Chapter 5—Strategy in Marketing Channels

MULTIPLE CHOICE

1. Pertaining to the release of movies, windowing is a practice by which movie producers stagger
the release of movies for various distributors. Which of the following statements about
windowing is false?
a. Windowing was established to help the movie industry maximize total revenues.
b. The practice essentially made movie theatres exclusive distributors for the first
four months after a movie's release.
c. Windowing greatly benefited movie theaters.
d. Windowing greatly threatened movie theaters.
e. Windowing may be replaced with new approach to distribution that shortened the
time consumers can purchase movies.

ANS: D (p. 150)

2. Which of the following is a false statement about the relationship between channel strategy
and marketing strategy?
a. Channel strategy is concerned with the place aspect of the marketing strategy.
b. Channel strategy is narrower in scope than the marketing strategy.
c. Channel strategy focuses on distribution objectives.
d. The channel strategy is important to the firm’s overall objectives.
e. The marketing channel strategy focuses on product, price, and promotion.

ANS: E (p. 151)

3. Channel strategy may be of more importance than the other strategic variables of the
marketing mix and is also important to:
a. The operations strategy.
b. The development of the breadth of the product line.
c. The firm’s overall objectives and strategies.
d. The firm’s competitive position in the market place.
e. The level of profits the firm achieves.

ANS: C (p. 151)

4. Which of the following is not one of the basic distribution decisions that most firms must
address?
a. Which individual should be chosen as channel manager
b. The role distribution should play in the firm’s overall objectives and strategies
c. The role distribution should play in the marketing mix
d. How the firm’s channels should be designed to achieve its distribution objectives
e. How channel member performance can be evaluated

ANS: A (p. 151)

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5. The dynamic nature of channel management effectively mandates that to make distribution
decisions, the channel manager:
a. Develop a “fire fighting” mentality to handle the almost constant change.
b. Utilize ad hoc committees to handle each unique situation as it arises.
c. Recognize that a large number and variety of channel members precludes
developing effective guidelines for decision-making.
d. Formulate a marketing channel strategy.
e. Be reactive to changing market conditions.

ANS: D (p. 151)

6. Channel strategy is best conducted:

a. On an ad hoc basis.
b. On a “cross that bridge when you come to it” basis.
c. On a firefighting basis.
d. By following a set of guiding principles basis.
e. By developing personal relationships with other channel managers.

ANS: D (p. 151)

7. The corporate level planning process is concerned with:

a. Communicating corporate guidelines, business definition, and mission.
b. Communicating business guidelines.
c. Communicating the program definition.
d. Integrating functional strategies.
e. Developing a one-year plan and budget for departments.

ANS: A (p. 154)

8. Which of the following is a false statement about Edward D. Jones and Company?
a. They have consciously decided to avoid Internet sales.
b. The company opens four new bricks and mortar offices per day.
c. Customers desire human contact.
d. Marketing channels of physical offices and “real-live” brokers are essential to the
company’s core mission.
e. The company maintains a pretax profit of 10% which is below the industry
average.

ANS: E (p. 155-156)

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9. ___________ is, the broad principles by which the firm expects to achieve its distribution
objectives for its target market(s).:
a. Corporate strategy
b. Channel strategy.
c. Marketing strategy.
d. Service to customers.
e. Inbound logistics.

ANS: B (p. 151)

10. To achieve distribution objectives, most firms will have to address all of the following except:
a. Role distribution plays in the firm's overall objectives and strategies.
b. Impact of distribution on operations planning.
c. Kinds of channel members should be selected to meet the firm's distribution
objectives.
d. Evaluation of channel member performance.
e. Management of marketing channels to implement the firm's channel strategy.

ANS: B (p. 151)

11. The main reason WD-40 is in 75 percent of all U.S. households seems to be:
a. Its efficient inbound logistics.
b. Marketing and sales.
c. Its retail distribution channels.
d. Technology development.
e. Procurement.

ANS: C (p. 157)

12. Caterpillar’s CEO, Donald V. Fites, makes it clear that the biggest reason for Caterpillar’s
success has been:
a. A great product.
b. An emphasis on product differentiation.
c. Competitive prices.
d. Its system of distribution and product support.
e. Its product development expertise.

ANS: D (p. 159)

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13. The most fundamental distribution decision of all for any firm or organization to consider is
the role:
a. Distribution will play in the marketing mix.
b. Distribution will play in channel design.
c. Distribution will play in the firm’s overall objectives and strategies.
d. Distribution will play in channel management.
e. Distribution will play in channel member evaluation.

ANS: C (p. 153)

14. The more crucial distribution objectives are to a firm’s long-run success:
a. The more frequently channel strategy should be revised.
b. The higher the level of management at which it should be considered.
c. The higher the cost of developing the necessary distribution systems.
d. The more often an environmental analysis should be conducted.
e. The more important the firm’s mission and objectives become.

ANS: B (p. 154)

15. Volvo GM Heavy Truck Corporation cited in the text illustrates:

a. That aggressive pricing is key.
b. Customer service is key.
c. Heavy inventory carried by dealers is a must for good service.
d. That all too often customers are too spread out.
e. Keeping high levels of inventories is crucial to good customer service.

ANS: B (p. 158-159)

16. Making distribution a priority is most appropriate for which of the following?
a. Consumer services providers
b. Consumer luxury goods manufacturers
c. Firms using intensive distribution
d. Firms in international business
e. No such generality can be made.

ANS: E

17. How much emphasis should be placed on each strategic variable of the marketing mix is:
a. A question without a general answer.
b. A direct function of the size of the firm.
c. Almost always most critical in high-tech companies.
d. A fairly clear-cut formula of Ts = f(P1,P2,P3,P4).
e. Dependent upon the firm’s goals and objectives.

ANS: A (p. 157)

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18. Which of the following is not a condition that argues for placing strategic emphasis on
distribution in the marketing mix?
a. Parity exists among competitors’ pricing.
b. Distribution is the most relevant variable for satisfying target market demand.
c. Little vulnerability exists because of strong competitor attention to distribution.
d. Distribution can enhance the firm by creating a synergy.
e. Competitors enjoy parity in the promotion variable of the marketing mix.

ANS: C (p. 158)

19. Partnerships with dealers, such as that enjoyed by Caterpillar tractors are based largely on:
a. Good communication.
b. Long-term channel strategy.
c. Very low prices.
d. Using technology and up-to-date information systems.
e. Common goals.

ANS: B (p. 159)

20. Which of the following statements regarding the marketing mix is true?
a. When distribution is the most relevant marketing mix element, it is because power
retailers are channel members.
b. Distribution usually is the leading variable in the marketing mix unless the
manufacturer owns and operates its own retailing operation.
c. As the number of channel members expands, so does the importance of
distribution in the marketing mix.
d. The most emphasis should be placed on profits and placement in developing a
marketing mix.
e. Distribution can offer a more favorable basis for developing the competitive edge
because it is not easily copied.

ANS: E (p. 159)

21. Competitive advantages gained through distribution tend to be:

a. Short-lived.
b. Long-lived.
c. Less costly to develop.
d. Much more difficult to develop than product advantages.
e. Almost always more expensive to develop.

ANS: B (p. 159 & 162)

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22. All of the following are competitive advantages earned in distribution that are not easily
copied by competitors except:
a. Superior strategies cannot be developed and implemented quickly.
b. Organizations take a long time to design and build.
c. Talented, capable and dedicated people have to be developed.
d. Understanding of the firm’s target market.
e. Development of the organization.

ANS: D (p. 159)

23. Many manufacturers have neglected distribution because:

a. Product, price and promotion are more difficult to control.
b. Independent channel members can be difficult to control.
c. It takes too long for distribution to impact market share.
d. The decisions are difficult to make.
e. It is hard to obtain the information.

ANS: B

24. A well-developed marketing channel comprised of the right channel members can create
__________ between the manufacturer and channel members.
a. synergy
b. problems
c. a legal partnership
d. unforeseen obstacles
e. conflict

ANS: A (p. 160)

25. The principal lesson BMW learned from Michael Dell of Dell Computer is:
a. Customers are looking for the lowest price.
b. Highly standardized products sell best.
c. Custom made distribution can attract customers.
d. Customers who need no technical support will buy from BMW.
e. Insecure customers who are afraid to venture into dealerships will buy from BMW.

ANS: C (p. 153)

26. Channel strategy should guide channel design so as to help the firm attain:
a. The most efficient channel.
b. The lowest cost channel.
c. Differential advantage.
d. Increased profits.
e. Power over other members of the channel.

ANS: C (p. 162)

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27. Which of the following statements regarding synergy through distribution is false?
a. It is sometimes referred to as distribution partnerships.
b. It is sometimes referred to as strategic alliances.
c. It is sometimes referred to as e-commerce.
d. It is sometimes referred to as networks.
e. It is sometimes referred to as partnering.

ANS: C (p. 161)

28. The strategic alliance between Procter & Gamble and Wal-Mart is an example of the
__________ that can be created between manufacturers and channel members.
a. legal partnerships
b. synergy
c. profit
d. value
e. exclusivity

ANS: B (p. 161)

29. Channel design should be viewed as:

a. The most important element for gaining differential advantage.
b. One component in the firm’s attempt to gain differential advantage.
c. The only real basis for gaining differential advantage.
d. Of little consequence in gaining differential advantage.
e. The second most important element behind pricing.

ANS: B (p. 162)

30. ______________ refers to a firm’s attainment of an advantageous position in the market

relative to competitors.
a. Channel and placement strategy
b. Differential advantage
c. Respect
d. Power
e. Marketing strategy

ANS: B (p. 162)

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31.Infiniti’s approach to selling cars, according to the company, stresses:

a. Tradition but with more “class”.
b. Aims to communicate to its dealers that they must be the best and create high
consumer expectations.
c. Extensive use of the Internet.
d. A strict one-price policy.
e. elimination of dealer salespeople to move to a higher technological computer-
based approach to car sales.

ANS: B (p. 163)

32. The reputation a manufacturer acquires among channel members for furnishing products,
services, financial returns, and systems that are in some way superior to those offered by
competing manufacturers is referred to as:
a. Channel position.
b. Channel strength.
c. Channel design.
d. Channel superiority.
e. Channel differentiation.

ANS: A (p. 162)

33. A well positioned channel:

a. Means the channel members support the strategy the manufacturer is using to gain
differential advantage.
b. Has high synergy between the manufacturer and the channel members.
c. Decreases the likelihood the manufacturer will be well-positioned with final
customers.
d. Requires a short-term strategic view.
e. Offers increased profits to all channel members.

ANS: A

34. From the perspective of __________, channel members are an extension of the
manufacturer’s own organization.
a. competitive manufacturers
b. suppliers
c. customers
d. managers
e. employees

ANS: C (p. 165)

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35. If a manufacturer’s products are “middle of the road” in quality and aimed at the mass market,
its distribution strategy should stress:
a. Exclusive distribution.
b. Broad coverage of the market.
c. Very selective distribution.
d. Intensive or exclusive distribution.
e. Regional distribution.

ANS: B (p. 165)

36. When Mattel sells Barbie’s younger sister, Kelly, only at Target stores, Mattel is engaging in:
a. A long-term placement strategy.
b. Channel member selection strategy.
c. Exclusive placement strategy.
d. Target market selection strategy.
e. Intermediary selection strategy.

ANS: B (p. 165)

37. After the channel has been designed, the channel manager still has to address fundamental
strategic questions regarding all of the following except:
a. The closeness of the relationship with the channel members.
b. How to motivate channel member cooperation.
c. How to use the marketing mix.
d. The intensity of distribution.
e. How channel members can cooperate in achieving the manufacturer’s objectives.

ANS: D (p. 166)

38. How close a channel relationship any given manufacturer should develop with its channel
members is really a question of:
a. Cost.
b. Strategy.
c. Channel lengths.
d. Tactics.
e. Behavioral dimensions.

ANS: B (p. 166)

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39. Generally the greater the degree of distribution intensity the __________ will be the closeness
of the channel relationship.
a. closer
b. longer
c. looser
d. more intense
e. selective

ANS: C (p. 167)

40. The tactics a channel manager can use to motivate channel members:
a. Are most effective when they provide financial gains to the channel member.
b. Are severely limited by law.
c. Are very diverse in approach.
d. Are best when they take a subtle approach.
e. Are difficult to implement.

ANS: C (p. 168)

41. Payment by the manufacturer for obtaining space on retailers’ shelves is commonly referred to
as a:
a. Trade discount.
b. Promotional allowance.
c. Display and selling aid.
d. Price guarantee.
e. Slotting allowance.

ANS: E (p. 168)

42. DPA stands for:

a. Distribution price allocation.
b. Distribution product advertising.
c. Distribution portfolio analysis.
d. Distribution production alternatives.
e. Distribution promotion analysis.

ANS: C (p. 168)

43. The channel manager should attempt to promote __________ among the elements of the
marketing mix.
a. the lowest cost tradeoff
b. the highest level of synergy
c. the lowest level of overlap
d. the greatest degree of independence
e. the best case scenario

ANS: B (p. 172)

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44. The evaluation of channel member performance is likely to be treated as an afterthought

unless:
a. The channel manager has detailed procedures and forms for the evaluation.
b. The manufacturer’s top management determines the strategic importance of
channel member evaluation.
c. Provision for evaluation is made in the design and management of the channel.
d. The board of directors requires an evaluation.
e. Profits begin to decrease.

ANS: C (p. 172)

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