E Channels TEST BANK 2

Chapter 1—Marketing Channel Concepts
MULTIPLE CHOICE
1. Which type of strategy did Walmart decide to use to compete with Amazon?
a. Heavy advertising
b. Price reduction
c. Establish kiosks in Walmart stores
d. Wholesale distribution
e. Mass distribution via its own online channel
ANS: E (p. 4)
2. Which of the following statements is false?

a. Consumer expectations have moved firms to add additional channels.
b. Both B2C and B2B businesses are increasing the number of channels they use to
distribute their products
c. The flexibility to respond to consumers does not appear to be relevant to channel
design.
d. Channels must be targeted to reach intended customer segments.
e. The increasing role of technology is helping to foster the use of multiple channels.
ANS: C (p. 6)
3. Which of the following is a true statement about Internet-based channels?

a. Walmart's channel model continues to rely on its 'brick and mortar' stores
exclusively.
b. ‘Bricks and Mortar’ retailers that added online capabilities to traditional channels
of distribution have had sluggish sales.
c. Online sales have become an established distribution channel for B2C but not B2B
markets.
d. Internet-based channels have become a mainstream channel in the channel mixes
of many firms.
e. The growth of E-commerce is beginning to slow.
ANS: D (p. 6-8)
4. A sustainable competitive advantage is one that

a. lasts at least five years.
b. is based on a superior product feature.
c. usually stresses a lower price.
d. is difficult for competitors to match.
e. stresses heavy promotional spending.
ANS: D (p. 9)
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Marketing Channel Concepts
5.According to the text, the most promising avenue for gaining a sustainable competitive
advantage today is through an emphasis on:
a. Pricing strategy.
b. Channel strategy.
c. Promotion strategy.
d. Product strategy.
e. Supply strategy.
ANS: B (p.9)
6. Which of the following is not relevant to the definition of, channel?

a. External, meaning the channel exists outside the firm.
b. Internal, meaning the channel exists as part of the firm.
c. Contactual organization, referring to those firms involved in negotiatory functions.
d. Operates, suggesting involvement by management in the affairs of the channel.
e. Distribution objectives, meaning management has certain distribution goals in
mind.
ANS: B (p. 10)
7. Relating to the term, channel manager, which of the following statements is false?
a. Most firms and organizations have a single designated position called channel
manager.
b. Channel managers refer to anyone in a firm who is involved in the marketing
channel decision making.
c. Depending on the type of firm, many different executives may be involved in
making channel decisions.
d. In some franchise organizations the, manager of franchisee relations, sometimes
plays an important role in channel decision making.
e. The term channel manager is used because it provides a sense of focus to the role
of channel decision making
ANS: A (p. 11-12)
8. According to the text, the technology that is likely to have the greatest impact on
marketing channels is:
a. Television.
b. Automated warehousing.
c. The Internet.
d. Hand-held computers.
e. Cellular phones.
ANS: C
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Marketing Channels 8e
9.According to the text, the confusion over the definition of the marketing channel stems
mainly from which of the following causes?
a. Marketing channels are complex.
b. There are simply too many definitions of the marketing channel.
c. Too many “academic types” have become involved.
d. The differing perspectives or viewpoints used.
e. There are too many marketing channels for anyone to understand.
ANS: D (p. 10-11)
10. The text argues that the role of marketing channels in marketing management is:
a. An extremely important tactical issue.
b. The most important part of marketing management.
c. Of strategic importance in many cases.
d. Important mainly in the automobile business.
e. To offset problems in product strategy.
ANS: C
11. Consumers often view the marketing channel as simply:

a. Part of the manufacturer’s organization.
b. A group of parasites who are mainly responsible for the high prices at the
supermarket.
c. A lot of middlemen standing between them and the producer of the product.
d. The flow of goods and services through the economy.
e. The path taken by the title to goods as it moves through agencies that take title or
facilitate its transfer.
ANS: C
12. According to the view taken in the text, the marketing channel may be defined as:
a. the intra-organizational system for moving goods and services to their markets.
b. the external contactual organization that management operates to achieve its
distribution objectives.
c. the path taken by goods or services as they flow from producer to final user.
d. all firms outside of the organization that are involved in performing marketing
functions.
e. the infrastructure used to move goods from manufacturer to retailer.
ANS: B (p. 10)
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13.When Wal-Mart is performing negotiatory functions, it is involved in

a. Transferring title, selling, and buying.
b. Buying, selling, and transportation.
c. Risk-taking, selling, and credit.
d. Selling and advertising.
e. Transferring title and providing storage.
ANS: A
14. A distinction is made between channel members and facilitating agencies because:
a. Sometimes academic hairsplitting is necessary.
b. The channel members are part of the interorganizational system, while the
facilitating agencies are not.
c. The channel management problems are often different for channel members versus
facilitating agencies.
d. The use of facilitating agencies is not a frequent occurrence for many firms.
e. Channel members and facilitating agencies have different levels of control in the
movement of goods.
ANS: C (p. 10)
15. Management of the marketing channel frequently involves all of the following except:
a. Interorganizational management.
b. The setting of distribution objectives.
c. Operating the channel.
d. Interorganizational management.
e. Negotiating functions such as buying and selling.
ANS: D (p.10)
16. When a firm finally invents the Star-Trek® Transporter, its marketing channel will come
into existence only after:
a. The Transporter has been introduced to the market.
b. The negotiatory functions have taken place.
c. Target markets have been defined.
d. Shipping alternatives have been considered.
e. Facilitating agencies have been contacted.
ANS: B
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17. Marketing channel management should be considered:

a. The premier strategic planning area of the firm.
b. An important part of logistics management.
c. A special tactical phase of marketing management.
d. A major strategic area of marketing management.
e. A component of operations management.
ANS: D
18. The channel manager is:

a. A quite common position today in many firms.
b. About equal to a product manager.
c. The marketing manager’s boss.
d. Almost always a staff position.
e. Anyone in the firm who makes marketing channel decisions.
ANS: E (p. 11)
19. Because the Sales Coordinator at Borden, Inc. makes channel decisions, he/she can be
considered:
a. A distribution manager.
b. A logistics manager.
c. A channels specialist.
d. A channel manager.
e. A marketing specialist.
ANS: D (p. 11)
20. Channel management should be viewed as:

a. The fourth element of the marketing mix.
b. Being more important to the firm’s strategy than the marketing mix.
c. One of the major strategic areas of marketing management.
d. A subdivision of logistics.
e. An element of the distribution function.
ANS: C (p. 13)
21. Management should develop and operate the marketing channel in such a way as to:
a. Reduce costs to the lowest possible level.
b. Support and enhance the other strategic variables of the marketing mix.
c. Maximize sales to final users.
d. Provide the bulk of the promotional support needed by the firm.
e. Provide a unique service to customers.
ANS: B
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22. The Coors Company has decided to focus on channel strategy as the key factor in
achieving sustainable competitive advantage because:
a. In the beer market, product, price and promotion simply are not important strategic
variables.
b. The relationship between a manufacturer and its channel members is not copied
easily by competitors.
c. The beer market is growing so rapidly that manufacturers have difficulty securing
enough distributors.
d. There is a high rate of new product success.
e. It is easy to maintain brand recognition.
ANS: B
23. Which of the following statements is true?

a. Channel management and distribution strategy are the two major components of
logistics.
b. Logistics and distribution strategy are the two major components of channel
management.
c. Logistics management is a production function, while channel management is a
marketing function.
d. Channel management and logistics are the two major components of distribution
strategy.
e. Logistics management must be formulated prior to developing a channel strategy.
ANS: D (p. 15-16)
24. Channel management is concerned mainly with

a. Providing for the physical availability of products.
b. Planning and overseeing the firm’s logistics activities.
c. The entire process of setting up and operating the contactual organization.
d. Developing the firm’s overall strategic marketing program.
e. Operating the firm’s entire marketing mix.
ANS: C
25. In general, basic decisions in channel strategy usually __________ operating decisions in
logistics management.
a. Follow
b. Precede
c. Occur simultaneously with
d. Are less important than
e. Are more important than
ANS: B (p. 15-16)
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26.The five flows in marketing channels discussed in the text are

a. Product, negotiation, ownership, information, payment.
b. Information, advertising, promotion, product, ownership.
c. Promotion, information, ownership, negotiation, transportation.
d. Negotiation, product, payment, information, promotion.
e. Ownership, product, negotiation, promotion, information.
ANS: E (p. 16)
27. The five flows discussed in the text

a. All flow both up and down the channel.
b. Indicate the static nature of buyer behavior.
c. Flow up the channel only.
d. Flow both horizontally and vertically.
e. Convey the dynamic nature of marketing channels.
ANS: E (p. 16-17)
28. When considering the flows in the marketing channel for lawn tractors, product flows
__________ and negotiation flows __________.
a. Down the channel; down the channel
b. Down the channel; up the channel
c. Down the channel; both up and down
d. Up the channel; down the channel
e. Up the channel; both up and down
ANS: C (p. 17)
29. In the context of the channel flows concept, logistics involves

a. Management of all of the flows.
b. Management of only the information flow.
c. Management of none of the major flows.
d. Management of the product flow.
e. Management of new distribution channels.
ANS: D (p. 17-18)
30. From the standpoint of the channel flows concept, only those parties who participate in
the __________ flows are considered members of the marketing channel.
a. Negotiation and ownership
b. Product and information
c. Payment and negotiation
d. Information and promotion
e. Product and negotiation
ANS: A (p. 17-18)
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31. The Internet and World Wide Web has connected millions of people and institutions and
a. Has increased the need for intermediaries.
b. Has eliminated intermediaries.
c. Is the only determinant of the role of intermediaries in the marketing channels.
d. Is an important determinant in the use of intermediaries in marketing channels.
e. Does not have any effect on the use of intermediaries in the marketing channels.
ANS: D
32. Using the concept of specialization and division of labor, a channel manager might
engage in any of the following activities except:
a. Allocate transportation of product to an outside shipping firm.
b. Allocate transportation of product to the manufacturer’s own trucking fleet.
c. Allocate transportation of product to the wholesaler’s trucking fleet.
d. Allocate transportation of product to the retailer.
e. Allocate transportation of product to an independent trucking company.
ANS: D (p. 19)
33. The concept of specialization and division of labor:

a. Is more important in production than distribution.
b. Is less important in distribution than production.
c. Is of equal importance in production and distribution.
d. Is rarely practical in distribution.
e. Applies mainly to production situations.
ANS: C (p. 19)
34. The only major difference between the specialization and division of labor principle as
applied to a production versus a distribution situation is:
a. Production tasks are often allocated intra-organizationally, while distribution tasks
are frequently allocated inter-organizationally.
b. Distribution tasks are much less amenable to specialization and division of labor
than production tasks.
c. Only logistics tasks are capable of being broken down for specialization.
d. Production tasks are more easily divided into separate tasks.
e. It is not possible to attain an optimal allocation of distribution tasks.
ANS: A (p. 19-20)
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35. The channel manager should allocate the distribution task to:
a. As many intermediaries as possible.
b. His/her own firm whenever possible.
c. Those firms that can perform them most efficiently.
d. The lowest-cost channel member.
e. None of these apply.
ANS: C (p. 21-22)
36. In the development of channel strategy, the channel manager is faced with:
a. A sales decision.
b. An allocation decision.
c. A tactical decision.
d. A logistics decision.
e. An operations decisions.
ANS: B (p. 23)
37. Contactual efficiency viewed from the channel manager’s perspective is:
a. The ratio of intermediaries to final customers.
b. The relationship between negotiation effort relative to achieving the distribution
objective.
c. A relationship between negotiation efforts relative to specialization and division of
labor.
d. The ratio of intermediaries to distribution tasks performed.
e. Cost savings in negotiating activities.
ANS: B (p. 20)
38. Four heavy equipment producers decide to sell their forklifts directly to 12 warehouses.
The number of contacts necessary is:
a. 13.
b. 3.
c. 48.
d. 8.
e. 12.
ANS: C
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39. Ten manufacturers of wallpaper all sell through one wholesaler to five retailers. The
number of contacts needed for all of the manufacturers to contact all of the retailers is:
a. 2.
b. 16.
c. 6.
d. 50.
e. 15.
ANS: E
40. Ten producers of garden tools all sell through one wholesaler to five retailers. The
number of contacts needed for all of the manufacturers to contact all of the retailers is
__________. If the wholesaler were eliminated from the channel, the number of contacts
needed would be:
a. 2; 5
b. 16; 15
c. 6; 5
d. 50; 50
e. 15; 50
ANS: E
41. A hot tub manufacturer estimates it will take ten personal sales calls, each of which costs
$250, and 25 phone calls, each costing $25, to get five retailers to carry its product. The
measure of contactual efficiency in dollar terms is:
a. $2,500.
b. $1,250.
c. $3,125.
d. $1,375.
e. $275.
ANS: C
42. Which of the following statements is correct?

a. The use of additional intermediaries will often increase the level of contactual
efficiency.
b. Specialization and division of labor as well as contactual efficiency considerations
are all that is needed to make decisions about intermediary usage.
c. Contactual efficiency and labor efficiency provide a framework for deciding
whether or not to use intermediaries in the channel.
d. Specialization and division of labor does not lead to contactual efficiency.
e. The use of retailers provides greater contactual efficiencies than the use of
wholesalers.
ANS: A (p. 20-22)
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43. The channel structure depicted as M->W->R->C indicates:

a. All the firms and parties involved in the product flow.
b. The intensity of distribution.
c. The channel manager has allocated distribution tasks to his/her own firm,
wholesalers, retailers and consumers.
d. A channel without any facilitating agencies.
e. Who is responsible for distribution tasks.
ANS: C (p. 22)
44. Ideally, the channel manager would like to exercise __________ over which firms in the
channel perform the distribution tasks.
a. A veto power
b. Limited control
c. Substantial control
d. Total control
e. Autonomous control
ANS: D
45. A multi-channel strategy means:

a. A firm uses multiple promotional strategies to reach customers.
b. A firm advertises its products or services on many television stations.
c. Numerous intra-organizational activities are used to provide products and services
to customers.
d. A product has many features that are desired by customers.
e. A company reaches its customers through more than one channel.
ANS: E (p. 23)
46. In order to reach its customers, Ralph Lauren apparel uses all of the following in its
multi-channel strategy, except:
a. Upscale department stores.
b. Online sales at Polo.com.
c. Company stores.
d. Catalogs.
e. Specialty retail stores.
ANS: D (p. 23)
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47.Which of the following is a true statement?

a. It is unusual to use multi-channel structures to reach customers in business
markets.
b. Most firms sell their products using a single channel structure.
c. Multi-channel structures do not work well in reaching customers in consumer
markets.
d. E-commerce technology that includes online sales is a common component in
today’s multi-channel structure.
e. Service can only reach customers through a single channel structure.
ANS: D
48. For accounting firms and other producers of services:

a. Marketing channels do not exist.
b. Marketing channels are much more important.
c. Marketing channels tend to be much longer.
d. Marketing channels are generally of much less importance.
e. Marketing channels often include agents or brokers.
ANS: E
49. In developing and managing the ancillary structure versus the channel structure, the
problems faced by the channel manager are:
a. Usually less difficult and complex.
b. Usually more difficult and complex.
c. Virtually the same in all respects.
d. Usually more important.
e. Complicated and time-consuming to solve.
ANS: A
50. In contrast to the development of channel structure, when the channel manager develops
ancillary structure, he or she is dealing with facilitating agencies that are:
a. Outside of the channel decision-making process.
b. An integral part of the decision-making process.
c. More committed to the long-term survival of the channel.
d. Able to provide additional cost saving services.
e. Capable of offering new information to the manager.
ANS: A (p. 27)

Chapter 2—The Channel Participants
MULTIPLE CHOICE
1. Which statement about Gazelle is false?

a. Gazelle distributes electronic products using its online channel.
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b. Gazelle buys, takes title and stores electronic products.

c. Gazelle pays for electronic products up front, before it has a buyer for them.
d. It is part of a $300 billion industry that distributes used electronic equipment.
e. Distribution channels are not adequately used by Gazelle..
ANS: E (p. 33)
2. The fundamental determinant of whether a firm is a member of a marketing channel is:

a. If the firm performs distribution tasks.
b. If the firm is considered to be important to the channel manager.
c. If the firm performs negotiatory functions.
d. If the firm performs tasks that are necessary to make products or services available
to ultimate buyers.
e. If the firm performs ancillary tasks.
ANS: C (p. 34)
3. The basic divisions of the marketing channel are:

a. Buyers and sellers.
b. Buyers, sellers and facilitators.
c. Consumer and industrial markets.
d. Producers and manufacturers; intermediaries; and final users.
e. Contactual organizations and non-contactual organizations.
ANS: D (p. 34)
4. In the commercial channel, participants who are specifically excluded are:

a. Producers.
b. Manufacturers.
c. Wholesale and retail intermediaries.
d. Consumer and industrial final users.
e. Agents and brokers.
ANS: D (p. 34)
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5. __________ are members of the target market.

a. Final users
b. Retailers
c. Wholesalers
d. Producers
e. Transportation firms
ANS: A (p. 34)
6. Facilitating agencies:
a. Are members of the marketing channel.
b. Perform non-negotiatory functions.
c. Are of little importance to the operation of the channel.
d. Are seldom called on by the channel manager.
e. Are members of the commercial channel.
ANS: B (p. 66)
7. Which of the following is not a facilitating agency?

a. FlowPipeline, Inc.
b. First National Bank of Chicago
c. Brooke Advertising, Inc.
d. Binney & Smith
e. Federal Express
ANS: D
8. In the context of the management perspective used in the text, it is appropriate to view
final users as:
a. Intermediaries.
b. Facilitating agencies.
c. Intermediate users.
d. Target markets.
e. Producers.
ANS: D
9. The technology and scale economies that enable producers and manufacturers to operate
at a low average cost for production are:
a. Also usually present in the performance of distribution tasks.
b. Even greater when it comes to performing distribution tasks.
c. Often lacking in the performance of distribution tasks.
d. Less important to the efficient performance of distribution tasks.
e. Easily attainable when performing distribution tasks.
ANS: C (p. 37-38)
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10. Intermediaries’ average costs curves for distribution tend to be __________ those of
manufacturers.
a. Higher than
b. Lower than
c. The same as
d. Longer than
e. Shorter than
ANS: B (p. 36-38)
11. To perform distribution tasks efficiently, a firm needs all of the following except:
a. Expertise.
b. Economies of scale.
c. Economies of scope.
d. To maintain high inventory levels.
e. High production volumes.
ANS: D (p. 36-38)
12. Procter & Gamble and Kellogg often face __________ average costs for distribution
tasks when they attempt to perform them by themselves.
a. High
b. Low
c. Medium
d. Extremely low
e. Marginal
ANS: A
13. Clayton Tennis Equipment, a manufacturer, cannot perform distribution tasks efficiently
so it uses Jackson Sports Equipment as a wholesaler to distribute its products in the
Midwest. Clayton likely is inefficient in performing distribution tasks because:
a. Jackson is better positioned to select and use facilitating agencies.
b. Clayton’s fixed costs are too high.
c. Jackson can spread its fixed costs across products from multiple manufacturers.
d. Clayton’s marginal revenue exceeds its marginal costs.
e. Clayton has low average production costs.
ANS: C
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14. The Census of Wholesale Trade classifies wholesalers into the following three categories:
a. Merchant wholesalers, manufacturers’ sales branches, and public warehouses.
b. Sales branches and offices, company-owned stores, and merchant wholesalers.
c. Merchant wholesalers, brokers, and commission merchants and agent wholesalers.
d. Manufacturers’ sales branches and offices; agents, brokers, and commission
merchants; and merchant wholesalers.
e. Merchant wholesalers, manufacturers’ facilitators, brokers, and independent
producers.
ANS: D (p. 38)
15. The Census of Wholesale Trade classifies wholesalers as all of the following except:
a. Merchant wholesalers.
b. Full-function or limited function wholesalers.
c. 18 groupings based on the kind of business.
d. Agents and brokers.
e. Manufacturers’ sales branches and offices.
ANS: B (p. 38-39)
16. The Census of Wholesale Trade classifies wholesalers into __________ kinds of business
groups.
a. 24
b. 18
c. 12
d. 10
e. 36
ANS: B (p. 39)
17. ___________ are firms that primarily buy, take title to, store, and physically handle
products.
a. Agents
b. Commission merchants
c. Manufacturers’ offices
d. Brokers
e. Merchant wholesalers
ANS: E (p. 38)
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18. During the decade from 1992 to 2002, Census data show that the percentage of total
wholesale sales enjoyed by merchant wholesalers:
a. Increased slightly.
b. Decreased slightly.
c. Stayed the same.
d. Increased by over 10%.
e. Decreased by almost one third.
ANS: B (p. 40)
19. Agents, brokers, and commission merchants’ percentage of total wholesale sales in 2002
was:
a. 0% to 8%.
b. 9% to 14%.
c. 15% to 20%.
d. 21% to 30%.
e. 31% to 40%.
ANS: B (p. 40)
20. In recent years, trends in wholesaling are showing a tendency towards:

a. Consolidation.
b. A decrease in average size.
c. Becoming more like retailers than wholesalers.
d. Operating only in Cyberspace.
e. A decrease in average size.
ANS: A (p. 40-41)
21. Most wholesalers could be characterized with regard to their size as:
a. Giant enterprises.
b. Large businesses.
c. Very small “mom and pop” businesses.
d. Relatively small businesses.
e. Conglomerates.
ANS: D (p. 41)
22. Absolute sales of all three types of wholesalers _________ during the period 1992 to
2002.
a. Decreased
b. Stayed the same
c. Increased substantially
d. Fell drastically
e. Increased by less than a fraction of one percent
ANS: C (p. 41)
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23. Sales patterns of the different types of wholesalers since 1948 have:
a. Been very similar for all types.
b. Varied across different types of wholesalers.
c. Increased sharply only for merchant wholesalers.
d. Had almost no influence on their relative market shares.
e. Increased only for agents, brokers, and commission merchants.
ANS: B
24. Economic concentration in terms of percentage of total wholesale sales enjoyed by most
merchant wholesalers in their respective line of trade is:
a. Relatively low.
b. Very high.
c. Extremely high and getting higher.
d. Very high but falling rapidly.
e. Very low and falling rapidly.
ANS: A (p. 42)
25. Merchant wholesalers are particularly well suited for performing all of the following
distribution tasks for their suppliers except:
a. Providing market coverage.
b. Providing low-cost sales contacts over a wide geographical area.
c. Providing low-cost warehousing and delivery.
d. Processing orders.
e. Serving as the firms’ outside sales force.
ANS: E (p. 42)
26. Merchant wholesalers perform all of the following functions except:

a. Processing orders.
b. Providing market coverage.
c. Holding inventory.
d. Selling merchandise to final users.
e. Offering customer support.
ANS: D (p. 42)
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27. Several studies, including the Brown and Herring report, suggest the wholesaler’s role in
__________ will grow even more important to manufacturers.
a. providing sales contacts
b. holding inventory
c. order processing
d. breaking bulk
e. extending credit and financial assistance
ANS: A (p. 44)
28. Customer support provided by merchant wholesalers to manufacturers is often referred to

as:
a. Retailers’ services.
b. Manufacturers’ services.
c. Value-added services.
d. Producers’ services.
e. Genuine wholesale services.
ANS: C (p. 45)
29. Merchant wholesalers often perform all of the following distribution tasks for customers
except:
a. Rendering services pertaining to the sale of goods.
b. Providing customer service.
c. Extending credit.
d. Providing technical support.
e. Assuring product availability.
ANS: A (p. 42-44)
30. _____________ refers to the wholesaler’s ability to bring together an assortment of

products from a variety of manufacturers.
a. Breaking bulk
b. Technical support
c. Order processing
d. Assortment convenience
e. Product line analysis
ANS: D (p. 46)
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31. Agents and brokers:

a. Do not take title to goods.
b. Are not considered members of the commercial channel.
c. Represent 1 or 2 manufacturers.
d. Work on a ‘cash and carry’ basis.
e. Physically hold the manufacturer’s inventory.
ANS: A (p. 47)
32. Agents, brokers, and commission merchants generally:

a. take title to products.
b. do not take title to products.
c. are listed as “limited function wholesalers” in the Census of Wholesale Trade.
d. are really the same thing as merchant wholesalers.
e. operate a very narrow range of products or services.
ANS: B (p. 47)
33. Manufacturers’ agents are often referred to as:

a. Manufacturer’s representatives.
b. Retailers.
c. Wholesaler’s cooperatives.
d. Sales support staff.
e. Limited function wholesalers.
ANS: A (p. 48)
34. Which of the following is a false statement about the manufacturer’s sales branches of
Bella Manufacturing, Inc.?
a. They are all owned by Bella.
b. The branches are operated by Bella.
c. The branches are physically separate from Bella’s manufacturing plants.
d. Their main purpose is to distribute the manufacturer’s products.
e. The branches service regions of the country.
ANS: E (p. 34)
35. A basic phenomenon in the ranks of retailers since 1948 has been:
a. The tendency toward larger-scale retailers as measured by average sales per store.
b. The large increase in the number of retail stores for each census period since 1948.
c. The increase of average sales per store.
d. The consistent large decline in the number of retail stores.
e. The decrease in the size of retail establishments.
ANS: C (p. 51)
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36. Between 1948 and 2002 for retail establishments:

a. Average sales and numbers of stores increased.
b. Average sales increased and the number of stores decreased.
c. Average sales decreased and the number of stores decreased.
d. Average sales decreased and the number of stores increased.
e. Total sales increased and the number of stores increased.
ANS: B (p. 51)
37. Trends in retailing in the U.S. suggest:

a. The number of stores is growing rapidly.
b. Average dollar sales per store has increased.
c. The number of retail stores has fallen by 50 percent in the last 25 years.
d. A movement by retailers to reduce the number of distribution tasks they perform.
e. A total sales volume greater than $5 trillion.
ANS: B (p. 51)
38. General merchandise, single line stores, and specialty stores are so named based on
which of the following classification bases?
a. Ownership of establishments
b. Size of establishments
c. Kind of business
d. Method of consumer contact
e. Legal form of organization
ANS: C (p. 50)
39. Which of the following would not be classified as retailers?

a. factory outlets
b. vending machines
c. mail order catalogs
d. TV shopping shows
e. food broker
ANS: E (p. 50)
40. Distribution tasks that were formerly the province of the wholesaler or manufacturer have
increasingly:
a. Been shifted to facilitating agencies.
b. Been shifted off to smaller wholesalers.
c. Been neglected by manufacturers and wholesalers.
d. Been taken over by larger retailers.
e. Been shifted to independent agents or brokers.
ANS: D (p. 66)
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41. Stores that dominate a particular line of merchandise and have large shares of the market
are often referred to as:
a. Diversified retailers.
b. Specialty retailers.
c. Category killers.
d. Department stores.
e. Mass merchandisers.
ANS: C (p. 63)
42. The potential of retail intermediaries for performing distribution tasks:

a. Has increased.
b. Is likely to decrease in the future.
c. Has not changed.
d. Will be a value added function.
e. Will only change if the economy grows over 5% per year.
ANS: A (p. 66)
43. The Census of Retail Trade classified retailers into _____ major groups by kind of
business.
a. 12
b. 16
c. 18
d. 10
e. 8
ANS: A (p. 51)
44. Economic concentration in many kinds of retail businesses is:

a. Getting lower.
b. Increasing.
c. Staying the same.
d. Highly variable across time.
e. Very volatile.
ANS: B (p. 51)
45. Virtually all retailers serve as:

a. Buying agents for the producer.
b. Selling agents for their suppliers.
c. Advertising agents for manufacturers.
d. Limited function businesses.
e. The external marketing staff for manufacturers.
ANS: B
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46. All of the following are reasons for retailers gaining power in the marketing channels
except:
a. Growing size.
b. Use of advanced technology.
c. Increased expertise of managers.
d. Increased use of the marketing concept.
e. Concentration of retailers.
ANS: C (p. 63)
47. Retailers have been using scanner data to perform all of the following except:
a. Pay and promotion analysis.
b. Promotion and pricing decisions.
c. Shelf management.
d. Direct product profitability.
e. Forecasting.
ANS: A (p. 63)
48. “Threetailing” is a term used to describe:

a. Retailers located in 3 or more countries.
b. The use of 3 types of promotion techniques.
c. The integration of technology for in-store, print, and television advertising.
d. Three main customer target markets.
e. The convergence of in-store, catalog, and online channels.
ANS: E (p. 63)
49. Kohl’s discount department store has used all of the following techniques of marketing
strategy except:
a. Use of a ‘racetrack’ layout to expose customers to a maximum amount of
merchandise.
b. Allow customers to spend less time in the store but buy more merchandise.
c. Sell brand name apparel.
d. Differentiate its store layout from competitors.
e. Increase use of multi-media advertising techniques.
ANS: E (p. 64)
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50. Which of the following is a false statement about Fresh Market’s use of marketing
strategy to reach its target market?
a. Has identified its target market as educated, high-income consumers in upscale
neighborhoods.
b. The store size is larger than those of major competitors.
c. Classical music is played in all stores.
d. The lighting in the store is unique and warm.
e. The decor is very elegant.
ANS: B (p. 64)
51. The term “gatekeeper” as used in the textbook refers to

a. The power of manufacturers in the channel.
b. The power of retailers in the channel.
c. The power of consumers in the channel.
d. The power of suppliers in the channel.
e. The power of manufacturer’s representatives in the channel.
ANS: B (p. 64)
Chapter 3—The Environment of Marketing Channels
MULTIPLE CHOICE
1. For channel managers, which of the following is a variable in the external environment?
a. Interest rates
b. Emerging competitors
c. Birth rates
d. Inflation rates
e. All of the above
ANS: E (p. 75)
2. For the channel manager, the external environments can be ranked, from most important
to least important, as:
a. Economic, competitive, sociocultural, technological, legal.
b. Legal, competitive, technological, economic, sociocultural.
c. Economic, legal, competitive, technological, sociocultural.
d. There is no single sequence for all industries at all times.
e. All are equally important.
ANS: D (p. 75)
3. The channel manager must analyze the external environment in terms of its impact on:
a. Target markets.
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b. Facilitating agencies.
c. Intermediaries.
d. All channel participants.
e. Retailers and brokers.
ANS: D (p. 75)
4. Adam Page, channel manager at Wood Products, Inc., read in this morning’s paper that
two large Midwest furniture retailing chains had merged. Page needs to recognize the
potential impact of this change in the external environment on all of the following except:
a. Wood Products, Inc.
b. Public warehouses, trucking firms, and other Midwest facilitating agencies.
c. All Midwest furniture retailers.
d. Consumers.
e. The change in interest rates on business loans.
ANS: E
5. According to the text, the most pervasive and obvious environmental force affecting
managers in all kinds of business and nonbusiness organizations has been:
a. Economic environment.
b. Sociocultural environment.
c. Competitive environment.
d. Legal environment.
e. Technological environment.
ANS: A (p. 77)
6. By the close of the 20th century, it was said about recessions that:
a. There would be more recessions in the future and they would be more severe than
past recessions.
b. Information technology could be used to warn businesses of potential economic
slowdowns and companies could make adjustments.
c. Although there would no longer be any recessions, the new economy would
experience more depressions.
d. The business cycle of ‘boom’ and ‘bust’ would be more rapid.
e. Economic slowdowns could be diverted by increasing interest rates and decreasing
inflation.
ANS: B (p. 77)
7. To deal with inflation and recession, channel managers should do all of the following
except:
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a. Take responsibility for helping intermediaries weather the situation.

b. Have contingency plans prepared to implement when economic conditions
warrant.
c. Increase spending on advertising.
d. Use special trade promotions.
e. Increase production and inventory.
ANS: E (p. 77-78)
8. The “official” definition of a recession among professional economists is:

a. One quarter of decline in GDP.
b. Two consecutive quarters of decline in GDP.
c. Three consecutive quarters of decline in GDP.
d. Four consecutive quarters of decline in GDP.
e. Any three quarterly declines during a two-year period.
ANS: B (p. 77)
9. As consumer spending slows down in recessionary periods, marketing channels for

__________ usually feel the impact earliest.
a. consumer packaged goods
b. consumer durable goods
c. health services
d. tobacco and alcohol products
e. None of the above.
ANS: B
10. Which of the following is a false statement about the 2007-2008 recession?
a. Many consumers shifted to lower priced products and brands.
b. Consumer spending in multiple business categories.
c. Consumer spent less on the Internet.
d. Unemployment rates rose.
e. The business sector found that it had excess production capacity.
ANS: C (p. 77-78)
11. In a recession, intermediaries are at greatest risk if:

a. They cannot sell their heavy inventories.
b. They do not reduce prices to final consumers.
c. They do not increase promotional spending.
d. They do not expand their product lines.
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e. They do not enhance information technology capabilities.
ANS: A (p. 77-78)
12. During recessionary periods, channel members at the wholesale and retail levels are
likely to:
a. Try to increase their inventory levels.
b. Lose sales volume.
c. Broaden their product line.
d. Increase financial borrowing.
e. Improve product quality.
ANS: B (p. 77-78)
13. In inflationary times, channel members can expect consumer spending to:
a. Slow down.
b. Increase.
c. Be unpredictable.
d. Drop off for durable goods but remain fairly steady for non-durables.
e. Drop off for services but remain fairly steady for tangible products.
ANS: C (p. 79)
14. In inflationary times, intermediaries generally can be expected to:

a. Stock up on inventory at today’s prices.
b. Be enthusiastic about manufacturer’s new product introductions.
c. Pressure manufacturers for special deals.
d. Increase the product line.
e. Increase the amount of money borrowed from banks.
ANS: C (p. 79)
15. To help intermediaries through periods of high inflation, manufacturers can do all of the
following except:
a. Increase pull promotion.
b. Emphasize lower-priced products in its product line.
c. Provide low cost financing for inventory purchases.
d. Decrease inventory turnover.
e. Provide faster order processing.
ANS: D (p. 80)
16. Deflation on a wide scale resulting in a decline in prices across a broad spectrum of
goods and services:
a. Has been a characteristic of the 1990s economy.
b. Occurs about once each decade.
c. Almost always results from inflation.
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d. Has not occurred in the U.S. since the 1930s.

e. Always follows periods of inflation.
ANS: D (p. 80)
17. Other economic issues of concern to channel members include all of the following
except:
a. The federal budget deficit.
b. High interest rates.
c. The trade deficit.
d. National debt.
e. New companies entering the marketplace.
ANS: E (p. 80)
18. The real interest rate is:

a. The same as the nominal rate.
b. About twice the nominal rate.
c. Higher when inflation is higher.
d. The nominal rate of interest minus the inflation rate.
e. The nominal rate of interest plus the inflation rate.
ANS: D (p. 80)
19. When the value of the U.S. dollar is high:

a. The price of U.S. products decreases relative to foreign products.
b. The price of U.S. products increases relative to foreign products.
c. It takes fewer foreign dollars to buy U.S. products.
d. U.S. products become more competitive in foreign markets.
e. It takes more U.S. dollars to buy foreign products.
ANS: B (p. 81)
20. During periods of low inflation:

a. It is easier to pass price increases through the channel.
b. Manufacturers, wholesalers, and retailers rarely face built-in cost pressures.
c. It becomes more difficult to pass price increases through the channel.
d. Increasing prices to offset cost pressures is more feasible.
e. Members of the channel are less sensitive to higher prices.
ANS: C (p. 80)
21. During periods of low inflation, passing price increases through the channel:
a. Becomes more difficult.
b. Becomes less difficult.
c. Makes no difference.
d. Increases the length of the channel.
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ANS: A (p. 80)
22. To cope with periods of slow economic growth, channel managers need to:
a. Increase productivity.
b. Expand product lines.
c. Increase sales personnel.
d. Decrease capital expenditures.
e. Decrease sales to foreign markets.
ANS: A
23. Competition between Kmart and Wal-Mart is an example of:

a. Horizontal competition.
b. Intertype competition.
c. Vertical competition.
d. Channel system competition.
e. Horizontal-vertical competition.
ANS: A (p. 82)
24. "Competition between an independent hardware store and the hardware department of a
Sears store is an example of:
a. Vertical competition.
b. Channel system competition.
c. Horizontal competition.
d. Intertype competition.
e. Vertical marketing competition.
ANS: D (p. 82)
25. McDonald’s competition with Burger King is an example of:

a. Vertical competition.
b. Horizontal competition.
c. Intertype competition.
d. Vertical-intertype competition.
e. Vertical marketing system competition.
ANS: B (p. 82)
26. A wholesaler attempts to secure retailer acceptance for its own brand of guitars. That
wholesaler also carries similar guitars from a manufacturer of a nationally known brand.
This is an illustration of:
a. Horizontal competition.
b. Vertical competition.
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c. Channel system competition.

d. Intertype competition.
e. Multiple channel competition.
ANS: B (p. 83)
27. Vertical marketing systems are typically divided into the following three basic categories:
a. Corporate, contractual, and horizontal.
b. Contractual, vertical, and franchise.
c. Administered, contractual, and corporate.
d. Corporate, voluntary associations, and administered.
e. Retailers’ cooperatives, contractual, and corporate.
ANS: C (p. 83)
28. Pure Play e-tailers, such as Amazon and Etoys, competing with ‘bricks and mortar’
companies is an example of what type of competition?
a. Vertical
b. Channel system
c. Intertype
d. Vertical Marketing systems
e. Horizontal
ANS: C (p. 82)
29. Gift wrapping paper on a grocer’s shelf is an example of:

a. Vertical integration.
b. Scrambled merchandise.
c. Retail assortment.
d. Horizontal integration.
e. Channel dysfunction.
ANS: B (p. 84)
30. Retailers like to sell their own brands because of all of the following except:
a. Gross margins are higher.
b. They control their own destiny.
c. Competitive comparisons are more difficult.
d. They are exclusive to the retailer.
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e. Consumers prefer private label products.
ANS: E (p. 83)
31. The most important of the sociocultural factors listed in the text include all of the
following except:
a. Globalization.
b. Consumer mobility and connectedness.
c. Demographics.
d. Social networking.
e. The Green Movement.
ANS: C (p. 87)
32. _______________ is the tem most commonly used to describe interconnectedness and
interdependencies of countries around the world.
a. Globalization.
c. Demographics.
ANS: A (p. 87)
33. "____________ has created world-class customer expectations that need to be satisfied
through world-class channel strategy, design and management."
a. Globalization.
c. Demographics.
ANS: A (p. 88)
34. In some of the countries in Tropical Africa, very long channels with many layers of
intermediaries are common. Such channel structures within the sociocultural context of
Tropical Africa are:
a. Highly inefficient.
b. Highly irrational.
c. Not suited to the needs of the consumers.
d. Rational and reasonably efficient.
e. Archaic and cumbersome.
ANS: D (p. 84)
35. The Japanese distribution system that links together manufacturers, wholesalers and retail
sales outlets is called:
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a. Trading companies
b. Export management companies.
c. Category killers.
d. Keiretsu.
e. Merchant Wholesaler.
ANS: D (p. 85)
36. Regarding the implications of the connectivity and mobility revolution that relates to m-
commerce, which of the following is true:
a. Virtually all channel members will need to include m-commerce channels in their
channel mixes.
b. Channel members will need to sort out the role m-commerce plays in their
respective multi-channel mix.
c. Channel members will need to sort out the potential of m-commerce channels.
d. Channel members will need to sort out the limitations of m-commerce channels.
e. All of the above.
ANS: E (p. 88)
37. ___________ is the term that refers to interaction in networks comprised of individuals
or organizations that are linked together based on some type of common interest.
a. Globalization.
c. Demographics.
ANS: D (p. 88)
38. From a marketing channels perspective, social networking has:

a. Caused consumers to make poor product choices.
b. Not lived up to the expectations that the Internet would allow consumers to be
better informed.
c. Helped consumers make better product choices but has had no effect on their
channel choices.
d. It has made consumers more demanding about the channels they choose.
e. All of the above.
ANS: D (p. 89)
39. Changes in technology occur:

a. Smoothly and predictably over time.
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b. At a decelerating pace.
c. Do not occur evenly or predicatively change over time.
d. Only at the manufacturing level of the marketing channel.
e. At accelerating rates in developing countries.
ANS: C (p. 90)
40. Which of the following is a consequence of the digital revolution?

a. Less than 10% of retailers have web sites.
b. Online shopping via the Internet has become a mainstream marketing channel for
B2C but not B2B markets.
c. 4.8 % of manufacturers now have web sites.
d. Online shopping via the Internet has become a mainstream marketing channel for
both B2B and B2C markets.
e. Retailers are working hard to avoid use of web sites.
ANS: D (p. 92)
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41. A widespread acceptance of teleshopping and/or computer shopping might very well do
all of the following except:
a. Reduce the need for traditional retail stores.
b. Decrease changes made by channel participants.
c. Increase consumer shopping efficiency.
d. Give rise to new types of facilitating agencies.
e. Give small retailers the same access to markets as large retailers.
ANS: B
42. Computerized inventory control systems available to all channel members will mean:
a. Increased dominance by manufacturers over retailers.
b. More time for the manufacturer to plan production schedules.
c. Slower responses by retailers to slow-moving items.
d. Decreased profits.
e. Better forecasting techniques.
ANS: B (p. 91-92)
43. A relatively new technology that uses an electronic tag to track people or products using
radio waves is called?
a. Electronic scanners
b. Computerized inventory control tags
c. RFID tag
d. Portable computers
e. Universal product codes
ANS: C (p. 93)
44. All technology has both up sides and down sides. To manufacturers, the downside of
electronic scanners and computerized inventory control systems is:
a. Retailers react very quickly to sales and thus can suddenly stop ordering slow-
selling product.
b. Manufacturers are too dependent on retailers for information.
c. Retailers pressure manufacturers for large quantities of fast-selling products.
d. An inability to predict customer needs.
e. Manufacturers are unable to control who has access to information.
ANS: A (p. 91)
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45. Which of the following is not a relatively new type of technology that can have a major
impact on marketing channels?
a. Uniform Product Codes
b. Smartphones
c. Mobile robots
d. 3-D modeling
e. Ultra-wideband technology
ANS: A
46. An Internet-based technology that enables both large and small businesses and
organizations to utilize computer applications without having to have their own hardware,
software, office computing space, and staff is called:
a. Raid systems.
b. Cloud computing.
c. RFID tags.
d. Mobile robots that delivery in large offices.
e. Computerized inventory system.
ANS: B (p. 94)
47. The channel manager must __________ the legal environment as it affects the channel.
a. be an expert on
b. have a general knowledge of
c. be familiar only with four basic pieces of federal legislation relevant to
d. follow closely and in detail all court cases impinging on
e. retain an attorney that has knowledge of
ANS: B (p. 95)
48. The Simplicity Pattern case indicates that manufacturers:

a. Should treat wholesalers and retailers the same.
b. Cannot assume the courts will rule that retailers with different operating
characteristics are not in competition.
c. Can refuse to deal with channel members who undercut suggested retail prices.
d. Do not need to document their cases.
e. Cannot force franchises to buy all of their supplies from a designated source.
ANS: B (p. 99)
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49. K&B Products, a producer of perfumes, prohibits its intermediaries from selling
competitive perfume products. K&B is engaged in:
a. Selective distribution.
b. Full-line forcing.
c. Exclusive dealing.
d. Refusal to deal.
e. Pushing.
ANS: C (p. 97)
50. A piece of federal legislation that specifically deals with price discrimination is the:
a. Clayton Act.
b. Baitman-Roberson Act.
c. Patman-Morgan Act.
d. Price Maintenance Act.
e. Robinson-Patman Act.
ANS: E (p. 95)
51. The _______________ Act passed in 1914 granted powers to investigate and enforce
unfair methods of competition in interstate commerce.
a. Celler-Kefauver
b. Sherman Anti-Trust
c. Robinson-Patman
d. Federal Trade Commission
e. Clayton
ANS: D (p. 95)
52. A federal act that specifically deals with the anticompetitive issues of acquisitions and
mergers through vertical integration is the:
a. Sherman Antitrust Act.
b. Federal Trade Commission Act.
c. Celler-Kefauver Act.
d. Morgan Stanley Act.
e. Robinson-Patman Act.
ANS: C (p. 96)
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53. An increasing number of manufacturers are opening their own stores that carry the same
merchandise sold by independent retailers. This practice introduces a potential legal
question regarding:
a. Resale restrictions.
b. Dual distribution.
c. Exclusive dealing.
d. Intensive distribution.
e. Bilateral distribution.
ANS: B (p. 97)
54. When Häagen Dazs, the Pillsbury-owned premium ice cream company, told its
wholesalers that its policy was to sell only through wholesalers that did not sell
competing products, Häagen Dazs was engaging in:
a. Exclusive dealing.
b. Selective distribution.
c. Refusal to deal.
d. Full-line forcing.
ANS: A (p. 97)
55. When a supplier requires its channel members to carry a broad group of its products in
order to sell any particular product in the supplier’s line, the supplier is involved in:
a. Selective distribution.
b. Exclusive dealing.
c. Full-line forcing.
d. Resale restrictions.
e. Price maintenance.
ANS: C (p. 98)
56. Price maintenance laws enacted by state governments that allowed retail price fixing,
were no longer exempted from federal antitrust legislation with the repeal of the:
a. Robinson-Patman Act.
b. Miller-Tydings and McGuire Acts.
c. Robeson-Johnson and Hastings Acts.
d. Celler-Kefauver Act.
e. McGuire-Tydman and Morgan Acts.
ANS: B (p. 100)
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57. The “Colgate Doctrine” is:

a. The legal basis for the American Dental Association’s endorsement of toothpastes.
b. The common term for state level “fair trade laws”.
c. The legal basis for sellers to use their own criteria and judgment in selecting
channel members
d. The legal basis for manufacturers retaining some customers as “house accounts”.
e. Allows the practice of price maintenance in the marketing channel.
ANS: C (p. 100)
58. Territorial restrictions constitute one of the major types of:

a. Tying agreement restrictions.
b. Full-line forcing restrictions.
c. Dual distribution restrictions.
d. Price discrimination.
e. Resale restrictions.
ANS: E (p. 101)
59. Interbrand competition versus intrabrand competition has been evaluated by the courts in
considering:
a. Fair trade laws.
b. Dual distribution.
c. Tying agreements.
d. Vertical integration.
e. Resale restrictions.
ANS: E (p. 101)
60. Dual distribution occurs when:

a. A manufacturer uses more than one channel.
b. A manufacturer sells its products under different brand names to the same
customer.
c. Two or more different channel structures for the same product exist.
d. A firm distributes through its own vertically-integrated channel.
e. A manufacturer sells the same product through two competing retail outlets.
ANS: C (p. 97)
61. The Business Electronics Corp. v. Sharp Electronics Corp. case has generally:
a. Made it harder for manufacturers to exercise price control over channel members.
b. Made it easier for manufacturers to exercise price control over channel members.
c. Had no effect on the manufacturer’s ability to control prices.
d. Resulted in strict prohibition of price control by manufacturers over channel
members.
e. Eliminated totally “free riders” from marketing channels.
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ANS: B (p. 101)
62. An example of ____________ occurred when Microsoft included the Internet Explorer
software into its Windows operating system.
a. a tying agreement
b. dual distribution
c. full-line forcing
d. intrabrand competition
e. vertical integration
ANS: A (p. 102)
63. _____________ exist(s) when a supplier requires its channel members to carry a broad
line of its products.
a. Dual distribution
b. Full-line forcing
c. Exclusive dealing
d. Vertical integration
e. Tying Agreements
ANS: B (p. 98)

Chapter 4—Behavioral Processes in Marketing Channels
MULTIPLE CHOICE
1. Conflict between Burger King and its franchisees has occurred because:
a. Increases in Burger King's product line.
b. Burger King raising fees it charges its franchisees.
c. Greater push by Burger King to use online web sites to market its burgers.
d. Burger King franchisees were forced to set low prices for some menu items.
e. Burger King forced improvements of franchisee profit margins.
ANS: D (p. 111)
2. The underlying theme of the relationship among channel members presented in the text
stresses:
a. Conflict.
b. Power struggles.
c. Lack of community.
d. Cooperation.
e. Animosity.
ANS: D
3. Four fundamental behavioral processes relevant to the marketing channel are:

a. Role, power, conflict, and segmentation.
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b. Social class, motivation, conflict, and power.

c. Control, cooperation, perception, and culture.
d. Power, conflict, role, and communication.
e. Conflict, power, communication, and group processes.
ANS: D (p. 112)
4. The marketing channel should be viewed as:

a. An economic system only.
b. An economic system affected solely by economic variables.
c. A behavioral system affected only by economic variables.
d. A business environment.
e. An interorganizational social system.
ANS: E (p. 112)
5. The social systems perspective of marketing channels is appropriate because:

a. The managerial perspective is less important than previously thought.
b. Specialization and division of labor apply more than ever in the 1990s.
c. The legal environment requires it.
d. Technology changes have to be offset.
e. A solely economic approach is not adequate for understanding channels.
ANS: E (p. 112)
6. Conflict in the marketing channel is usually referred to as behavior that is:

a. Nasty and vicious.
b. Unwarranted and useless.
c. Object centered.
d. Goal impeding.
e. Unfair.
ANS: D (p. 113)
7. Competition is different than conflict because:

a. In competition the parties do not try to impede each other’s goal attainment.
b. Competition is personal.
c. In conflict the parties’ goals are compatible.
d. Competition is self-centered.
e. Competition is direct.
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ANS: A (p. 113)
8. Conflict in marketing channels is often caused by all of the following except:

a. Different economic objectives.
b. Ideological differences.
c. Inappropriate channel structure.
d. Differing perceptions.
e. A focus on object centered behavior.
ANS: E (p. 114)
9. SEA Publishing and Kate’s Bookstores are embroiled in conflict over who should
establish retail prices. The conflict likely is the result of:
a. Communication difficulty.
b. Decision domain disagreements.
c. Goal incompatibility.
d. Perceptual differences.
e. Role incongruencies.
ANS: B
10. Two retailers are fighting for the right to represent a major manufacturer in New York.
The conflict between these two retailers is probably caused by:
a. Decision domain disagreements.
b. Role incongruencies.
c. Perceptual differences.
d. Expectational differences.
e. Allocation of scarce resources.
ANS: E (p. 114)
11. A wholesaler and retailer have become embroiled in conflict over attempts by the
wholesaler’s sales force to help the retailer display its products. The retailer views this
sales force as a nuisance that interferes with customer service. There seems to be a
problem of:
a. Expectational differences.
b. Goal incompatibilities.
c. Resource scarcities.
d. Role incongruencies.
e. Perceptual differences.
ANS: E (p. 114)
12. In the case of the franchiser Alpha Graphics discussed in the text, the main cause of the
conflict with franchisees probably stemmed from:
a. Communication difficulties.
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b. Goal incompatibilities.
c. Expectational differences.
d. Perceptual differences.
e. Role incongruities.
ANS: A (p. 116)
13. _____________ occur when publishers want to sell as much of their product as possible
through Amazon.com and when Amazon.com wants to sell as much merchandise as
possible from all sources.
a. Perceptual differences
b. Goal incompatibilities
c. Expectation differences
d. Communication difficulties
e. Role incongruities
ANS: B (p. 115)
14. With regard to channel conflict and channel efficiency:

a. The most commonly held view is that conflict has no effect on channel efficiency.
b. A wealth of empirical data about the relationships between conflict and channel
efficiency exists.
c. Rosenbloom hypothesizes a general curve suggesting that conflict initially
increases channel efficiency.
d. Channel conflict is usually expected to have a negative effect.
e. Conflict forces manufacturers to use less total input.
ANS: D (p. 116)
15. Which of the following is not an input to achieving distribution objectives?

a. Routine calls on a retailer by a wholesaler’s sales force
b. Fees paid by a manufacturer to a retailer for handling coupons
c. Wholesalers’ warehouse space
d. Consumer demand for products
e. Time and effort of the sales force
ANS: D
16. The relationship between channel conflict and channel performance is expressed in terms
of:
a. Communications policy.
b. Incompatibilities and dissension.
c. Channel efficiency.
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d. Channel processes.
e. There is no established relationship between channel conflict and channel
performance.
ANS: C (p. 116)
17. The greater the degree of optimization in carrying out a distribution objective:
a. The lower is the level of channel efficiency.
b. The higher is the level of channel efficiency.
c. The faster the distribution objective is achieved.
d. The lower is the level of conflict.
e. The higher is the level of conflict.
ANS: B (p. 116)
18. In order to get retailers to display its product, a manufacturer has to have its salespeople
go to the retailers’ stores, set up the displays, and instruct them in how to utilize the
displays. In this example:
a. Conflict is obviously not present.
b. Channel efficiency is apparently quite high.
c. Extra input is needed to achieve the distribution objective.
d. Trade margins appear to be too low.
e. The manufacturer is unable to achieve channel efficiency.
ANS: C (p. 116)
19. Which of the following generalizations about conflict is not true?

a. Conflict is an inherent behavioral dimension in the channel.
b. Given the numerous cases from which conflict may stem, it is a pervasive
phenomenon in channels.
c. Conflict can affect channel efficiency.
d. Various levels of conflict may have both negative and positive effects on channel
efficiency–possibly resulting in no effect.
e. Studies have found that leadership styles do not have an impact in creating
conflict.
ANS: E (p. 120)
20. A well designed and managed marketing channel:

a. Will be able to eliminate conflict among the channel members.
b. Will have mechanisms for dealing with conflict because it cannot be eliminated.
c. Will only have conflict of the type that does not impact channel efficiency.
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d. Will have contracts among the channel members that effectively resolve conflict
before it arises.
e. Will have to deal with conflict on an ad hoc basis as nothing else can be done.
ANS: B
21. In practice, conflict is usually spotted:

a. Immediately.
b. When it is first beginning to develop.
c. After it is well developed and obvious.
d. After a marketing channel audit has been conducted.
e. After channel members’ perceptions of performance have been measured.
ANS: C (p. 121)
22. With regard to channel conflict, it is true that:

a. The channel manager must make a conscious effort to detect channel conflict.
b. A marketing channel audit is the best method for conflict detection.
c. Surveys of channel members’ perceptions of performance are useless for the
detection of conflict.
d. A company’s sales force should not be used to help detect conflict.
e. Manufacturer vs. wholesaler perceptions do not lead to channel conflict.
ANS: A
23. Which of the following statements regarding appraising the effects of conflict on the
channel is true?
a. At present, the conflict index is used in most consumer products channels.
b. At present, most appraisals rely on the channel manager’s subjective judgment.
c. At present, most channel managers use a linear scale measuring conflict intensity
and frequency.
d. At present, the channel manager uses a scale to relate frequency of disagreements
to channel member performance.
e. Channel managers that use objective scales of analysis obtain the best results for
identifying channel conflict.
ANS: B (p. 120-122)
24. When an evaluation of key areas of the relationship of a channel member with other
members takes place, a(n) ____________ has been used.
a. advisory council analysis
b. marketing channel audit
c. cost-benefit analysis
d. perceptions survey
e. early warning system
ANS: B (p. 121)
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25. All of the following are advantages of using arbitration for resolving channel conflict
except:
a. It lessens secrecy.
b. It is less expensive than litigation.
c. It confronts problems in their incipient stages.
d. It is relatively fast.
e. It often involves industry experts.
ANS: A (p. 123)
26. The feasibility and applicability of the various approaches for resolving channel conflict
will:
a. Both increase as a firm becomes larger and more powerful.
b. Vary for different kinds of channels under different sets of circumstances.
c. Be much higher for the manufacturer than for the wholesaler or retailer.
d. Vary far more for the larger channel members than the smaller.
e. Cost about the same to implement, but vary on effectiveness.
ANS: B (p. 124)
27. In resolving channel conflict, the channel manager should:

a. Compromise only when the other party involved is a larger or more powerful firm.
b. Leave it alone as it usually dissipates across time and interfering tends to make
things worse.
c. Consider a “peace conference” to jointly solve the problem.
d. Use informal inquiries to determine the cause of the conflict.
e. Consider using other providers to carry out channel tasks.
ANS: C (p. 123-124)
28. Which of the following is not a useful approach to resolving channel conflict?
a. The use of an authoritarian leadership style by the channel manager.
b. The application of organizational development concepts.
c. Face-to-face meetings.
d. Specialized bargaining and negotiating procedures.
e. Set up a specialized organization for information gathering purposes.
ANS: A (p. 123-124)
29. _________ is defined as when a channel member exerts control or influence over the
behavior of another channel member.
a. Aggressiveness
b. Opposition
c. Marketing channel power
d. Leadership
e. Charisma
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ANS: C (p. 125)
30. Franchisors have the right to tell franchisees how to market products because of the
franchise contract. In this case, franchisors are emphasizing the use of:
a. Referent power.
b. Reward power.
c. Legitimate power.
d. Coercive power.
e. Expert power.
ANS: C (p. 129)
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31. Retailers are often willing to adhere to the wishes of large manufacturers such as Procter
& Gamble and General Foods because these companies sell brands of products that are in
great demand by consumers. These large manufacturers are in a position to emphasize the
use of:
a. Reward power.
b. Expert power.
c. Referent power.
d. Legitimate power.
e. Channel power.
ANS: A (p. 125)
32. Many manufacturers will listen to retailers’ product demands because retailers are
knowledgeable about consumer needs. Such retailers are in a good position to emphasize
the use of:
a. Reward power.
b. Expert power.
c. Coercive power.
d. Referent power.
e. Legitimate power.
ANS: B (p. 129-130)
33. Clayton Computer Systems is a value-added retailer that promotes its products as the
very latest in technology. Hardware and software producers with a reputation for being
on the leading edge will be in a good position to use __________ power with Clayton.
a. coercive
b. expert
c. legitimate
d. referent
e. reward
ANS: D (p. 129)
34. With regard to coercive power, available evidence suggests that:

a. Coercive power should be used to force channel members to stay within
designated territories.
b. Coercive power should be the first type of power used to obtain channel member
cooperation.
c. The use of coercive power is likely to lead to a higher incidence of conflict in the
channel.
d. The use of coercive power is likely to increase the stability and viability of the
channel.
e. Coercive power is often used by smaller companies in the marketing channel.
ANS: C (p. 127)
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35. Sylvan Learning Center’s ad stressing its pride in being the world leader in
supplementary education is an example of:
a. Expert power.
b. Reward power.
c. Referent power.
d. Coercive power.
e. Legitimate power.
ANS: C (p. 129)
36. Generally the power bases available to the manufacturer are a function of all of the
following except:
a. The size of the manufacturer relative to his channel members.
b. The leadership style of the channel manager.
c. The particular set of circumstances surrounding the channel relationship.
d. The organization of the channel.
e. The size of the producer relative to other channel members.
ANS: B
37. Hoover’s “All Aboard” marketing campaign in trade magazines portrayed in the text was
based largely on _________ power to attract channel members.
a. coercive
b. reward
c. legitimate
d. expert
e. referent
ANS: B (p. 125)
38. In order to select the right power bases to use, the channel manager needs to know:
a. How effective the various power bases are for influencing channel member
behavior.
b. What reactions the channel members might have in response to the use of different
power bases.
c. How the use of the various power bases might affect the overall channel
relationship.
d. All of the above.
e. Only a and c are correct.
ANS: D
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39. Large retailers tend to have ________ power over their smaller manufacturers or
suppliers.
a. low levels of coercive
b. referent
c. high levels of expert
d. high levels of reward
e. low levels of legitimate
ANS: D (p. 125-127)
40. Typically, the larger the producer or manufacturer, the higher the __________ power
bases available to it.
a. expert and reward
b. expert and legitimate
c. reward and coercive
d. legitimate and coercive
e. There is no pattern that can be generalized.
ANS: C (p. 131)
41. Channel research that has dealt with the use of coercive power in the channel indicates
that coercive power:
a. Is highly effective.
b. Reduces the probability of channel members taking legal action to gain
countervailing power.
c. Appears to foster conflict.
d. Reduces channel member dissatisfaction.
e. Has little or no effect on channel member satisfaction.
ANS: C (p. 134)
42. One study by Etgar found that in channels with relatively small local dealers, power
employed by manufacturers based on economic rewards or coercion provided a degree of
control over channel members __________ power based on legitimacy, expertise or
reference.
a. Higher than
b. Lower than
c. Equal to
d. The opposite of
e. No pattern on degree of control was suggested by the study.
ANS: A
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43. A study found that in a franchised channel, avoidance of using coercive power resulted in
all of the following except:
a. Franchisees had higher morale.
b. Franchisees were more likely to file class action suits.
c. Franchisees were more likely to cooperate with the franchisor.
d. Franchisees were less likely to terminate their contracts.
e. Franchisees were less likely to file individual suits against the franchisor.
ANS: B (p. 132)
44. When considering the use of power in international channels, U.S. channel managers
know that:
a. Power is a fairly universal concept, and all cultures perceive power and its use
pretty much the same way Americans do.
b. Cultural differences can affect how channel members perceive the use of various
power bases.
c. The Japanese relate to the use of power in a way typical of Western cultures.
d. Australian channel members do not respond negatively to the use of coercive
power.
e. An aggressive use of power is effective to use on Japanese channel members.
ANS: B
45. A recent study of marketing channels in China found:

a. That Chinese beer distributors had similar perceptions of power as their western
counterparts.
b. Chinese distributors divide power into legitimate and illegitimate categories.
c. Chinese distributors were more satisfied when suppliers used coercive power.
d. Chinese distributors reacted positively to both reward and referent power when
used by western suppliers.
e. Expert power was not effective among Chinese distributors.
ANS: A (p. 133)
46. The text defines role as:

a. The jobs performed by the various channel members.
b. A set of prescriptions defining what the behavior of a position member should be.
c. The behaviors that channel members typically engage in.
d. A set of activities that are appropriate for particular channel members.
e. The place of the channel member within the marketing channel.
ANS: B (p. 134)
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47. According to the text, the concept of role is of use to the channel manager because it:
a. Is based on expert power and therefore helps him/her to control channel member
behavior.
b. Helps him/her to describe motives of channel members.
c. Provides him/her with insight into the constraints under which channel members
operate.
d. Helps to better understand the power of ‘megadealers’.
e. Provides insight into actions that lead to conflict.
ANS: C
48. Which of the following statements about role is not true?

a. It helps define acceptable behavior for occupants of positions or roles in the
channel.
b. A manufacturer’s role is to promote its brand effectively.
c. Roles in the marketing channel stay constant over time.
d. Megadealers in the automobile industry want their role to expand so they are
included in the decision making process of product development.
e. Allows the channel manager to determine what role a particular channel member is
expected to play.
ANS: C (p. 134-135)
49. More congruent roles should lead to:

a. More conflict in the channel but also improved channel efficiency.
b. A higher level of power for each of the channel members.
c. More elaborate channel structures.
d. More cooperative and efficient channels.
e. A higher commonality of goals among channel members.
ANS: D (p. 135)
50. The vehicle for all interactions among channel members is:
a. Cooperation.
b. Communications.
c. Contracts.
d. Facilitators
e. Technology.
ANS: B (p. 136)
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51. To reduce communications difficulties with small independent retailers, channel

managers in large manufacturing firms should:
a. Learn whether the goals of smaller channel members are very different from
his/her own firm’s goals.
b. Emphasize the value of small businesses in channel communiqués.
c. Use industry jargon.
d. Follow up oral discussions with a written summary.
e. Include managers from all levels of the firms in channel member meetings.
ANS: A (p. 136)
52. Which of the following is not likely to cause communications problems based on
perceptual differences?
a. Just-in-time delivery standards
b. Reasonable delivery schedules
c. Industry standard delivery time
d. Corporate goals
e. Return privileges
ANS: D
53. In their communications, channel members often omit or distort information:

a. To obtain feedback on plans before they are implemented.
b. To protect promotional plans from being leaked to the competition.
c. And thus build additional expert power.
d. To gain additional profits.
e. To mislead competitors.
ANS: B
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)
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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)
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.
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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)
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.
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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)

Chapter 6—Designing Marketing Channels
MULTIPLE CHOICE
1. Channel design refers to all of the following except:

a. The development of new channels.
b. The modification of existing channels.
c. The allocation of distribution tasks among channel members.
d. The selection of channel members.
e. The development of methods used to motivate channel members.
ANS: E (p. 180)
2. Channels that have not been designed have taken on their existing structure through:
a. Modification.
b. Specialization and division of labor.
c. Contactual efficiency.
d. Interorganizational management.
e. Evolution.
ANS: E
3. In marketing channels, the term “reengineering” refers to:

a. A change in an intermediary’s product assortment.
b. Appointment of a new channel manager.
c. Modification of an existing channel.
d. Selecting new intermediaries to replace current ones.
e. Completely redesigning the marketing mix and selecting new channel managers.
ANS: C (p. 180)
4. The perspective used by producers and manufacturers with respect to channel design is
one of a firm looking:
a. Down the channel toward the market.
b. Up the channel away from the market.
c. Both down and up the channel.
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d. Toward and away from the market.

e. At changes in the environment.
ANS: A (p. 180-181)
5. Which of the following does not engage in channel design?

a. Manufacturers
b. Wholesalers
c. Retailers
d. Producers
e. Facilitating agencies
ANS: E
6. Which of the following is not a step in the channel design decision process?
a. Forecast changes in the environment.
b. Develop alternative channel structures.
c. Choose the “best” channel structure.
d. Recognize the need for channel design decisions.
e. Set and coordinate distribution objectives.
ANS: A (p. 181-182)
7. Channel design strategy is __________ differential advantage.

a. the most important component of
b. usually an insignificant aspect for creating
c. always playing a part in creating
d. often one component of
e. the least important aspect of
ANS: D (p. 180)
8. Using channel design __________ should be uppermost in the channel manager’s

thinking.
a. to accommodate changes in channel variables
b. as a means for gaining differential advantage
c. to reduce channel costs
d. to increase the intensity of distribution
e. to increase profits
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ANS: B (p. 180)
9. When a channel manager undertakes channel design, what distribution decision already
should have been made?
a. How the changes will be evaluated
b. The role of distribution in new product strategy
c. The role of distribution in the firm’s overall objectives and strategies
d. How the new design will be implemented
e. The role of distribution in the promotion strategy
ANS: C
10. Which of the following is not one of the basic phases of the paradigm of the channel
design decision?
a. Evaluating the variables affecting channel structure
b. Choosing the “best” channel structure
c. Recognizing the need for a channel design decision
d. Developing specialization and division of labor
e. Setting and coordinating distribution objectives
ANS: D (p. 181-182)
11. For a producer of computer-based training programs for businesses, all of the following
should precipitate a channel design decision except:
a. Development of a new product for the government market.
b. Deleting one training program from the product line.
c. Deciding to sell the current product line in Canada.
d. Merging the firm with another company that manufactures products for the
business market.
e. Identifying home-based business owners as a new target market.
ANS: B (p. 182)
12. There are generally considered to be _______ reasons for making channel design
decisions.
a. 10
b. 15
c. 18
d. 20
e. an indefinite number of
ANS: E (p. 183)
13. According to the text, the most basic variable affecting channel design is:
a. The target market.
b. The product.
c. The number of channel members.
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d. Cost.
e. The environment.
ANS: A
14. A key part of Frito-Lay’s success in distributing its snack products at a level that allows
the company to dominate retailers’ shelves is:
a. Lower prices than competitors.
b. High retail inventory requirements.
c. Few products so as to streamline distribution.
d. Hand-held computers used by drivers/salespeople.
e. Incentives paid to retailers.
ANS: D (p. 183)
15. Distribution objectives must be set:

a. Only in relation to considerations of logistics.
b. To provide for fast distribution of products to the market.
c. With the major emphasis being on keeping the cost of distribution to a minimum.
d. With an eye toward objectives and policies of the firm.
e. To achieve the maximum level of sales volume.
ANS: D
16. Which of the following is not an example of a well-stated distribution objective?

a. Our distribution objective is to ensure all do-it-yourselfers have the opportunity to
buy our hand tools 75% of the time they shop for home maintenance and repair
materials.
b. Our distribution objective is to ensure our customers have as many opportunities as
possible to purchase our carpeting and curtains.
c. Our distribution objective is to assure that half of all high school varsity swimmers
have at least one opportunity per season to purchase our swimwear.
d. Our distribution objective is to ensure that every consumer with children under the
age of 10 has the opportunity to buy our candies.
e. Our distribution objective is to broaden our penetration in the school and college
markets and use exclusive contracts where schools agree to sell only our food
product.
ANS: B (p. 184)
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17. A congruency check of a distribution objective means that:

a. All of the channel members have agreed on the distribution objective.
b. All phases of the channel design decision have been coordinated.
c. The distribution objective does not conflict with other objectives and policies of
the firm.
d. The distribution objective will minimize channel conflict.
e. The distribution objective matches the objectives of the retailers who sell our
product.
ANS: C (p. 184)
18. The distribution objective must be congruent with:

a. Channel members’ objectives and strategies.
b. The other elements of the marketing mix.
c. Standard industry practices.
d. Competitors’ objectives and strategies.
e. Suppliers’ objectives and strategies.
ANS: B (p. 184)
19. The channel manager’s specification of distribution tasks is:

a. Situationally dependent.
b. Generalizable across most situations.
c. One of choosing from among the eight basic marketing functions.
d. Based mainly on what the existing channel members want.
e. The first phase of channel design.
ANS: A (p. 186-187)
20. The specific kind of distribution tasks required are mainly a function of:
a. The length of the channel.
b. The distribution objective.
c. The selectively of distribution.
d. The kinds of channel members used.
e. The product mix.
ANS: B (p. 187)
21. The allocation of distribution tasks should include consideration of all of the following
except:
a. Number of levels in the channel.
b. The saturation at the various levels.
c. The number of channel managers at each level.
d. Types of intermediaries at each level.
e. The selective number of intermediaries at various levels.
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ANS: C
22. A major cause of the failure of many dot-com companies can be traced to:
a. Providing too much information to customers.
b. Underestimating the distribution tasks needed to link firms with customers.
c. Setting poorly stated goals and objectives for the firm.
d. Mis-identifying the target market.
e. Selecting a product mix that did not meet targeted customer needs.
ANS: B (p. 187)
23. When developing alternative channel structures, the number of levels the channel
manager considers may be limited by all of the following except:
a. The industry’s standard practices.
b. The size of the market.
c. The availability of intermediaries.
d. Short-term objectives.
e. The nature of the market.
ANS: D (p. 188)
24. The Internet has affected the number of levels in a channel by:
a. Adding a fifth level to the current three and four level channels.
b. Allowing manufacturers to add a direct two level channel to their existing options.
c. Increasing the level of product saturation available to manufacturers and
producers.
d. Fixing the number of levels available to manufacturers.
e. Changing the environment such that manufacturers are unable to identify the
possible number of levels available.
ANS: B (p. 188)
25. Given five possible channel structures, two degrees of intensity, and four different types
of intermediaries, the maximum number of possible channel alternatives would be:
a. 11.
b. 40.
c. 22.
d. 14.
e. 100.
ANS: B (p. 189-190)
26. A channel manager may choose more than one channel structure in order to:
a. Decrease costs of distribution of products.
b. Maximize consumer awareness of the product.
c. Reach the target market effectively and efficiently.
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d. Increase net profits.

e. Achieve corporate objectives.
ANS: C (p. 187)
27. As a dimension of channel structure, types of intermediaries really pertains to:

a. The classifications of the Census of Wholesale Trade and the Census of Retail
Trade.
b. The basic types of distribution tasks performed.
c. Traditional industry terminology.
d. The leadership style of channel managers.
e. The many different retail outlets at which customers buy products.
ANS: B
28. Intensity:
a. Refers to the number of intermediaries at each level of the marketing channel.
b. Is generally classified as either intensive or selective.
c. Referes to the number of independent sales agents a manufacturer uses.
d. Kiosk retailers.
e. Picture-capable cell phones.
ANS: A (p. 188)
29. A marketing strategy that focuses on carefully chosen target markets will most likely
stress:
a. Intensive distribution.
b. Only high-priced retail outlets.
c. Direct distribution.
d. Selective or exclusive distribution.
e. Exclusive distribution only.
ANS: D (p. 188)
30. Selective distribution is:

a. The use of as many outlets as possible.
b. Usually preferred for the distribution of industrial operating supplies.
c. The use of one intermediary in a particular market area.
d. When not all available distributors are used, rather a carefully chosen group.
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e. Standard practice in the distribution of convenience goods.
ANS: D (p. 188)
31. According to Michael Dell, founder of Dell Computers, the typical computer retailer:
a. Could not match the extremely low prices he charged for direct sales.
b. Could not provide as rapid product delivery.
c. Provided better instruction and support but higher prices.
d. Had too little inventory to compete.
e. Lacked technical expertise.
ANS: E
32. The longest channels are expected for all of the following except:
a. Consumer markets.
b. Geographically dispersed markets.
c. Seasonally consumed products.
d. Goods bought in small quantities.
e. Goods purchased online by consumers.
ANS: E
33. Short channels are preferred for:

a. Nontechnical products.
b. Convenience goods.
c. Firms with limited financial resources.
d. Firms that desire a high level of channel control.
e. Firms with an inexperienced channel manager.
ANS: D (p. 187-189)
34. More channel levels and more intermediaries are expected for:
a. Markets requiring many contacts.
b. Markets requiring personalized contacts.
c. Markets and producers that have no quantity discrepancies.
d. Markets and producers with very little spatial separation.
e. Technically complex products.
ANS: A (p. 187-189)
35. Heuristics that relate particular variables with possible channel structures should be
viewed as:
a. Rather clear-cut prescriptions for choosing channel structures.
b. Of very little value in channel design decisions.
c. A rough reflection of fairly typical relationships among variables affecting channel
structure.
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d. Good quantitative devices for choosing channel structures.

e. Part of the management science class of techniques for choosing channels.
ANS: C (p. 190)
36. The usual operational measure of market size is:

a. The number of buying units (consumer or industrial).
b. The dollar sales in the market.
c. The geographical extent of the market.
d. The density of the buying units.
e. The design of heterogeneity in the market.
ANS: A (p. 191)
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37. In general, the more geographically dispersed the market:

a. The shorter the channel structure.
b. The more direct is distribution.
c. The fewer the number of intermediaries that will likely have to be used.
d. The more difficult and expensive is distribution.
e. The more selective is distribution.
ANS: D (p. 191)
38. For distant manufacturers it can be generalized that:

a. The use of intermediaries will increase distribution costs.
b. The use of intermediaries will decrease distribution costs.
c. A direct channel from distant manufacturer to consumer is most efficient with the
lowest distribution costs.
d. The use of intermediaries increase product costs because of increased
trucking/shipping expenses.
e. Profits are constant regardless of the use of intermediaries because all distribution
costs are passed onto the consumer.
ANS: B (p. 191)
39. Which of the following is not one of the market behavior variables?
a. How customers buy
b. When customers buy
c. Where customers buy
d. What customers buy
e. Who does the buying
ANS: D (p. 192)
40. All other factors being equal, in general there is __________ between the degree of
standardization of products and channel length.
a. an inverse relationship
b. a positive relationship
c. no relationship
d. a totally unknown relationship
e. an exponential relationship
ANS: B (p. 193)
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41. Products that are in the introductory stage of the product life cycle often need heavy
promotion. This tends to foster:
a. An increased use of intermediaries.
b. Very long channels of distribution.
c. Shortened channels.
d. The total elimination of intermediaries.
e. An emphasis on facilitating agencies.
ANS: C (p. 194)
42. Product variables affecting channel structure include all of the following except:
a. Availability of inputs/supplies.
b. Perishability.
c. Degree of standardization.
d. Newness.
e. Unit value.
ANS: A (p. 192-194)
43. In distribution, economies of scope are needed to overcome:

a. Low unit value.
b. A high degree of standardization.
c. Low technology.
d. Rapid perishability.
e. High bulk or weight.
ANS: A (p. 193)
44. Which of the following heuristics about the relationship between a manufacturer’s
characteristics and channel design is false?
a. The larger the firm the less flexibility it has because of its internal bureaucracy and
the complexity of its product line.
b. The greater the capital available to a manufacturer, the less its dependence on
intermediaries for the performance of distribution tasks.
c. Management expertise in distribution increases across time.
d. Manufacturers should sell directly to users if a product is technically complex.
e. More intermediaries are needed in a large market.
ANS: A (p. 194-195)
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45. When the unit value of a product is high relative to its size and weight, what is the best
distribution channel?
a. Direct distribution
b. Two levels of intermediaries
c. Three levels of intermediaries
d. Four levels of intermediaries
e. Indeterminate number of intermediaries
ANS: A (p. 193)
46. Assuming total cost for a direct channel of $100,000 and an average gross margin on
sales of 25%, the sales volume needed to cover these costs would be:
a. $2,500,000.
b. $25,000.
c. $75,000.
d. $400,000.
e. $250,000.
ANS: D
47. The intermediary variables are:

a. Size, expertise and cost.
b. Availability, cost and services.
c. Intensity, type and size.
d. Financial capacity, services and newness.
e. Geography, size, and degree of standardization.
ANS: B (p. 195)
48. In practice, the channel manager is usually not able to choose an optimal channel
structure in the strict sense of the term for all of the following reasons except:
a. He/she is often unable to know what all of the alternative structures are.
b. Maximizing long-term profits can be achieved with a number of alternative
channel structures.
c. The time involved would often be prohibitive.
d. Precise methods generally do not exist for calculating the payoffs associated with
each of the alternative structures.
e. The costs involved are very high.
ANS: B (p. 196)
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49. According to Aspinwall, short channels are expected for products with a:
a. High replacement rate.
b. High gross margin.
c. Low time of consumption.
d. Low adjustment needs.
e. Low searching time.
ANS: B (p. 198)
50. Aspinwall’s approach to channel design:

a. Assumes there are 15 characteristics that need to be considered when designing the
channel.
b. Is impossible to operationalize.
c. Always selects the optimal channel structure.
d. Puts too much emphasis on product characteristics as the determinant of channel
structure.
e. Assumes products can be represented on a seven color spectrum.
ANS: D (p. 199)
51. According to the financial approach, choosing a channel structure is analogous to:
a. Aspinwall’s parallel systems approach.
b. An investment decision of capital budgeting.
c. Most of the management science approaches.
d. The Bayesian approach to channel choice.
e. Simulations of channel choice decisions.
ANS: B
52. Shortening the channel will __________ the amount of capital necessary for distribution.
a. increase
b. decrease
c. have no affect upon
d. slightly decrease
e. There is no relationship between the length of a channel and capital requirements.
ANS: A (p. 199)
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53. The most difficult problem with making the financial approach to choosing a channel
structure operational is:
a. The reluctance on the part of firms to use it.
b. Obtaining accurate estimates of future revenues and costs from alternative channel
structures.
c. The great expense involved in employing this method.
d. The inadequate capacity of existing computer systems to handle the mass of data
involved.
e. Poor attitudes on the part of managers toward using it.
ANS: B (p. 200)
54. Approaches that attempt to identify all channel structure variables explicitly and then
attempt to express the relationships among them in quantitative terms were referred to in
the text as:
a. Management science approaches.
b. Heuristic approaches.
c. Bayesian approaches.
d. Distribution costing approaches.
e. Financial analysis approaches.
ANS: A (p. 201)
55. Which of the following is not a key limitation of Transaction Cost Analysis (TCA)?
a. It deals only with the dichotomy of vertical integration versus independent channel
members.
b. The assumption of opportunistic behavior may not be accurate.
c. It neglects most of the other relevant variables associated with channel choice.
d. No distinction is made between long-term and short-term issues in channel
structure relationships.
e. It is difficult to implement.
ANS: E (p. 200)
56. In the weighted factor score approach, all of the following are criteria for choosing
channel structure except:
a. Decision factors must be less than seven.
b. Factors are stated explicitly.
c. Decision factors are weighted.
d. Each channel alternative is rated.
e. An overall weighted factor score is computed.
ANS: A (p. 203-205)
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57. The total score arrived at in the weighted factor score approach represents:
a. The probability of choosing a particular channel structure alternative.
b. The probability that the channel structure alternative chosen will be optimal.
c. A quantitative representation of management’s judgment on the merits of a
particular channel alternative.
d. The optimal channel choice.
e. The only logical channel alternative.
ANS: C (p. 205)
58. The distribution costing approach to choosing channel structure:

a. Requires almost no managerial judgment.
b. Requires specific factors to be identified.
c. Requires that management make some cost and revenue estimates.
d. Will, if done well, generally yield an optimal channel choice.
e. Assumes a three-level distribution structure.
ANS: C (p. 205)
59. The __________approach to selecting the “best” channel structure focuses on

synthesizing traditional economic analysis with behavioral concepts.
a. Aspinwall
b. straight quality judgment
c. weighted factor score
d. transaction cost analysis
e. distribution costing
ANS: D (p. 200)

Chapter 7—Selecting the Channel Members
MULTIPLE CHOICE
1. The selection of channel members according to the text is __________ the selection of
employees.
a. almost as important as
b. as important as
c. more important than
d. of little importance compared with
e. much easier than
ANS: B (p. 215)
2. The selection of channel members:

a. Always involves basic changes in channel structure.
b. Is of most importance to vertically integrated manufacturers.
c. Is sometimes necessary even though the basic channel structure remains the same.
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d. Is one of the first phases of channel design.

e. Is the same as choosing channel structure.
ANS: C (p. 215)
3. Which of the following is an incorrect statement about manufacturers and producers

choosing a two-level channel structure?
a. They use a six-phase process in channel design.
b. They do not have to worry about selection of channel members.
c. It is not necessary to allocate any distribution tasks to intermediaries.
d. They do not have to make selection decisions.
e. They need to develop specific criteria to evaluate channel members.
ANS: E
4. The selection of channel members:

a. Cannot take place in the absence of the channel design process.
b. Is the most important phase of channel design.
c. Can occur even when channel structure is not altered.
d. Should be done at least on an annual basis.
e. Is essentially the same as the evaluation of channel members.
ANS: C (p. 215)
5. As a general rule, the higher the level of selectivity of distribution:

a. The greater the emphasis on selection.
b. The less the emphasis on selection.
c. The lower the emphasis on finding prospective channel members.
d. The fewer the criteria used in selection.
e. The more crucial the need to place products in all appropriate outlets.
ANS: A (p. 215)
6. As a general rule, the greater the intensity of distribution:

a. The less the emphasis on selection.
b. The greater the emphasis on selection.
c. Intensity is not related to the selection decision.
d. The more complex the issues surrounding selection.
e. The development of specific criteria for channel member selection becomes very
important.
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ANS: A (p. 215)
7. If a channel has been structured to emphasize intensive distribution:

a. A great deal of emphasis is placed on selection.
b. Less emphasis is placed on selection.
c. Selection takes a long time to accomplish.
d. Channel members must be presold on the products prior to distribution.
e. The selected channel members must be re-evaluated every two years.
ANS: B (p. 215)
8. In highly intensive distribution, the selection criteria for channel members:

a. Tend to be complex.
b. Amount to “Can they pay their bills?”
c. Focus on matching retailer image with product image.
d. Cannot be generalized.
e. Focuses on their efficiency in completing the distribution task.
ANS: B (p. 216)
9. According to the text, the most important source for finding prospective channel
members is:
a. Trade sources.
b. Reseller inquiries.
c. Distributors’ customers.
d. Field sales organizations.
e. Facilitating agencies.
ANS: D (p. 216)
10. The manufacturer’s salespeople are often able to do all of the following except:
a. Know the prospective channel members in their territories.
b. Provide objective evaluations of channel members.
c. Become acquainted with the management of salespeople of prospective channel
members.
d. Obtain a good deal of information about prospective channel members.
e. Line up intermediaries in advance.
ANS: B (p. 216)
11. Trade sources used for finding prospective channel members include all of the following
except:
a. Local newspapers.
b. Trade associations.
c. Trade shows.
d. “Grapevine”.
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e. Other firms selling similar products.
ANS: A (p. 217)
12. The best way for the manufacturer to obtain information about potential intermediaries
from customers is by _______________ to learn customers’ views about distributors in
their market area.
a. talking with competitors who serve the same customers
b. conducting surveys
c. using focus groups
d. setting up a suggestion box
e. analyzing buyer data from UPCs
ANS: B
13. A significant problem with using the sales force to find prospective channel members is
that:
a. In many cases salespeople do not know their territories well.
b. Salespeople are not in a good position to recognize potential new channel
members.
c. Salespeople may not devote much effort to finding new channel members because
they may not be adequately rewarded for doing so.
d. It is very expensive to use salespeople for this purpose.
e. Salespeople are not trained to evaluate channel members.
ANS: C (p. 217)
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14. Trade shows and conventions:

a. Are generally the most important sources for finding new channel members.
b. Are typically a waste of time when it comes to finding prospective channel
members.
c. Are useful for finding channel members only in consumer goods industries.
d. Are generally useful sources for finding new channel members.
e. Have greatly declined as a source for finding new channel members.
ANS: D (p. 217)
15. In general, the most specific source of information on prospective channel members in a
particular industry is:
a. The National Retail Federation.
b. The appropriate trade association.
c. The National Association of Wholesale Distributors.
d. Industrial Distribution magazine.
e. The Census of Wholesale Trade and the Census of Retail Trade.
ANS: B (p. 217)
16. Typically, the producers and manufacturers receiving the highest number of inquiries
from prospective channel members are:
a. Those listed in the Verified Directory of Manufacturers’ Representatives.
b. Those who advertise most heavily.
c. Those who are generally considered to be the most prestigious in the industry.
d. Those who offer the largest trade discounts.
e. Those who presently have the fewest number of channel members.
ANS: C
17. A channel member uses __________ as a source for prospective channel members for
firsthand appraisal of the actual performance of the prospective channel members.
a. the field sales force
b. customers
c. independent consultants
d. all of the above
e. none of the above
ANS: B (p. 219)
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18. Which of the following statements about channel member selection criteria lists is true?
a. Channel member criteria lists rarely are used in practice.
b. Generalized lists of criteria such as those of Pegram and Shipley are useless to the
channel manager.
c. Once a company develops a list of criteria, it should not be changed.
d. A changing environment may require the firm to alter its emphasis.
e. A single criteria list is adequate for a firm under all possible conditions.
ANS: D (p. 220)
19. Generalized lists of channel member selection criteria:

a. Can help the channel member to develop his or her own specialized list.
b. Usually conflict with more specialized lists of criteria.
c. Provide little room for flexibility.
d. Are adequate without changes.
e. Are relevant for all firms in every industry.
ANS: A (p. 220-221)
20. Which of the following statements is a false statement about Hlavacek and McCuistion’s
channel member selection criteria for technical product sold in industrial markets?
a. Manufacturers should select distributors who carry a rather small array of
products.
b. Financial capacity should not be overemphasized; sometimes less well-financed
distributors are “hungrier”.
c. Aggressiveness of the distributor always is a vital criterion.
d. A distributor that is a “small business” will be able to focus more attention on
specific products.
e. A channel member’s market coverage should be a criterion.
ANS: D (p. 221)
21. Yeoh and Calantone identify six categories of selection criteria that reflect the _________
distributors must possess to be effective representatives in foreign markets.
a. breadth of expertise
b. knowledge
c. core competencies
d. technical skills
e. efficiency skills
ANS: C (p. 221)
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22. The list of selection criteria offered by Pegram may be described as:
a. A very long one.
b. Empirically based.
c. A hypothetical checklist.
d. A non native set of criteria.
e. Not very relevant to many firms today.
ANS: B (p. 221)
23. According to Pegram, the most frequently used criterion for judging the acceptability of
prospective channel members is:
a. Distributor sales strength.
b. Distributors’ product lines.
c. Reputation.
d. Credit and financial rating.
e. Market coverage.
ANS: D (p. 222)
24. In the selection of foreign distributors as laid out by Yeoh and Calantone, which of the
following criteria was not cited in a study of foreign distributors’ selection processes
mentioned in the textbook?
a. Ethnicity
b. Commitment level
c. Financial strength
d. Marketing skills
e. Product-related factors
ANS: A (p. 221)
25. _________ is the selection criterion that reflects a prospective intermediary’s enthusiasm,
initiative, and aggressiveness.
a. Management ability
b. Reputation
c. Attitude
d. Market coverage
e. Risk
ANS: C (p. 223)
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26. The selection criterion that refers to __________ reflects the degree to which there is a
continuity of management if the principal dies.
a. management ability
b. management succession
c. capability
d. reputation
e. performance
ANS: B (p. 223)
27. A prospective channel member’s ability to blanket the geographical territory that the
manufacturer would like to reach is referred to as the __________ criterion.
a. market segmentation
b. intensive distribution
c. market coverage
d. territorial restriction
e. geographical flexibility
ANS: C (p. 227)
28. A prospective wholesaler channel member’s sales strength can be measured by:
a. The number and quality of its sales reps.
b. The geography covered by the sales force.
c. The quality of its current product lines.
d. Gross profit.
e. Total sales revenue.
ANS: A (p. 222)
29. Selecting channel members with market coverage overlap is especially problematic for:
a. Manufacturers in highly intensive distribution.
b. Manufacturers in highly selective distribution.
c. Manufacturers of high technology products.
d. Manufacturers with large product lines.
e. It is equally troublesome for all of the above.
ANS: B (p. 223)
30. Which of the following is not a good inducement that manufacturers might offer
prospective channel members?
a. Friendly relationships
b. Good, profitable product lines
c. Financial support
d. Advertising support
e. Management assistance
ANS: C (p. 225)
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31. Securing the prospective channel members as actual channel members is usually the:
a. First step in the selection process.
b. Second step in the selection process.
c. Third step in the selection process.
d. Fourth step in the selection process.
e. Cannot be determined because it varies so much from case to case.
ANS: C (p. 216)
32. The trade magazine advertisement for Snyder’s pretzel manufacturer offers _______ as
an inducement to prospective channel members.
a. advertising support
b. fair dealing practices
c. the quality and variety of its product line
d. strong partnership agreements
e. management assistance
ANS: A (p. 225)
33. According to Pegram's research, ______________ between manufacturers and

intermediaries have become the norm for relationships in many channels of distribution.
a. high trade discount structure
b. exclusive dealing arrangements
c. partnerships or strategic alliances
d. special promotional deals
e. substantial monetary incentives
ANS: C (p. 225)
34. One of the best measures of a manufacturer’s commitment to helping channel members
to achieve their objectives is by:
a. Offering them a very high quality product line.
b. Offering the lowest prices.
c. Offering a legal contract to spell out the nature of the channel relationship.
d. Offering a management assistance program.
e. Offering large cooperative advertising allowances.
ANS: D (p. 227-228)
1-85
35. In using its product line to secure new channel members, it is most important for the
manufacturer to stress:
a. The functionality of the product.
b. The quality of the product.
c. The customer benefits of the product.
d. The depth and breadth of the product line.
e. The profit potential of the product.
ANS: E (p. 225)
36. Which company in the text advertised in a trade magazine offering a “Category
Management Partner” program as an inducement to potential channel members?
a. Gillette
b. Dell Computer
c. Snyder’s
d. 3M
e. Thermoid
ANS: D (p. 228)
1-86

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E Channels TEST BANK 2

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Chapter 1—Marketing Channel Concepts

2. Which of the following statements is false?

3. Which of the following is a true statement about Internet-based channels?

ANS: D (p. 6-8)

4. A sustainable competitive advantage is one that

6. Which of the following is not relevant to the definition of, channel?

ANS: B (p. 10)

ANS: A (p. 11-12)

ANS: D (p. 10-11)

11. Consumers often view the marketing channel as simply:

ANS: B (p. 10)

13.When Wal-Mart is performing negotiatory functions, it is involved in

ANS: C (p. 10)

17. Marketing channel management should be considered:

18. The channel manager is:

ANS: E (p. 11)

ANS: D (p. 11)

20. Channel management should be viewed as:

ANS: C (p. 13)

23. Which of the following statements is true?

ANS: D (p. 15-16)

24. Channel management is concerned mainly with

ANS: B (p. 15-16)

26.The five flows in marketing channels discussed in the text are

ANS: E (p. 16)

27. The five flows discussed in the text

ANS: E (p. 16-17)

ANS: C (p. 17)

29. In the context of the channel flows concept, logistics involves

ANS: D (p. 17-18)

ANS: A (p. 17-18)

ANS: D (p. 19)

33. The concept of specialization and division of labor:

ANS: C (p. 19)

ANS: A (p. 19-20)

ANS: C (p. 21-22)

ANS: B (p. 23)

ANS: B (p. 20)

42. Which of the following statements is correct?

ANS: A (p. 20-22)

43. The channel structure depicted as M->W->R->C indicates:

ANS: C (p. 22)

45. A multi-channel strategy means:

ANS: E (p. 23)

ANS: D (p. 23)

47.Which of the following is a true statement?

48. For accounting firms and other producers of services:

ANS: A (p. 27)

1. Which statement about Gazelle is false?

b. Gazelle buys, takes title and stores electronic products.

ANS: E (p. 33)

2. The fundamental determinant of whether a firm is a member of a marketing channel is:

ANS: C (p. 34)

3. The basic divisions of the marketing channel are:

ANS: D (p. 34)

4. In the commercial channel, participants who are specifically excluded are:

ANS: D (p. 34)

5. __________ are members of the target market.

ANS: A (p. 34)

ANS: B (p. 66)

7. Which of the following is not a facilitating agency?

ANS: C (p. 37-38)

ANS: B (p. 36-38)