hospitals across the nation. d. d. b. where the creation of marketing channel relationships is expensive and time consuming. a manufacturer of several popular over-the-counter medications.13-54 STRATEGIC CHANNEL ALLIANCES CONCEPTUAL Which type of marketing channel arrangement is good for a firm to use in international marketing where the creation of marketing channel relationships is expensive and time consuming? a. multi-channel distribution. e. a strategic channel alliance. . 13-55 STRATEGIC CHANNEL ALLIANCES APPLICATION Abbott Laboratories. b. e. In this case. 3M uses Abbott Laboratories’ marketing channel to sell its medical and surgical products to hospitals. dual distribution strategic channel alliance cooperative distribution integrated global channel alliance multi-channel distribution Answer: b Page: 287 Rationale: Strategic channel alliances use one firm’s marketing channel to sell another firm’s products. a cooperative distribution channel. The agreement between Abbott Laboratories and 3M is an example of: a.

Integrated Horizontal Vertical Functional Cooperative Answer: c Page: 287 Rationale: Key term definition—vertical marketing systems 851 . d. b. The most efficient distribution arrangement in terms of cost and time for Meyers Inc. Strategic channel alliances are popular in international marketing because developing marketing channel relationships are expensive and time consuming. d. 13-57 STRATEGIC CHANNEL ALLIANCES APPLICATION An example of a(n) __________ occurs when Kraft Foods uses the distribution system of Ajinomoto. Inc. a. direct marketing channel industrial distributor dual distribution system strategic channel alliance franchising operation Answer: d Page: 287 Rationale: A strategic channel alliance occurs when one firm's marketing channel is used to sell another firm's products. cooperative distribution. a dual distribution agreement. Strategic channel alliances are popular in international marketing because developing marketing channel relationships are expensive and time consuming. Because of the wide popularity of its products in the U. Meyers wants to initiate distribution internationally as soon as possible.S. c. e.S. 13-58 VERTICAL MARKETING SYSTEMS DEFINITION __________ marketing systems are professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.13-56 STRATEGIC CHANNEL ALLIANCES APPLICATION Meyers. a. d. a strategic channel alliance. e. direct marketing. c. b. a major Japanese food company. is an American company that manufactures and distributes coffee products in the U. Answer: d Page: 287 Rationale: A strategic channel alliance occurs when one firm's marketing channel is used to sell another firm's products. c. to market its Maxwell House coffee in Japan. b. e. to use would be: a.. multi-channel distribution.

This results in more control since ties among the intermediaries are the strongest when they are all under the same ownership. maximize the number of wholesalers a supplier can deal through. b. eliminate competition by narrowing the channel from supplier to consumer. or maintain a limited service region. c. b. Answer: c Page: 287 Rationale: Vertical marketing systems are professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact. has eliminated economies of scale. 13-61 CORPORATE VERTICAL MARKETING SYSTEMS APPLICATION A new company produces paint and other home decorating products. limit the number of retail outlets served. c. CONCEPTUAL dissuade retailers from dealing with other manufacturers or wholesalers. c. e. which results in more control.13-59 VERTICAL MARKETING SYSTEMS The purpose of a vertical marketing system is to: a. Answer: d Page: 288 Rationale: The combination of successive stages of production and distribution under a single ownership is a corporate vertical marketing system. d. .” This quote means that the Cessna corporation: a. b. 13-60 COPRORATE VERTICAL MARKETING SYSTEMS CONCEPTUAL Cessna is considered the volume leader for the executive-jet market. has achieved a high level of social responsibility. achieves coordination of production and distribution through ownership. Which marketing channel arrangement should this company choose? a. uses outsourcing for all component parts and materials. d. a corporate vertical marketing system a contractual vertical marketing system an administered vertical marketing system an integrated marketing system a corporate horizontal marketing system Answer: a Page: 288 Rationale: The combination of successive stages of production and distribution under a single ownership is a corporate vertical marketing system. It has been described as “almost totally vertically integrated. Its goal is to choose the best marketing channel arrangement that would give it the most control and the least amount of conflict. achieve channel economies and maximum marketing impact. e. d. e. does not fall under the jurisdiction of any federal regulatory agency.

Fox Entertainment Group is an example of a(n): a. e. c. b. 13-64 FORWARD INTEGRATION DEFINITION When a producer owns an intermediary at the next level down in the marketing channel. and 21 regional sports networks.13-62 CORPORATE VERTICAL MARKETING SYSTEM DEFINITION The combination of successive stages of production and distribution under a single ownership is called a(n): a. c. d. corporate horizontal marketing system. d. 33 TV stations. Answer: a Page: 288 Rationale: Text term definition—corporate vertical marketing system 13-63 CORPORATE VERTICAL MARKETING SYSTEM APPLICATION The Fox Entertainment Group counts among its assets a thriving TV production unit. d. Since most of the shows produced at its TV production unit and many of the movies made at its studio are made just for televising on its cable networks. integrated marketing system. a half-dozen national cable networks. contractual horizontal marketing system. vertical channel. Fox Entertainment Group produces and distributes made-for-TV movies to its own stations. e. b. it is called: a. In this case. resulting in more control. a Hollywood movie studio. backward integration. corporate horizontal marketing system. horizontal integration. corporate vertical marketing system. e. contractual horizontal marketing system. c. b. forward integration. horizontal channel. integrated marketing system. Answer: a Page: 288 Rationale: A corporate vertical marketing system combines successive stages of production and distribution under a single ownership. contractual vertical marketing system. contractual vertical marketing system. Answer: a Page: 288 Rationale: Text term definition—forward integration 853 . corporate vertical marketing system.

vertical integration. horizontal integration. b. a. Sears also obtains over 50 percent of its goods from companies that it partly or wholly owns. d. e. 13-66 BACKWARD INTEGRATION APPLICATION Sears operates a network of warehouses as part of its distribution system. DEFINITION Answer: b Page: 288 Rationale: Text term definition—backward integration . b. d. c. 13-67 BACKWARD INTEGRATION When a retailer owns a manufacturing operation. Hart Schaffner & Marx uses__________ to distribute its suits and sports coats. backward integration. strategic alliance. c.13-65 FORWARD INTEGRATION APPLICATION Hart Schaffner & Marx is a producer of men's suits and sports coats that operates 100 menswear stores. Answer: c Page: 288 Rationale: Backward integration is the practice of a retailer owning a manufacturing operation. Sears is engaged in: a. it is called: a. dual distribution. forward integration. b. backward integration. e. horizontal integration. e. dual distribution forward integration backward integration horizontal integration strategic alliance Answer: b Page: 288 Rationale: Forward integration occurs when a producer owns an intermediary at the next level down in the marketing channel. joint venture. c. forward integration. d.

accounting for about 40 percent of all retail sales? a. and inventory management efforts? a. b. service-sponsored retail franchise system retailer-sponsored cooperative administered vertical marketing system manufacturer-sponsored retail franchise system wholesaler-sponsored voluntary chain Answer: e Page: 288. 13-69 WHOLESALER-SPONSORED VOLUNTARY CHAIN DEFINITION Which type of contractual vertical marketing system involves a contractual relationship between a wholesaler and small independent retailers to standardize and coordinate buying practices. service-sponsored retail system retailer-sponsored cooperative administered cooperative system manufacturer-sponsored cooperative wholesaler-sponsored voluntary chain Answer: b Page: 288 Other Location: web Rationale: Retailer-sponsored cooperatives exist when small. d. e. b. e. c. b. d. corporate vertical marketing systems horizontal marketing systems contractual vertical marketing systems administered vertical marketing systems wholesaler-sponsored voluntary systems Answer: c Page: 288 Other Location: web Rationale: Contractual systems (including franchises) are the most popular among the three types of vertical marketing systems and are estimated to account for about 40 percent of all retail sales. merchandising programs. retailers of lighting fixtures. c.13-68 CONTRACTUAL VERTICAL MARKETING SYSTEMS CONCEPTUAL Which of the following is the most popular type of vertical marketing system. 855 . a. to concentrate their buying power through wholesalers and more importantly plan collaborative promotional and pricing activities. independent retailers form an organization that operates a wholesale facility cooperatively. c. d. Figure 13-6 Rationale: Text term definition 13-70 RETAILER-SPONSORED COOPERATIVE APPLICATION Lighting-One is a national ___________ that allows its members. Member retailers then concentrate their buying power through the wholesaler and plan collaborative promotional and pricing activities. e.

administered vertical marketing systems. b. d. horizontal marketing systems. e. an administered vertical marketing system. b. corporate vertical marketing systems. franchising. contractual vertical marketing systems. Answer: d Page: 288. wholesaler-sponsored voluntary systems. a wholesaler sponsored voluntary chain. 13-73 FRANCHISING DEFINITION A contractual arrangement between a parent company and an individual or firm that allows the individual or firm to operate a certain type of business under an established name and according to specific rules is called: a. e. c. service-sponsored retail system retailer-sponsored cooperative administered cooperative system manufacturer-sponsored cooperative wholesaler-sponsored voluntary chain Answer: b Page: 288: Figure 13-6 Rationale: Text term definition—retailer-sponsored cooperative 13-72 CONTRACTUAL VERTICAL MARKETING SYSTEM Franchising is a form of: a. Figure 13-6 Rationale: The most visible variation of contractual systems is franchising. DEFINITION Answer: c Page: 288. a retailer sponsored cooperative. b. a corporate vertical marketing system. d. Figure 13-6 Rationale: Key term definition—franchising . a contractual arrangement between a parent company and an individual or firm that allows the franchise to operate a certain type of business under an established name and according to specific rules. e. d.13-71 RETAILER-SPONSORED COOPERATIVE DEFINITION Which type of contractual vertical marketing system involves small independent retailers forming an organization that operates a wholesale facility cooperatively? a. c. c.

b. and market the finished product to retailers. In a franchise vertical marketing system. a contractual arrangement between a parent company and an individual or firm that allows the franchise to operate a certain type of business under an established name and according to specific rules. who carbonate it. Figure 13-6 Rationale: Text term definition—manufacturer-sponsored wholesale franchise systems 857 . e. 13-75 MANUFACTURER-SPONSORED RETAIL FRANCHISE DEFINITION __________ are commonly used in the automobile industry. Which of the following options might he choose? a. c. He might open up branch offices around the country to provide the exposure he needs. e. He might establish a corporate vertical marketing system to control the distribution system established. c. d. With this system. service-sponsored franchise service-sponsored retail franchise manufacturer-sponsored wholesale franchise manufacturer-sponsored retail franchise administered vertical marketing Answer: c Page: 289. d. still wants a wide distribution of his new product. Jacob would get a profit or sales royalty to gain income. d. a. Jacob can establish a contract that allows the franchisee to use the product and the name. Figure 13-6 Rationale: Text term definition—manufacturer-sponsored retail franchise systems 13-76 MANUFACTURER-SPONSORED WHOLESALE SYSTEM DEFINITION The __________ system is common in the soft drink industry where the manufacturer sells its concentrate to wholesalers. He can establish a contractual vertical marketing system (franchise). He could establish a wholesaler-sponsored vertical marketing system to obtain greater economies of scale. b. a. Service-sponsored producer franchise systems Service-sponsored retail franchise systems Manufacturer-sponsored wholesale systems Manufacturer-sponsored retail franchise systems Administered vertical marketing systems Answer: d Page: 289. but provide the operating capital to run independent businesses. He might develop an administered vertical marketing system in order to achieve distribution. e. c. Jacob.13-74 FRANCHISING APPLICATION Jacob has developed a lawn care service that will revolutionize the lawn care industry. b. Answer: e Page: 288 Rationale: The most visible variation of contractual systems is franchising. has limited operating capital and yet. however. a manufacturer licenses dealers to sell its cars subject to various sales and service conditions.

b. e. d. b. c. corporate vertical marketing system integrated vertical marketing system contractual vertical marketing system administered vertical marketing systems service-sponsored franchise systems Answer: e Page: 289: Figure 13-6 Rationale: Text term definition—service-sponsored franchise systems 13-79 ADMINISTERED VERTICAL MARKETING SYSTEMS DEFINITION Which type of vertical marketing system achieves coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership? a. corporate vertical marketing system integrated vertical marketing system contractual vertical marketing system administered vertical marketing systems interactive vertical marketing system Answer: d Page: 289. corporate vertical marketing systems service-sponsored retail franchise systems contractual vertical marketing systems administered vertical marketing systems interactive vertical marketing systems Answer: b Page: 289. e. e. d. c. d. Figure 13-6 Rationale: Text term definition—administered vertical marketing systems . b.13-77 SERVICE-SPONSORED RETAIL FRANCHISE SYSTEMS DEFINITION Which type of vertical marketing system is provided by firms that have designed a unique approach for performing a service and wish to profit by selling the franchise to others? a. Figure 13-6 Rationale: Text term definition—service-sponsored retail franchise systems 13-78 SERVICE-SPONSORED FRANCHISE SYSTEMS DEFINITION Which type of vertical marketing system exists when franchisors license individuals or firms to dispense a service under a trade name and specific guidelines? a. c.

c. Size and influence of a single channel member is the factor in administered vertical marketing systems. Administered vertical marketing systems gain power through size and influence of one channel member and ownership. Administered vertical marketing systems are usually larger and more profitable than corporate vertical marketing systems. b. Administered vertical marketing systems gain power through contractual agreement and ownership. Administered vertical marketing systems achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership. e. d. corporate vertical marketing system integrated vertical marketing system contractual vertical marketing system administered vertical marketing systems interactive vertical marketing system Answer: d Page: 289 Rationale: Procter and Gamble can achieve coordination of production and distribution because of its size and influence rather than through ownership of the marketing channel. e. Answer: c Page: 289 Rationale: A corporate vertical marketing system combines successive stages of production and distribution under a single ownership. whereas ownership is the key factor in corporate vertical marketing systems. d. Administered vertical marketing systems gain power through ownership while vertical marketing systems gain power through corporate agreement. An administered vertical marketing system achieves coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership. promoting. Procter and Gamble represents which type of vertical marketing system? a. and pricing its products.13-80ADMINISTERED VERTICAL MARKETING SYSTEMS CONCEPTUAL Which of the following statements describes the most significant distinction between a corporate vertical marketing system and an administered vertical marketing system? a. 859 . 13-81 ADMINISTERED VERTICAL MARKETING SYSTEMS APPLICATION Because Procter and Gamble has a broad product assortment and is able to obtain excellent cooperation from supermarkets in displaying. c. b.

Which type of distribution should Kraft have used with this new product? a. e. and selective. concentrated. and concentrated. CONCEPTUAL Answer: c Page: 290 Rationale: Achieving the best coverage of the target market requires attention to the density— that is. b. d. e. pervasive. the number of stores in a given geographical area—and type of intermediaries to be used at the retail level of distribution. 13-84 INTENSIVE DISTRIBUTION APPLICATION When Kraft Foods introduced Planters Trail Mix snack food. . Three degrees of distribution density exist: intensive. exclusive. intensive. d. including density and type of intermediaries used at retail. Since this is a product that customers are not likely to spend much time searching for. b. extensive. e. c.13-82 FACTORS AFFECTING MARKETING CHANNEL CHOICE CONCEPTUAL Which of the following do marketing executives consider when choosing a marketing channel and intermediaries? a. and selective. b. exclusive. and selective. exclusive distribution direct distribution intensive distribution dual distribution selective distribution Answer: c Page: 290 Rationale: Intensive distribution means that a firm tries to place its products and services in as many outlets as possible. such as candy and newspapers. convenience becomes the key attribute of distribution. extensive. Intensive distribution is usually chosen for convenience products or services. it was a low-involvement convenience product. d. c. Thus. and intensive. 13-83 DEGREES OF DISTRIBUTION DENSITY The three degrees of distribution density are: a. concentrated. intensive distribution is the answer. coverage of the target market satisfying buyer requirements profitability of the channel and intermediaries density and type of intermediaries used at the retail level of distribution all of the above Answer: e Page: 290 Rationale: Marketing executives consider three items when choosing a marketing channel and intermediaries: (1) target market coverage. exclusive. and selective. (2) satisfying buyer requirements. extensive. c. intensive. and (3) profitability of the channel and intermediaries.

and nail clippers would most likely use which density of distribution? a. intensive extensive selective exclusive concentrated Answer: d Page: 290 Other Location: web Rationale: Key term definition—exclusive distribution 861 . b. d. d. b. intensive distribution extensive distribution selective distribution exclusive distribution concentrated distribution Answer: a Page: 290 Rationale: Intensive distribution means that a firm tries to place its products and services in as many outlets as possible. a. for example. automatic teller machines. c.13-85 INTENSIVE DISTRIBUTION DEFINITION The density of distribution whereby a firm tries to place its products or services in as many outlets as possible is called __________ distribution. and soft drinks. e. bottled water. c. Intensive distribution is usually chosen for convenience products or services. e. b. intensive extensive selective exclusive concentrated Answer: a Page: 290 Other Location: web Rationale: Key term definition—intensive distribution 13-86 INTENSIVE DISTRIBUTION APPLICATION Breath mints. chewing gum. d. a. c. e. 13-87 EXCLUSIVE DISTRIBUTION DEFINITION The density of distribution whereby a firm tries to place its products or services with only one retail outlet in a specified geographical area is called __________ distribution.

13-90 EXCLUSIVE DISTRIBUTION CONCEPTUAL For which of the following products would the manufacturer be most likely to use exclusive distribution? a. b. men's suits. Exclusive distribution is typically chosen for specialty products or services. b. men's suits. e. c. e. d.13-88 EXCLUSIVE DISTRIBUTION APPLICATION John Deere manufactures and distributes industrial and farm equipment. for example. b. Breyer's ice cream. e. Exclusive distribution is typically chosen for specialty products or services—for example. some women's fragrances. and vanilla wafers paper clips. some women's fragrances. c. d. automobiles. and yachts. and Coca-Cola Answer: b Page: 290 Rationale: Exclusive distribution means that only one retail outlet in a specified geographical area carries the firm’s products. intensive distribution extensive distribution selective distribution exclusive distribution concentrated distribution Answer: d Page: 290 Rationale: Exclusive distribution means that only one retail outlet in a specified geographical area carries the firm’s products. Exclusive distribution is typically chosen for specialty products or services. Hanes underwear. Which type of market coverage does the company use? a. and Baccarat crystal Oreos. automobiles. 13-89 EXCLUSIVE DISTRIBUTION APPLICATION Which type of distribution density is used by Rolls Royce when the car manufacturer maintains only one dealership in any large metropolitan area? a. intensive distribution extensive distribution selective distribution exclusive distribution private label distribution Answer: d Page: 290 Rationale: Exclusive distribution means that only one retail outlet in a specified geographical area carries the firm’s products. and file folders Lean Cuisine meals. . c. and yachts. d. These types equipment are considered to be specialty products. Steinway pianos. Teddy Grahams. and Nike shoes Chanel perfume. Timex watches. light bulbs.

d. work boots. selective distribution.13-91 SELECTIVE DISTRIBUTION DEFINITION The density of distribution whereby a firm tries to place its products in a few retail outlets in a specific geographical area is called __________ distribution. b. c. selective distribution is the most common form of distribution density and is usually associated with shopping goods or services. c. For this reason. e. and dining room furniture is called: a. exclusive distribution. e. a. selective distribution is the most common form of distribution density and is usually associated with shopping goods or services. b. secondary distribution. intensive distribution extensive distribution selective distribution exclusive distribution concentrated distribution CONCEPTUAL Answer: c Page: 290 Rationale: Selective distribution means that a firm selects a few retail outlets in a specific geographical area to carry its products. c. For this reason. Selective distribution combines some of the market coverage benefits of intensive distribution with the control over resale possible with exclusive distribution. Answer: c Page: 290 Rationale: Selective distribution means that a firm selects a few retail outlets in a specific geographical area to carry its products. e. 13-93 SELECTIVE DISTRIBUTION Which type of market coverage is usually associated with shopping goods? a. intensive distribution. intensive extensive selective exclusive concentrated Answer: c Page: 290 Rationale: Key term definition—selective distribution 13-92 SELECTIVE DISTRIBUTION CONCEPTUAL The target market coverage and distribution density associated with shopping goods such as overcoats. d. 863 . Selective distribution combines some of the market coverage benefits of intensive distribution with the control over resale possible with exclusive distribution. d. b. primary distribution.

Selective distribution means that a firm selects a few retail outlets in a specific geographical area to carry its products. For this reason. selective distribution is the most common form of distribution density and is usually associated with shopping goods or services. c.13-94 SELECTIVE DISTRIBUTION CONCEPTUAL The Hallmark Card Company is able to maintain good dealer relationships because it limits the number and maintains the quality of outlets through which it sells. Selective distribution combines some of the market coverage benefits of intensive distribution with the control over resale possible with exclusive distribution. e. located throughout the country. selective selective. exclusive exclusive. d. as it seeks to broaden the degree of its distribution and make its computers available in several retail outlets in specific areas. e. a. Currently. Currently. As such. c. Selective distribution combines some of the market coverage benefits of intensive distribution with the control over resale possible with exclusive distribution. intensive intensive. selective distribution is the most common form of distribution density and is usually associated with shopping goods or services. For this reason. Consumers can now purchase IBM computers at several wellknown department and discount stores. . 13-95 TARGET MARKET COVERAGE APPLICATION IBM has long been perceived as the leader in computer technology. intensive. a. selective Answer: e Page: 290 Rationale: Marketers seek to achieve the best coverage of their target markets by selecting the type and density of intermediaries used at the retail level. Exclusive distribution involves the use of one specific retailer in a certain geographic region as the only outlet for a product. for many years IBM computers were available only from selected. as computers have become more of a shopping good. authorized IBM retailers. Initially. b. IBM has changed its distribution strategy. d. including Wal-Mart and K-Mart. Hallmark uses __________ distribution. exclusive exclusive. IBM is using __________ distribution. b. intensive extensive selective exclusive concentrated Answer: c Page: 290 Rationale: Selective distribution means that a firm selects a few retail outlets in a specific geographical area to carry its products. IBM employed __________ distribution and made its products available only through a single retail outlet in specific locations.

and personal selling. (2) convenience. which enhances their attractiveness to buyers. Convenience has multiple meanings for buyers. When a membership book club allows its members to use the Internet to notify the company whether they want to receive the next month's issue. which enhances their attractiveness to buyers. and (4) pre. and personal selling. installation. b.or post-sale services all of the above Answer: e Page: 290 Rationale: Satisfying four buyer requirements is another objective in channel design: (1) information.13-96 CHANNEL DESIGN: SATISFYING BUYER REQUIREMENTS CONCEPTUAL Which of the following is a major consideration for satisfying buyer requirements when designing distribution channels? a. e. demonstrations. 13-97 CHANNEL DESIGN: SATISFYING BUYER REQUIREMENTS APPLICATION Channels are typically designed to satisfy one or more of four consumer interests. the book club is appealing to which buyer requirement? a. (3) variety. c. In this case. demonstrations. e. installation. Information is an important requirement when buyers have limited knowledge or desire specific data about a product or service. b. Properly chosen intermediaries communicate with buyers through in-store displays. (3) variety.or post-sale services. Variety reflects buyers’ interest in having numerous competing and complementary products carried by intermediaries. Convenience has multiple meanings for buyers. information convenience variety pre. such as proximity or driving time to a retail outlet or hours of operation. d. Services provided by intermediaries are an important buying requirement for products such as large household appliances that require delivery. Information is an important requirement when buyers have limited knowledge or desire specific data about a product or service. convenience 865 .or post-sale services. c. Variety reflects buyers’ interest in having numerous competing and complementary products carried by intermediaries. and (4) pre. d. and credit. such as proximity or driving time to a retail outlet or hours of operation. Services provided by intermediaries are an important buying requirement for products such as large household appliances that require delivery. (2) convenience. information convenience variety attendant services all of the above Answer: b Page: 290-291 Rationale: Satisfying four buyer requirements is another objective in channel design: (1) information. and credit. Properly chosen intermediaries communicate with buyers through in-store displays.

means being able to respond without having to find a stamp and take the letter to the mailbox. .

horizontal integration. d. Services provided by intermediaries are an important buying requirement for products such as large household appliances that require delivery. Variety reflects buyers’ interest in having numerous competing and complementary products carried by intermediaries. c. d. strategic alliance. 867 . forward integration. and credit. (3) variety. Convenience has multiple meanings for buyers. which enhances their attractiveness to buyers. installation. Answer: b Page: 290 Rationale: Forward integration occurs when a producer owns an intermediary at the next level down in the marketing channel. Properly chosen intermediaries communicate with buyers through in-store displays. In this case. from a website. the buyer would need information obtained from personal selling or perhaps.or post-sale services. Apple used: a. information context variety attendant services none of the above would be more important Answer: a Page: 290 Rationale: Satisfying four buyer requirements is another objective in channel design: (1) information. e. b. 13-99 MARKETING NEWSNET APPLICATION When Apple Computer opened the Apple stores to allow customers to create a less stressful and more supportive environment for shopping for a new PC. c. demonstrations. b. e. backward integration. and personal selling.13-98 CHANNEL DESIGN: SATISFYING BUYER REQUIREMENTS APPLICATION Which buyer requirement would be most important in choosing a channel design for a financial service? a. dual distribution. (2) convenience. and (4) pre. Information is an important requirement when buyers have limited knowledge or desire specific data about a product or service. such as proximity or driving time to a retail outlet or hours of operation.

c. Distribution. d. Cost is the critical factor of channel profitability. Variety reflects buyers’ interest in having numerous competing and complementary products carried by intermediaries. d. demonstrations. advertising. such as proximity or driving time to a retail outlet or hours of operation. (3) variety.13-100 MARKETING NEWSNET APPLICATION Which of the following buyer requirements has Apple provided in its own retail stores? a. advertising. b. and selling expenses. Since Apple owns these retail stores. information convenience variety pre.S. The extent to which channel members share these costs determines the profitability of each member and of the channel as a whole.or post-sale services all of the above Answer: e Page: 290 Rationale: Satisfying four buyer requirements is another objective in channel design: (1) information. Information is an important requirement when buyers have limited knowledge or desire specific data about a product or service. The extent to which channel members share these costs determines the profitability of each member and of the channel as a whole. and personal selling. c. b. and credit. which enhances their attractiveness to buyers. they have chosen to provide a “Genius Bar” staffed with knowledgeable sales people to provide information. Cost is the critical factor of channel profitability. Here the computer purchase may require extending credit. Apple has over 110 stores in the U. installation. Apple keeps inventory in stock for over 300 third-party software products for creative people. In their stores. CONCEPTUAL Answer: e Page: 291-292 Rationale: Channel profitability is determined by the revenues earned minus cost for each channel member and for the channel as a whole. and (4) pre. These costs include distribution. (2) convenience. providing convenience. Channel profitability is determined by the revenues earned minus cost for each channel member and for the channel as a whole. e. 13-101 PROFITABILITY Which of the following is true about channel profitability? a.or post-sale services. Convenience has multiple meanings for buyers. Properly chosen intermediaries communicate with buyers through in-store displays. All of the above are true about channel profitability. e. and selling expenses are critical factors. . Services provided by intermediaries are an important buying requirement for products that require delivery.

Channels consist of independent individuals and firms. e. divisional and organizational. which products and services will be provided by whom. b. Channel disagreements include who performs which channel functions. 13-103 CHANNEL CONFLICT DEFINITION __________ arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals. e. Channel disagreements include how profits are distributed. supervisor-subordinate and subordinate-subordinate. d. DEFINITION Answer: b Page: 292 Rationale: Key term definition—channel conflict 869 . horizontal and vertical. All of the above statements about channel relationships are true. b. Channel conflict Disintermediation Cross-docking Partnership inconsistency Relationship variance Answer: a Page: 292 Other Location: web Rationale: Key term definition—channel conflict 13-104 CHANNEL CONFLICT The two types of channel conflict are: a. b. there is always potential for disagreements concerning who performs which channel functions. e. a. There is always potential for disagreement in a channel. c. transactional and transformational. c.13-102 CHANNEL RELATIONSHIPS Which of the following statements is true regarding channel relationships? a. how profits are distributed. external and internal. d. because channels consist of independent individuals and firms. c. d. CONCEPTUAL Answer: e Page: 292 Rationale: Unfortunately. and who makes critical channel-related decisions.

between a manufacturer and a wholesaler or between a wholesaler and a retailer. resale restrictions. e. unethical. when disintermediation occurs when channel members disagree on how profit margins are distributed among channel members when a manufacturer increases its distribution coverage in a geographic area when a manufacturer believes a wholesaler or retailer is not devoting sufficient attention to its products when a channel member bypasses another member and sells or buys a product direct CONCEPTUAL Answer: c Page: 292 Rationale: Vertical conflict occurs between different levels in a marketing channel. b. disintermediation. b. e. First. c. c. Finally. conflict arises when a channel member bypasses another member and sells or buys products direct. e. 13-107 DISINTERMEDIATION DEFINITION When a channel member bypasses another member and sells or buys products direct. this is called: a. disagreements over how profits are distributed among channel members produce conflict. a. for example. d. d. c. when manufacturers believe wholesalers or retailers are not giving their products adequate attention. Alternative c is a source of horizontal channel conflict. b. Second. d. a practice called disintermediation. conflicts may arise. channel conflict horizontal conflict.13-105 VERTICAL CONFLICT __________ conflict occurs between different levels in a marketing channel. Three sources of vertical conflict are most common. Corporate Horizontal Vertical Administered Contractual DEFINITION Answer: c Page: 292 Rationale: Text term definition—vertical conflict 13-106 VERTICAL CONFLICT Which of the following is NOT a source of vertical conflict? a. Answer: a Page: 292 Rationale: Key term definition—disintermediation .

b. e. between a manufacturer and a wholesaler or between a wholesaler and a retailer. First. by allowing customers to purchase at the site. In this case. b. it decided against it and simply provides the name and address of the nearest Maytag dealers. d. when manufacturers believe wholesalers or retailers are not giving their products adequate attention. c. 871 . 13-109 CHANNEL CONFLICT APPLICATION Which of the following types of vertical marketing systems is likely to experience the least channel conflict? a. e. Second.13-108 DISINTERMEDIATION APPLICATION While Maytag appliances have the leading brand name. conflict arises when a channel member bypasses another member and sells or buys products direct. a practice called disintermediation. a. There will be very little vertical conflict among channel members when all intermediaries are owned by a single organization. conflicts may arise. Maytag would have been bypassing their retailers and allowing customers to purchase direct from Maytag. One of the things the company has done to spur sales is to create a website where potential customers can find the answers to the questions most asked during the appliance purchase process. c. d. for example. its sales are third in the industry. transactional function horizontal integration horizontal innovation cross-docking disintermediation Answer: e Page: 292 Rationale: Disintermediation occurs when a channel member bypasses another member and sells or buys products direct. corporate vertical marketing system wholesaler-sponsored voluntary chain retailer-sponsored cooperative franchise system administered vertical marketing system Answer: a Page: 292 Rationale: Vertical conflict occurs between different levels in a marketing channel. Three sources of vertical conflict are most common. disagreements over how profits are distributed among channel members produce conflict. Finally. While Maytag considered using __________ (allowing customers to purchase at the site).

director of distribution. Answer: c Page: 292 Rationale: Text term definition—channel captain 13-112 CHANNEL CAPTAIN APPLICATION Bombardier makes corporate jets. d. and supports other channel members. c. directs. corporate horizontal vertical administered contractual Answer: b Page: 292 Rationale: Text term definition—horizontal conflict 13-111 CHANNEL CAPTAIN DEFINITION A channel member who coordinates. In this case. d. directs. Bombardier is the leading marketer of corporate jets. director of distribution. Bombardier coordinates outside suppliers. e. product captain. b. product champion. product captain. the Continental. thus influencing their production facility. channel coordinator. For its newest plane. The aircraft company coordinates outside suppliers that supply design services. and supports other channel members is called a: a. c. channel captain. a. Answer: c Page: 292 Rationale: A channel captain is a channel member who coordinates. Bombardier has about 30 lead suppliers— about ten of those have been involved since the initial design phase. product champion. Bombardier is an example of a: a. b. and directs them in how to improve product quality. such as between two or more retailers that handle the same manufacturer’s brands is called __________ conflict. . channel captain. e. e. d. channel coordinator. c. b.13-110 HORIZONTAL CONFLICT DEFINITION Conflict occurring between intermediaries at the same level in a marketing channel. Bombardier often suggests ways in which these suppliers can reduce costs while keeping the same level of quality.

d. b. wholesaler producer channel captain channel spokesperson sole channel intermediary Answer: c Page: 292 Rationale: A channel captain is a channel member that coordinates. and (4) the legitimate right of one channel member to direct the behavior of other members. Influence can take four forms: economic. economic power expertise identification with a particular channel member legitimate rights through contracts any of the above Answer: e Page: 292 Rationale: A firm can become a channel captain because it is typically the channel member with the ability to influence the behavior of other members. Channel captains can be producers. Because of its strong consumer following. Sports Port. wholesalers. A firm becomes a channel captain because it is the channel member with the ability to influence the behavior of other members. expertise. The owner of Sports Port served as the __________ in the channel of distribution. e. a. identification with a channel member. other retailers. and even detailers. a motorcycle and fishing boat retailer located in a small northern Minnesota town was the world's largest dealer for Crestliner fishing boats. the owner of Sports Port had the power to resolve disputes between channel members. b. e. Such a diverse channel of distribution often resulted in channel conflict. In this case. In order to meet the demand of his many customers. Sports Port is a retailer that is a channel captain. the owner of Sports Port worked with a wide variety of channel members. 13-114 CHANNEL CAPTAIN APPLICATION During the 1990s. due to his strong consumer following. thus making it the channel captain. (2) expertise in managing inventory and streamlining order processing.13-113 CHANNEL CAPTAIN CONCEPTUAL Which of the following is the source of power determining which channel member will be the channel captain? a. and contractual rights. This influence can take four forms: (1) economic influence arising from the ability of a firm to reward other members because of its strong financial position. Sports Port has the ability to influence the other members of its channel. c. or retailers. directs. However. c. (3) identification with a particular channel member. 873 . d. ranging from the manufacturer of the boats to trucking firms. and supports other channel members.

logistical-assisted manufacturing (LAD). UPS Logistics: a. strategic distribution. creates utility for these companies' customers. increases the number of steps in the value proposition. d. e. logistics. c. direct selling.13-115 LOGISTICS DEFINITION The performance of activities that focus on getting the right amount of the right product to the right place at the right time at the lowest possible cost is called: a. assumes the role of freight forwarder. movement and storage. c. Answer: a Page: 293 Rationale: Logistics focus on getting the right amount of the right product to the right place (time and place utility) at the right time at the lowest possible cost—in this case. b. does not influence their clients' supply chain. for the customers of Ford and National Semiconductor. b. Answer: c Page: 293 Rationale: Key term definition—logistics 13-116 LOGISTICS APPLICATION UPS Logistics earned more than $1 billion in revenue in a recent year and is one of the fastest growing divisions of UPS. 13-117 LOGISTICS Logistics is most closely related to which element of the marketing mix? a. product production place promotion price DEFINITION Answer: c Page: 293 Rationale: Key term definition—logistics . e. d. d. UPS Logistics designs and manages entire transportation and customer service networks for global clients that include Ford Motor Co. c. b. assumes the role of drop shipper. e. and National Semiconductor.

diamond. suggesting the flow through a pipeline. 875 . pipeline. production management. customer service. manufacturer distribution logistics. in-process inventory. pyramid. e. e. finished goods. b.13-118 LOGISTICS MANAGEMENT DEFINITION Organizing the cost-effective flow of raw materials. b. finished goods. circle. d. in-process inventory. none of the above. c. it would most likely resemble a(n). and related information from point-of-origin to point-of consumption to satisfy customer requirements is called: a. Answer: b Page: 293 Other Location: web Rationale: Text term definition—logistics management 13-119 LOGISTICS MANAGEMENT DEFINITION Logistics management is organizing the cost-effective flow of raw materials. abstract figure. c. eliminate all competition. logistics management. c. Answer: a Page: 293 Rationale: Text term definition—logistics management 13-120 LOGISTICS MANAGEMENT DEFINITION If you were to draw a graphic representation of logistics management. maintain organizational culture. and related information from point-of-origin to point-ofconsumption to satisfy customer requirements. inprocess inventory. physical distribution management. a. finished goods. and related information from point-of-origin to point-of-consumption to: a. b. satisfy customer requirements. Logistics is the practice of organizing the effective flow of raw materials to finished products. d. d. e. Answer: d Page: 293 Rationale: Logistics management is organizing the cost-effective flow of raw materials. create maximum profit.

The manufacturer is the body of the butterfly with many different suppliers accumulated on one side of the body for the left wing and a large number of buyers collected on the other side to form the right wing. c. c. . e. d. a. logistical flow demand chain materials handling facility supply chain retailer cooperative Answer: d Page: 293 Other Location: web Rationale: A supply chain is a sequence of firms that perform activities required to create and deliver a good or service to consumers or industrial users. b. suppliers (the left wing) providing inputs to the firm that processes them and sends them as finished products to customers (the right wing).13-121 SUPPLY CHAIN DEFINITION A(n) __________ is a series of firms that perform activities required to create and deliver a good or service to consumers or industrial users. b. effective response system demand channel strategic information alliance supply chain product-specific delivery system Answer: d Page: 293 Other Location: web Rationale: Key term definition—supply chain 13-122 SUPPLY CHAIN CONCEPTUAL A marketing expert described a __________ as looking like a butterfly. e. d. a.

13-123 SUPPLY CHAIN CONCEPTUAL Which of the following statements describes how a supply chain differs from a marketing channel? a. c. A marketing channel includes suppliers that provide raw material inputs to a manufacturer. Supply chain management is the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to consumers. It differs from a marketing channel in terms of the firms involved. e. The marketing channel places more emphasis on cost-effectiveness than the supply chain. Supply chain management Logistics management Point-to-point management Just-in-time management Cost-effective flow Answer: a Page: 293-294 Other Location: web Rationale: Text term definition—supply chain management 877 . A communication is more important in the marketing channel than in the supply chain. d. and inventory and facility management. A supply chain includes suppliers that provide raw material inputs to a manufacturer. The management process is also different. 13-124 SUPPLY CHAIN MANAGEMENT DEFINITION __________ is the integration and organization of information and logistics across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to consumers. Answer: c Page: 293-294 Rationale: A supply chain is a series of firms that perform activities required to create and deliver a good or service to consumers or industrial users. d. There is no difference between the two. An important feature of supply chain management is its application of sophisticated information technology that allows companies to share and operate systems for order processing. transportation scheduling. b. e. c. A supply chain includes suppliers who provide raw material inputs to a manufacturer as well as the wholesalers and retailers who deliver finished goods to you. b. a.

e. c. e. an airplane assembled from just a dozen large component parts. lengthened its supply chain unnecessarily. one can assume the marketing strategy is to satisfy the needs of the customer segment—corporate executives. d. Bombardier is the first not to use vertical integration. the target market selection decision. d. b. Dual distribution Intermodal distribution An effective merchandise response (EMR) system Piggy-backing Cross-docking Answer: e Page: 296 Rationale: Text term definition—cross-docking . b. sorting products for individual stores. maintaining its reputation for quality. pricing decisions.13-125 SUPPLY CHAIN CONCEPTUAL Supply chain management impacts all of the following aspects of the marketing mix strategy EXCEPT: a. Bombardier has a. b. Answer: a Page: 293-294 Rationale: Target market selection is not part of the marketing mix. implemented a just-in-time materials handling policy. a. c. While building planes with subassemblies is not new. 13-126 SUPPLY CHAIN APPLICATION Bombardier makes corporate jets and its strategy involves streamlining production activities. harmonized its supply chain and its marketing strategy. promotion decisions. In terms of its supply chain. used a production repositioning strategy. It has developed the Continental. e. created a marketing channel. All parts are supplied by carefully chosen independent companies that share the development costs and market risk. two goals that are also important to the segment targeted by Bombardier’s marketing strategy. which will deliver the products to specific stores. Answer: d Page: 295 Rationale: Because Bombardier manufactures corporate jets. The supply chain is developed to assure that customer needs are met by choosing independent companies which also are concerned with maintaining quality and reducing costs. c. product mix decisions. and quickly reloading products on trucks. 13-127 CROSS-DOCKING DEFINITION __________ is a practice that involves unloading products from suppliers. distribution decisions. d. and reducing its costs.

Answer: a Page: 297 Other Location: web Rationale: The objective of logistics management in a supply chain is to minimize total logistics costs while delivering the appropriate level of customer service. minimize relevant logistics costs. e. 13-130 OBJECTIVES OF LOGISTICS CONCEPTUAL The objectives of logistics management in a supply chain are to deliver maximum customer service and to: a. c.13-128 CROSS-DOCKING Cross-docking is most closely related to: a. maximize employee wages. 879 . minimize employee productivity. c. materials handling DEFINITION Answer: a Page: 296 Rationale: Text term definition—cross-docking 13-129 OBJECTIVES OF LOGISTICS CONCEPTUAL The objectives of logistics management in a supply chain are to minimize relevant logistics costs and to: a. b. reverse logistics. maximize marketing objectives. minimize employee productivity. c. increasing lead time. d. b. e. minimize employee layoffs. efficient supply chain activities. deliver maximum customer service. d. minimize shareholder's return on investment. Answer: d Page: 297 Rationale: The objective of logistics management in a supply chain is to minimize total logistics costs while delivering the appropriate level of customer service. maximize up-stream task transference. intermodal transportation. minimize shareholder's return on investment. e. b. d.

Supplier service cost Manufacturing cost Total logistics cost Social responsibility cost Total marketing cost Answer: c Page: 297. c. Figure 13-9 Rationale: Total logistics cost includes expenses associated with transportation. inventory. stockouts. c. inventory. inventory and stockouts. order processing. DEFINITION Answer: e Page: 297. warehousing and materials handling. Figure 13-9 Other Location: web Rationale: Key term definition—total logistics cost 13-132 TOTAL LOGISTICS COST DEFINITION __________ includes expenses associated with transportation. all of the above. c. e. materials handling and warehousing. materials handling and warehousing. Figure 13-9 Rationale: Key term definition—total logistics cost 13-133 TOTAL LOGISTICS COST Which of the following is an element of total logistics cost? a. and order processing. b. d. d. order processing and returned goods handling. new product development advertising inventory personal selling all of the above CONCEPTUAL Answer: c Page: 297. d. b. e.13-131 TOTAL LOGISTICS COST Total logistics cost includes expenses associated with: a. b. stockouts. . transportation. e. a.

c. on-time delivery of product. order cycle time. c. and: a. communication between buyer and seller. b. inventory management. c. effective handling of problems. Figure 13-9 Rationale: Key term definition—total logistics cost 13-136 TOTAL LOGISTICS COST DEFINITION The four key logistics costs in a supply chain include warehousing and materials handling. order cycle time. b. e. b. e. Figure 13-9 Rationale: Key term definition—total logistics cost 881 .13-134 TOTAL LOGISTICS COST CONCEPTUAL Which of the following best describes the goal of a firm's combination of inventory and transportation costs? a. order processing. d. communication between buyer and seller. Minimizing the cost of either one independently can cause the cost of the other to skyrocket. transportation. inventory management. e. effective handling of problems. which serves as a strategic goal. warehousing and materials handling. Answer: d Page: 297. on-time delivery of product. minimize required inventory costs minimize required transportation costs minimize the sum of required inventory and transportation costs maximize the difference between required inventory and transportation costs set a level of transportation costs and minimize the required inventory costs Answer: c Page: 297 Rationale: Logistics costs are dependent on customer service level. d. 13-135 TOTAL LOGISTICS COST DEFINITION The four key logistics costs in a supply chain include transportation. Because inventory and transportation costs interact. d. and: a. the goal is to minimize the sum. order processing. Answer: b Page: 297.

e. communication between buyer and seller. on-time delivery of product. effective handling of problems. b. Figure 13-9 Rationale: Key term definition—total logistics cost 13-139 CUSTOMER SERVICE CONCEPT The customer service concept implies firms should: a. c. on-time delivery of product. and: a. inventory management. c. so customer service levels and logistics costs must be considered together. warehousing and materials handling. effective handling of problems. The former may lead in importance. d. c. warehousing and materials handling. Answer: a Page: 297. e. order cycle time. automate customer service. inventory management and: a. order processing. establish logistics costs and let customer service follow. Answer: d Page: 297. minimize customer service levels. d. b. but striving to attain desired levels may erode profit too far. b. CONCEPTUAL Answer: e Page: 297 Rationale: Customer service and logistics costs interact. d. order processing.13-137 TOTAL LOGISTICS COST DEFINITION The four key logistics costs in a supply chain include transportation. Figure 13-9 Rationale: Key term definition—total logistics cost 13-138 TOTAL LOGISTICS COST DEFINITION The four key logistics costs in a supply chain include transportation. e. maximize customer service levels. order cycle time. set customer service levels and logistic costs simultaneously in order to achieve strategic goals. . communication between buyer and seller.

replenishment b. d. dependability. and tangibles. Late deliveries can shut down the production line. communication. lead time dependability and on-time delivery communication convenience none of the above Answer: b Page: 297 Rationale: The production schedule based on on-time parts availability is the critical factor. 13-142 CUSTOMER SERVICE CONCEPT DEFINITION Supply chain managers balance total logistics cost factors against customer service factors. b. and empathy. and flexibility. responsiveness. customer service e. e. d. time. distribution management c. __________ is the ability of a logistics system to satisfy users in terms of time. Figure 13-9 Rationale: Key term definition—customer service 883 . time. and convenience. convenience. and dependability. a. convenience. flexibility. stockout creation d. and tangibles. e. time. b. tangibles. c. Customer service factors include: a. dependability. Answer: a Page: 297. assurance. communication.13-140 CUSTOMER SERVICE DEFINITION Within the context of a supply chain. lead time Answer: d Page: 197 Other Location: web Rationale: Key term definition—customer service 13-141 CUSTOMER SERVICE CONCEPT APPLICATION Which of the following customer-service components is likely to be most critical for Ford when it purchases original-issue automobile tires (tires put on new Ford cars)? a. reliability. c. flexibility. responsiveness. assurance.

13-143 ORDER CYCLE TIME The time from ordering an item until it is received and ready for use is called: a. b. c. d. e. order cycle time. order handling time. lag time. purchase cycle. logistics cycle.

DEFINITION

Answer: a Page: 297 Rationale: Text term definition—order cycle or replenishment time 13-144 ORDER CYCLE TIME DEFINITION

In a logistics setting, order cycle time refers to the time from ordering an item until it is: a. b. c. d. e. billed to the customer. acknowledged by the customer. billed and paid for. promised for delivery. received and ready for use or sale.

Answer: e Page: 297 Rationale: Text term definition—order cycle or replenishment time 13-145 ORDER CYCLE TIME Replenishment time is sometimes referred to as: a. b. c. d. e. physical distribution sequence. total logistics cycle. logistical support time. order cycle time. billing cycle time. DEFINITION

Answer: d Page: 297 Rationale: Text term definition—order cycle or replenishment time

13-146 REPLENISHMENT TIME

APPLICATION

Saks Fifth Avenue employs a quick response system to order fast-moving fashion items. Saks’ point-of-sales scanner records each sale. When stock falls below a minimum level, the system automatically sends an electronic order to the vendor (e.g., Donna Karan), which processes the order within 48 hours. This system has effectively reduced __________. a. b. c. d. e. customer response cycle. product flow. replenishment time. supply lag. logistical lag.

Answer: c Page: 297 Rationale: Within the context of a supply chain, customer service is the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience. Time in this instance refers time between the ordering of an item and when it is received and ready for use—48 hours. 13-147 CUSTOMER SERVICE APPLICATION

Many organizations have realized that customer service is a key element of supply chain management. Firms the world over have discovered that customer service is closely related to customer satisfaction and the sale of goods and services. The logistics manager who seeks to provide clients with complete customer service must satisfy those clients in terms of: a. b. c. d. e. dependability of product replenishment. communication between buyer and seller. convenience for the buyer. time between placing an order and receiving the order. all of the above.

Answer: e Page: 297; Figure 13-9 Rationale: Within the context of a supply chain, customer service is the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience. 13-148 ORDER CYCLE TIME APPLICATION

Saks Fifth Avenue has employed a quick response delivery system since the mid-1990s. When stock falls below a minimums level, the system: a. b. c. d. e. alerts management that the stock needs replenishment. automatically issues advertising for other, in-stock merchandise. automatically suggests possible re-order quantities. automatically generates a replenishment order. automatically raises the price of the remaining stock.

Answer: d Page: 297 Rationale: The store's point-of-sale scanner system records each day's sales. When stock falls below a minimum level, the system automatically generates a replenishment order.

885

13-149 EFFICIENT CONSUMER RESPONSE

DEFINITION

Saks Fifth Avenue has a point-of-sale scanner system to record each sale. When stock of fashion merchandise, such as a Donna Karan jacket, falls below a minimum level, the system automatically generates a replenishment order. When the Donna Karan vendor receives it, the electronic order is processed within 48 hours. This is an example of a(n): a. b. c. d. e. efficient manufacturing program. customer service policy. customer loyalty program. manufacturing and distribution alliance. efficient consumer response delivery system.

Answer: e Page: 297 Rationale: Text term definition—efficient consumer response 13-150 VENDOR-MANAGED INVENTORY (VMI) DEFINITION

A __________ is an inventory-management system whereby the supplier determines the product amount and assortment a customer, such as a retailer needs and automatically delivers the appropriate items. a. b. c. d. e. supplier-managed inventory supply chain inventory logistics-managed inventory just-in-time system vendor-managed inventory

Answer: e Page: 297 Rationale: Key term definition—vendor-managed inventory (VMI) 13-151 VENDOR-MANAGED INVENTORY (VMI) CONCEPTUAL

Pharmaceutical companies such as Eli Lilly and SmithKline Beecham use __________ to make sure retailers carrying their products maintain predetermined inventory levels in stock. The pharmaceutical companies do this by a daily monitoring of sales at individual stores. a. b. c. d. e. supplier-managed inventory supply chain inventory logistics-managed inventory just-in-time system vendor-managed inventory

Answer: e Page: 298 Rationale: An inventory-management system whereby the supplier like Lilly determines the product amount and assortment a customer, such as a retailer needs and automatically delivers the appropriate items is termed a vendor-managed inventory.

storing. and financing Answer: a Page: 300. Figure 13-2 Rationale: Assorting is creating product assortments from several sources to serve customers. d. authorized its suppliers to eliminate as many wholesaling functions as possible from the supply chain. d. Storing is assembling and protecting products at a convenient location to offer better customer service. b. had its suppliers perform all materials handing activities. c. buying. Sorting is purchasing in large quantities and breaking into smaller amounts desired by customers. assorting. b. used a system in which its suppliers determined the product amount and assortment that should be in stock. a. grading. made half of its purchases under vendor-managed inventory programs. and storing risk taking. d. e. Answer: a Page: 298 Rationale: Vendor-managed inventory is a system whereby the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items. a big Milpitas. e. balanced its total logistics cost by eliminating the convenience service factor. storing. b. 887 . and sorting transporting. Therefore. c. and they expect to find it available at liquor stores. and storing financing. Solectron. Solectron: a. sorting. electronics contractor. 13-153 VIDEO CASE: CRESTON VINEYARDS APPLICATION One of the channels of distribution for Creston Vineyards involves distributors that purchase several brands at the same time from a warehouse intermediary—not directly from the vineyard. authorized the use of distribution centers to provide quicker customer response times. Distributors who buy from the warehouse are expecting the warehouse to perform which logistical functions for them? a. Creston Vineyards should use __________ distribution. c. intensive extensive selective exclusive concentrated Answer: c Page: 300 Rationale: Shopping goods are typically sold using selective distribution.13-152 VENDOR-MANAGED INVENTORY (VMI) APPLICATION At the end of a recent year. 13-154 VIDEO CASE: CRESTON VINEYARDS APPLICATION For most consumers fine wine is considered a shopping good. e. California. and marketing marketing research.

13-155 VIDEO CASE: CRESTON VINEYARDS A broker working with Creston Vineyards would NOT: a. train distributors' sales forces. assist in making sales calls to retailers. d. create product assortments for distributors. CONCEPTUAL Answer: e Page: 300 Rationale: Brokers are wholesalers that do not take title to the merchandise they sell. take title to the wine. e. . b. c. provide marketing information to distributors.

These are: 1) a transactional function (involving buying. grading. Indirect channels occur when intermediaries are inserted between the producer and consumers and perform numerous channel functions. Because there are no intermediaries. the producer must perform all channel functions.CHAPTER 13 MANAGING MARKETING CHANNELS AND SUPPLY CHAIN SHORT ESSAY QUESTIONS 13-156 FUNCTIONS PERFORMED BY INTERMEDIARIES What are the functions performed by intermediaries? Answer: Intermediaries perform three basic functions. storing. selling. and possession (entails efforts by intermediaries to help buyers take possession of a product or service. Page: 284-285. form (enhancing a product to make it more appealing to buyers). Page: 283. and marketing information and research). sorting. place (having a product available where consumers want it). Page: 283 13-158 KEY DIFFERENCES BETWEEN CHANNELS Distinguish between a direct and an indirect consumer channel. and transporting of products) 3) a facilitating function (involving financing. Figure 13-2 13-157 UTILITIES CONCEPTUAL CONCEPTUAL What are the utilities created by marketing intermediaries? How do intermediaries create these utilities? Answer: Marketing intermediaries help create four utilities: time (having a product or service when consumers want it). and risk taking because they stock merchandise in anticipation of sales) 2) a logistical function (involving the assorting. Answer: A direct channel occurs when a producer and ultimate consumers deal directly with each other. Figure 13-3 CONCEPTUAL 889 .

Page: 288-289. Page: 287 13-160 VERTICAL MARKETING SYSTEMS List and define the three major types of vertical marketing systems. A difference between the two terms is that for dual distribution. one producer uses the marketing channel developed by another firm (sometimes a competitor in a product class) to reach its target market segments. Answer: Dual distribution occurs when a firm employs two or more different types of channels for the same product (e. but also provides the means through which a firm implements various elements of its marketing strategy. A similarity between the two terms is that both are used by firms to reach different market segments in a more cost-effective manner. contractual. Contractual systems consist of independent production and distribution firms signing written agreements and integrating their efforts to obtain greater functional economies and marketing impact than they could achieve alone. Administered systems achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.g.g. The final choice of a marketing channel by a marketing executive depends on a three factors (1) target market coverage (2) satisfying buyer requirements (3) profitability Page: 290-291 . GE sells its large appliances directly to home and apartment builders but uses retailers to sell them to consumers). and administered. Answer: There are three major types of vertical marketing systems--corporate. Dual distribution is used for a multibrand strategy. Strategic channel alliances allow one firm's marketing channel to be used to sell another firm's products (e. Lipton iced tea distributed by Pepsi bottlers). Figure 13-6 13-161 CHANNEL DESIGN CONSIDERATIONS CONCEPTUAL DEFINITION Why are marketing channels important in a marketing strategy? What factors affect channel choice and management? Answer: A marketing channel not only links a producer to its buyers.13-159 DUAL DISTRIBUTION AND STRATEGIC CHANNEL ALLIANCES CONCEPTUAL Define and describe a similarity and difference between dual distribution and strategic channel alliances. Corporate vertical marketing systems combine successive stages of production and distribution under a single ownership. a single producer selects the intermediaries to reach its target market segments whereas in a strategic channel alliance. This is done to minimize cannibalization of the firm’s family brand and to differentiate the channels.

convenience. Preand post-sale services such as delivery. Page: 290-291 13-164 CHANNEL CAPTAIN CONCEPTUAL What is a channel captain? What is its function when there is channel conflict? Answer: Conflict can have destructive effects on the workings of a marketing channel. wholesalers.13-162 CHANNEL DESIGN CONSIDERATIONS CONCEPTUAL What are the three questions marketing executives consider when choosing a marketing channel and intermediaries? Answer: Marketing executives typically consider three questions when choosing a market channel and intermediaries: 1) Which channel and intermediaries will provide the best coverage of the target market? 2) Which channel and intermediaries will best satisfy the buying requirements of the target market? 3) Which channel and intermediaries will be the most profitable? Page: 290 13-163 CHANNEL DESIGN: BUYER REQUIREMENTS CONCEPTUAL List the four interests that buyers might want fulfilled by a marketing channel. and credit can also be very important. a channel member who coordinates. These interests fall into four categories: information. or retailers. so it is necessary to secure cooperation among channel members. directs. Channel captains can be producers. variety. Information is important when buyers have limited knowledge or desire specific data. Page: 292 891 . and supports other channel members. and preand post-sale services. One means is through a channel captain. Convenience can have multiple meanings such as proximity or driving time to a retail outlet. Why are they important? Answer: A consideration in channel design is gaining access to channels and intermediaries that satisfy at least some of the interests buyers might want fulfilled when they purchase a firm's goods or services. Variety reflects buyers' interests in having many items from which to choose. installation.

Figure 13-9 13-167 TOTAL LOGISTICS COST TRADE-OFFS CONCEPTUAL What are some specific cost trade-offs that can be made in a logistics system? Answer: Logistics attempts to minimize the total cost of moving and storing the goods a firm uses and produces while achieving a given service level. As one cost increases. There are many individual cost elements present in a logistics system. For example. A supply chain includes suppliers that provide raw material inputs to a manufacturer as well as the wholesalers and retailers that deliver the finished goods. various inventory costs. Page: 297. Page: 293-294 13-166 TOTAL LOGISTICS COST CONCEPT DEFINITION What specific decisions are associated with the flow of goods and together make up total logistics costs? Answer: There are at least nine decision areas: 1) traffic and transportation 2) warehousing and storage 3) materials handling 4) inventory control 5) order processing 6) stockouts 7) return goods handling. In contrast. as the number of warehouses increases. another may decrease. Supply chain management is the integration and organization of information and logistic activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to consumers. and order processing. including transportation. stockouts. Page: 297 . a marketing channel involves only the distribution of finished goods from the manufacturer through wholesalers and retailers to the buyers. inventory costs rise and transportation costs fall. warehousing and materials handling.13-165 SUPPLY CHAIN CONCEPTUAL Briefly explain the differences between the terms “supply chain management” and “marketing channel.” Answer: A supply chain is a sequence of firms that performs activities required to create and deliver a good or service to consumers or industrial users. It differs from a marketing channel in terms of membership.

13-168 SUPPLY CHAIN MANAGEMENT AND MARKETING STRATEGY APPLICATION 893 .

As Nokia gathers data on the target market desired benefits. and choose the correct supply chain to make and distribute handsets in the future. they should be sure that suppliers can effectively provide the benefits with the products they provide to Nokia for handset manufacturer that satisfies the customer. 3) Harmonize the supply chain with the marketing strategy. Supply chains range from those that emphasize being responsive to customer requirements (the Nokia case) and demand. In the quote from the Nokia executive. Page: 295 829 . As the world’s largest handset original equipment manufacturer. what marketing strategy step(s) should Nokia follow and why? Answer: 1) Understand the customer. A company needs to ensure that what the supply chain is capable of doing well is consistent with the targeted customer’s needs and its marketing strategy.A profusion of low-cost components and communications protocols is beginning to blur the line between cell phones and handheld computers and present new purchasing options for the electronic supply chain. Since Nokia is the world’s largest handset OEM manufacturer.com/showArticle?articleID=10300249 ) In order to align the Nokia supply chain with marketing strategy. A company must understand what a supply chain is designed to do well. one could assume they have been successful with this in the past and will continue to be successful in the future. Nokia Corporation works with multiple service providers to try to evaluate the various directions the market will take. These needs. how much we can fit in the handset. such as a desire for a low price or convenience of purchase. CA. (taken from Electronic Business News. the nicehaves. how much memory for a given price point. the company is clearly trying to understand what the customer is interested in regarding phone handset features and benefits. and then how to prioritize the feature sets. 2) Understand the supply chain. VP of technology development for Nokia’s CDMA business unit in Irvine. to those that emphasize efficiency with a goal of supplying products at the lowest possible delivered cost. To understand the customer.” said Adam Gould.” June 9. a company must identify the needs of the customer segment being served. help a company define the relative importance of efficiency and responsiveness in meeting customer requirements. http://www. “Smart phone designs hang up industry.ebnews. “There is a lot of thought that goes into determining the must-haves. 2003.

Korea will produce LCD sheets as big as a queen-size mattress and will halve prices of large-screen LCD TVs. Thus a large advantage accrues to Samsung in that it has harmonization of the supply chain and the marketing strategy since both are done internally.13-169 SUPPLY CHAIN MANAGEMENT AND MARKETING STRATEGY APPLICATION Samsung is a company that thrives in low-margin consumer electronics by concentrating on producing hardware rather than software and reducing the time from production to market. A company must understand what a supply chain is designed to do well. These needs. Halving the price of large-screen TVs by 2005 is an example. and complete delivery). Samsung is in a unique position in that it is vertically integrated. 7) Convenience: Minimizing the effort necessary on the part of the buyer to do business with the seller. A company needs to ensure that what the supply chain is capable of doing well is consistent with the targeted customer’s needs and its marketing strategy. 3) Harmonize the supply chain with the marketing strategy. what marketing strategy step(s) should Samsung follow and why? 1) Understand the customer. Answer: 4) Time: The order or replenishment time between the ordering of an item and when it is ready for use or sale. a Samsung factory being built in Tangjung. 6) Communication: Two-way link between buyer and seller that helps in monitoring customer service and anticipating future needs. Page: 297-298. a company must identify the needs of the customer segment being served. Samsung’s strength is in inventing technology that helps it lead in the area of consumer electronics hardware. To understand the customer. 5) Dependability: The consistency of replenishment (consistent lead time. It is a large conglomerate that makes everything itself. and choose the correct supply chain to make and distribute Samsung hardware in the future. Samsung is actually in front of customer desires because of the exceptional R & D group that it employs. In order to align the Samsung supply chain with marketing strategy. safe delivery. so it has complete control over its supply chain. By 2005. Supply chains range from those that emphasize being responsive to customer requirements (Samsung discovers new solutions that the customer is not yet aware of) and demand. Samsung will offer the best new products at the lowest price available because they are a very efficient company. Page: 295 13-170 COST VERSUS SERVICE FACTORS CONCEPTUAL List and briefly describe the four customer service factors that must be balanced in a logistics system. help a company define the relative importance of efficiency and responsiveness in meeting customer requirements. Figure 13-9 . 2) Understand the supply chain. such as a desire for a low price or convenience of purchase. to those that emphasize efficiency with a goal of supplying products at the lowest possible delivered cost.

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