Marketing Channels A Management

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Chapter 10—Product Issues in Channel Management

MULTIPLE CHOICE

1. Amazon.com has begun to pressure manufacturers to use less wasteful packaging because:
a. Thousands of workers are injured each year opening the hard, clear plastic
packaging.
b. The packaging is bad for the environment.
c. With sales of over $35 billion annually, it has to clout to pressure manufacturers.
d. Customers have complained about the use of excessive packaging.
e. Having a large advertising budget.

ANS: E (p. 291)

2. To a channel manager, the elements of the marketing mix do all of the following except:
a. They can inhibit the performance of the marketing channel.
b. They can enhance the performance of the marketing channel.
c. They are tools for securing channel member cooperation.
d. They are viewed as resources for the channel manager.
e. They do not affect the performance of other channel members.

ANS: E (p. 292)

3. The channel manager’s efforts to manage the marketing channels effectively should focus on:
a. Creating synergy among the four components of the marketing mix.
b. Motivating channel managers.
c. Understanding advertising and promotions that attract customers.
d. Developing the firm’s marketing objectives.
e. Using good communication skills with channel members.

ANS: A (p. 292)

4. For the channel manager, the most powerful element of the marketing mix for gaining channel
member cooperation is:
a. Product.
b. Price.
c. Promotion.
d. Logistics.
e. It varies.

ANS: E

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5. Product decisions __________ channel management decisions.

a. affect
b. are dependent upon
c. are independent of
d. are made before
e. are made after

ANS: A

6. Which of the following is a false statement about when a manufacturer is developing new
products and involvement of channel members?
a. Channel members should have experts at the manufacturer’s plant during product
development.
b. Channel members should be consulted to determine whether new products will be
acceptable.
c. Channel members should be asked to react to new product and package prototypes.
d. Channel members should provide feedback during the test-marketing stage.
e. Channel members should be asked for new product ideas.

ANS: A (p. 293)

7. K&B Manufacturing, in developing its new products, must recognize that its intermediaries
will judge the acceptability of the new products based on:
a. The amount of real innovation in the product.
b. The cost of the new product relative to the cost of competitive products.
c. The product’s profit potential in terms of meeting established margin structures.
d. The amount of advertising dollars offered to the intermediaries to support the new
product.
e. The demand by customers.

ANS: C

8. Large supermarkets have selected small food manufacturers to provide natural food items for
their stores because:
a. Customers are demanding products made by small manufacturers.
b. Of the small manufacturer’s credibility.
c. Large supermarkets can exert greater control over small manufacturers.
d. Costs to the supermarkets are lower.
e. Small food manufacturers are offering large incentives.

ANS: B (p. 295)

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9. Acceptance of a new product by channel members __________ its acceptance by final users.
a. effectively guarantees
b. is necessary for
c. is unrelated to
d. is dependent upon
e. is unconstrained by

ANS: B (p. 294)

10. Bruce Computer Software, in developing its new products, must recognize that its
intermediaries will be enthusiastic only if the new products:
a. Are highly differentiated.
b. Complement the intermediaries’ current assortment.
c. Are of high quality.
d. Are unique.
e. Offer new opportunities to gain new customers.

ANS: B

11. Consumer product companies launch more than 45,000 products each year. Yet, just over
_______ maintain distribution for more than two years.
a. 40%
b. 25%
c. 39%
d. 5%
e. 10%

ANS: B (p. 293)

12. Channel members judge a product package based on how well it meets their __________
requirements.
a. stock and display
b. size
c. promotion
d. durability
e. recycling

ANS: A (p. 294)

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13. Manufacturers have to exert a lot of effort to gain channel member acceptance of new
products because of all the following except:
a. There are far more new products than shelf space to hold them.
b. Channel members have hard data on product profitability.
c. Shelf space is an asset channel members can “sell” to manufacturers.
d. Channel members want salable items.
e. Manufacturers are experts in identifying what customers want.

ANS: E

14. The particular mix of products carried by a channel member at the wholesale or retail level is
referred to in the text as its:
a. Product line.
b. Product mix.
c. Merchandise mix.
d. Merchandise variety.
e. Assortment.

ANS: E (p. 296)

15. Training for channel members to sell new products successfully:

a. Should be conducted by the manufacturer if the channel members request it.
b. Is necessary only for industrial products or complex consumer products.
c. Should be planned as the new product is being developed.
d. Is useful only during the introductory stage of the product life cycle.
e. Is unnecessary except for highly technical products.

ANS: C (p. 297)

16. Which of the following was a major problem for Jaguar dealers when Ford introduced the X-
Type Jaguar?
a. Consumers did not like the color options available to them.
b. Not enough of the models were produced so dealers had angry customers.
c. The new technology used in the cars did not perform well.
d. The leather seat coverings did not wear well.
e. Ford was careless about quality, which resulted in higher warranty costs.

ANS: E (p. 298)

17. Which of the following is not a stage of the product life cycle?
a. Decline
b. Maturity
c. Advanced
d. Growth
e. Introduction

ANS: C (p. 299)

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18. One of the most critical channel management tasks during the introductory stage of the
product life cycle is to:
a. Obtain adequate market coverage.
b. Emphasize very selective distribution.
c. Emphasize intensive distribution.
d. Keep promotional expenditures to a minimum.
e. Drop slow starting product promptly.

ANS: A (p. 300)

19. During the growth stage of the product life cycle, two overriding issues for channel
management are:
a. Providing for adequate product availability and considering changes in channel
structure.
b. Monitoring competitive products and dropping poorly performing channel
members.
c. Providing heavy promotional support and changing the channel structure.
d. Monitoring competitive products and providing for adequate product availability.
e. Educating channel members and evaluating their performance.

ANS: D (p. 300)

20. During the __________ stage of the product life cycle, manufacturers must be especially
mindful of channel member actions with respect to competitive products.
a. introductory
b. growth
c. maturity
d. decline
e. All stages of the PLC equally.

ANS: B (p. 301)

21. The major strategic emphasis for channel managers to make possible changes to the channel
structure or to select different types of intermediaries occurs in the _______ product life cycle
stage.
a. introduction
b. growth
c. maturity
d. decline
e. stagnation

ANS: C (p. 302)

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22. When the maturity stage of the product life cycle is reached, the sales turnover experienced by
many of the channel members for the product in question is likely to:
a. Increase.
b. Decrease.
c. Remain the same.
d. Increase but at a decreasing rate.
e. Be totally unpredictable.

ANS: B (p. 303)

23. It is fair to say that many retailers have become ___________ about the profitability of the
barrage of new products offered to them.
a. delighted
b. thrilled
c. angry
d. hyperskeptical, even cynical
e. happy and enthusiastic

ANS: D (p. 296)

24. A fundamental but long-term strategic channel management option that should be considered
during the maturity stage of the product life cycle is:
a. An extra trade discount.
b. More advertising allowances.
c. Special package deal discounts.
d. A change in the channel structure.
e. A more liberal returns policy.

ANS: D (p. 302-303)

25. Special trade deals can keep a channel member attracted to a product in the maturity stage of
the product life cycle, but they may not be in the manufacturer’s long-run interest because:
a. They distract the channel members from the manufacturer’s other products.
b. They can send the wrong message about the product to channel members.
c. They are stopgap measures.
d. They cause channel members to lose interest in carrying the product.
e. They may be considered illegal under antitrust/price fixing legislation.

ANS: C (p. 303)

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26. During the decline stage of the product life cycle, it is not unusual to find all of the following
except:
a. Some channel members who still carry the product in question.
b. A high proportion of low volume channel members.
c. Small orders by channel members.
d. High costs of servicing channel members.
e. Increased profit margins.

ANS: E (p. 303-304)

27. Perhaps the best way for a manufacturer to find out how his products are selling relative to
competitive products is:
a. Through sales analysis.
b. By performing consumer attitude research.
c. By monitoring the flow of products at the point of final sale.
d. By hiring A.C. Nielsen Co. to do television ratings.
e. To develop a consumer panel that is continuously monitored.

ANS: C

28. A product differentiation strategy includes all of the following except:

a. It is based on differences in physical characteristics.
b. It is intended to get consumers to perceive a significant difference.
c. It can require channel member cooperation in the way the product is displayed,
sold and serviced.
d. Prices to consumers may be higher.
e. Gross profit margins will increase through the life of the product.

ANS: E (p. 305)

29. Which of the following would not be considered a differentiated product?

a. Godiva Chocolates
b. Bic pens
c. Rolex watches
d. All-Clad pots and pans
e. Tommy Hilfiger products

ANS: B (p. 305)

30. A product positioning strategy includes all of the following except:

a. The type of retailer selling the product.
b. The degree of brand equity.
c. The “in-store position” for the product.
d. The cost to manufacture the product.
e. How the brand is promoted.

ANS: D (p. 306)

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31. The main channel management issue in product line expansion and contraction strategies is:
a. To balance trading up and trading down strategies.
b. Trying to gain channel member support for reshaped product lines.
c. Getting channel members to participate in product design.
d. Convincing the channel members to accept a smaller product line.
e. Speeding up shipments of the new product line so channel members will be able to
sell it faster.

ANS: B (p. 308)

32. Product line expansion and contraction is becoming even more challenging for channel
managers because:
a. Too few new products are being released to support expansion.
b. Power retailers are emphasizing store-by-store category management.
c. The number of private label brands is decreasing.
d. Retailers are requesting the development of new products.
e. There is too much retail shelf space available.

ANS: B (p. 308)

33. When pursuing a trading up or trading down product strategy, the most critical issue a channel
manager must consider whether:
a. Whether existing channel members provide adequate market coverage of the high
or low end of the market.
b. Prices are too high or low for the middle market.
c. There is adequate inventory to serve all of the market.
d. New channel members will be needed to cover the manufacturer’s existing
markets.
e. Speeding up shipments of products will be needed.

ANS: A (p. 309)

34. When Levi Strauss Co. introduced its Levi Strauss Signature brand jeans, it was engaging in
a(n) __________ strategy.
a. trading down
b. trading up
c. expansion
d. contraction
e. high end

ANS: A (p. 309)

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35. A manufacturer risks creating its own competition when it adopts a product strategy of:
a. Trading up.
b. National and private brands.
c. “Me-too” products.
d. Category management.
e. Trading down.

ANS: B (p. 310)

36. When dealing with product brand strategy, the most difficult channel management issues arise
in connection with:
a. Selling all products under one national brand.
b. Selling products under several national brands.
c. Selling all products under a private label.
d. Selling products under both national and private brands.
e. Selling all products under generic brands.

ANS: D (p. 310)

37. Treating post-sales service as an afterthought is a shortcoming in:

a. Profit management.
b. Channel management.
c. Logistics management.
d. Customer service management.
e. Training management.

ANS: B (p. 311-312)

38. Product service:

a. Should be considered as an important strategic issue.
b. Is generally outside the area of channel management.
c. Should be in the realm of logistics management.
d. Is the responsibility of the channel members other than the manufacturer.
e. Is really a product management issue.

ANS: A (p. 312)

39. The success of a manufacturer’s product strategies is:

a. Marginally related to channel management.
b. Totally dependent upon channel management.
c. Generally unrelated to channel management.
d. Often related to channel management.
e. A prerequisite to channel management.

ANS: D (p. 312)

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