Chapter 11 Deliver Value Through Supply Chain Management, Channels of Distribution, and Logistics 1) Which of the following is the series of firms or individuals that facilitate(s) the movement of a product from the producer to the final customers? A) the industrial network B) the retailer chain C) the multilevel network D) the channel of distribution E) the conventional marketing system Answer: D 2) Producers benefit from using intermediaries because they ________. A) offer greater efficiency in making goods available to target markets B) bring a fresh point of view to strategy development C) eliminate risk D) are rarely backlogged with orders E) will store products indefinitely Answer: A 3) At the least a channel of distribution consists of a producer and a(n) ________. A) wholesaler B) agent C) broker D) intermediary E) customer Answer: E 4) Which of the following is the term for the firms and individuals who help move a product to the consumer or the business user? A) third-party logistics providers B) channel leaders C) channel intermediaries D) enterprise resource planners E) strategic allies Answer: C 5) It is most accurate to say that channels of distribution provide which of the following? A) time, place, and ownership utility B) promotion, product, and place utility C) time, place, and form utility D) promotion and form utility E) time and promotion utility Answer: A 6) Wholesalers and retailers purchase large quantities of goods from manufacturers but sell only one or a few at a time to many different customers. This process is called ________. A) creating assortments B) breaking bulk C) third-party logistics D) order processing E) inventory control Answer: B 7) Wholesalers and retailers create efficiencies in the flow of goods from producer to end consumer by ________ when they provide a variety of products in one location. A) creating assortments B) just in time processing C) third-party logistics D) order processing E) inventory control Answer: A 8) Functions provided by channel intermediaries that make the purchase process easier for customers and manufacturers are referred to as ________ functions. A) distributing B) facilitating C) management D) marketing E) wholesaling Answer: B 9) Offering credit to buyers and providing refund services for products are both examples of ________ functions provided by channel intermediaries. A) communication B) marketing C) promotional D) facilitating E) management Answer: D 10) Channel members can help producers by identifying customer complaints, customer preferences, and new competitors in the market. These are all examples of the ________ function of channel intermediaries. A) communication B) marketing C) promotional D) transaction E) management Answer: A 11) Retailers handle the financial exchange when a customer pays for a product. This is an example of the ________ function of channel intermediaries. A) communication B) marketing C) promotional D) transaction E) management Answer: D 12) Through a process of ________, traditional intermediaries are being eliminated as many companies question the value added by layers in the distribution channel. A) knowledge management B) disintermediation C) horizontal marketing D) vertical marketing E) hybrid marketing Answer: B 13) Which of the following describes a comprehensive approach to collecting, organizing, storing, and retrieving a firm's information assets? A) logistics B) knowledge management C) facilitation D) enterprise resource planning E) just-in-time techniques Answer: B 14) The theft and unauthorized repurposing of intellectual material via the Internet is called ________. A) information logistics theft B) non-permission-based downloading C) online distribution piracy D) disintermediation E) taking title Answer: C 15) Intermediaries that do business with many different manufacturers and many different customers are most accurately referred to as ________. A) interdependent intermediaries B) dependent intermediaries C) independent intermediaries D) wholesalers E) retail outlets Answer: C 16) Limited-service merchant wholesalers are less likely than full-service merchant wholesalers to do which of the following? A) set the prices of the merchandise they sell B) take title to the merchandise they sell C) suffer financial losses if the merchandise they sell is damaged or stolen D) offer marketing assistance or delivery for the products they sell E) use their own sales force Answer: D 17) Which group of independent intermediaries can be divided into the two broad types of full-service and limited-service? A) brokers B) agents C) sales branches D) specialty wholesalers E) merchant wholesalers Answer: E 18) An intermediary who ________ legally owns the goods being handled. A) breaks bulk B) takes title C) creates assortments D) takes consignments E) selectively distributes Answer: B 19) The owner of a grocery store wants to have non-food items delivered, priced, displayed, and inventoried by a wholesaler. Which type of wholesaler best fits the owner's needs? A) drop shipper B) cash-and-carry wholesaler C) truck jobber D) rack jobber E) mail-order wholesaler Answer: D 20) Truck jobbers are limited-service merchant wholesalers who would most likely handle which of the following? A) building materials B) fruits and vegetables C) coal and lumber D) cosmetics E) magazines Answer: B 21) Mail-order wholesalers are associated with all of the following EXCEPT which one? A) selling products to small retailers and other industrial customers B) selling products to retailers in remote locations C) allowing shipment prior to receiving payment D) carrying products in inventory E) selling through catalogs Answer: C 22) Drop shippers do all of the following EXCEPT which of the following? A) take title to the merchandise B) take actual possession of the merchandise C) take orders from retailers and industry buyers D) bill retailers and industry buyers E) assume the same risks as other types of limited-service merchant wholesalers Answer: B 23) Rack jobbers are limited-service merchant wholesalers who would most likely handle which of the following? A) imported plants B) precious minerals C) agricultural products D) perishable food items E) magazines Answer: E 24) A ________ brings buyers and sellers together and facilitates transactions, typically charging a fee after a transaction is completed. A) cash-and-carry wholesaler B) broker C) retailer D) wholesaler E) commission merchant Answer: B 25) Which of the following are intermediaries that receive fees for facilitating transactions in markets such as real estate, food, and used equipment in which there are a lot of small buyers and sellers? A) manufacturers' agents B) selling agents C) commission merchants D) merchandise brokers E) sale mediators Answer: D 26) Manufacturers' ________, also called manufacturers' representatives, represent a buyer or seller on an ongoing basis. A) brokers B) franchisers C) agents D) retailers E) intermediaries Answer: C 27) Which of the following statements about merchandise brokers is true? A) Brokers are paid salaries by the manufacturers for whom they work. B) Brokers never take title to the merchandise they sell. C) Brokers work for manufacturer-owned intermediaries. D) Brokers typically represent sellers on an ongoing basis. E) Brokers work in industries with only a few, very large buyers and sellers. Answer: B 28) Which of the following statements about manufacturers' agents is true? A) Manufacturers' agents are also called manufacturers' brokers. B) Manufacturers' agents most typically work for only one manufacturer. C) Manufacturers' agents are compensated with commissions based on a percentage of what they sell. D) Manufacturers' agents have unlimited sales territories. E) Manufacturers' agents are entirely supervised by the manufacturer for whom they sell. Answer: C 29) A commission merchant would most likely sell which of the following? A) agricultural products B) extractive materials such as coal and iron C) convenience goods such as gum and candy D) fresh fruits and vegetables E) real estate Answer: A 30) Which of the following is true about sales branches, sales offices, and manufacturers' showrooms? A) They are all manufacturer-owned intermediaries. B) They all determine the marketing strategy for the products they sell. C) They are all independent intermediaries. D) They all carry inventory and take title to the inventory they carry. E) They perform the same functions as self-service wholesalers. Answer: A 31) Which of the following are manufacturer-owned facilities that carry inventory and provide sales and services to customers? A) sales offices B) sales branches C) manufacturers' showrooms D) manufacturers' offices E) merchandise brokerages Answer: B 32) Which of the following are manufacturer-owned facilities that do NOT carry inventory but provide selling functions for the manufacturer in a specific geographic area? A) commission merchandise marts B) merchandise brokerages C) sales offices D) sales branches E) manufacturers' showrooms Answer: C 33) Ed Barney owns a chain of small gift shops. Before buying merchandise to carry in his store, Barney can visit a ________ where he can examine a manufacturer's products before he stocks his stores. A) sales office B) manufacturer's showroom C) commission merchandise mart D) merchandise brokerage E) manufacturer's office Answer: B 34) To a producer of goods, a greater number of channel levels means ________. A) less distance between producer and end consumer B) less control C) more creativity D) higher taxes E) multiple distribution systems Answer: B 35) The producer-retailer-consumer channel is ________. A) the most efficient channel B) also referred to as a triple channel C) the shortest indirect channel D) the shortest direct channel E) a rarely used channel form Answer: C 36) In business-to-business channels, the functions of a merchant wholesaler are performed by a(n) ________. A) sales office B) commission merchant C) merchant broker D) business retailer E) industrial distributor Answer: E 37) Which of the following statements about business-to-business channels is true? A) Direct channels are more common in business-to-business markets than consumer markets. B) Business-to-business channels have few parallels with consumer channels. C) The size of business markets makes indirect channels more efficient. D) Indirect channels are more common in business-to-business markets than consumer markets. E) When an industrial distributor is included in a business-to-business channel, the channel is by definition direct. Answer: A 38) Which of the following is in place when a producer, dealer, wholesaler, retailer, or customer interacts with more than one type of channel? A) dual or multiple distribution system B) intermediation C) knowledge management D) supply chain management E) vertical marketing system Answer: A 39) Which of the following is a distribution system that uses different channels and communication methods to reach and serve a target market? A) a vertical marketing system B) a horizontal marketing system C) a hybrid marketing system D) a logistics system E) an intensive distribution system Answer: C 40) Which of the following is most likely to force a manufacturer to pay a slotting allowance? A) a selling agent B) a merchandise broker C) a large retail chain D) a small retailer E) a rack jobber Answer: C 41) A new company called LidRock is prospering because it figured out a novel way to get music, video games, and movies into the hands of consumers: on mini-CDs tucked into the lids of soft drinks. LidRock is focusing on which one of the four Ps? A) product B) price C) promotion D) place E) profit Answer: D 42) Which of the following is the best example of a direct channel? A) J&L Manufacturing Company sells drapery hardware to The Home Depot's Design Center, and the Design Center then sells it to consumers. B) Family Dollar Store sells modeling clay to school-age children. C) A wholesaler sells candy to convenience stores, who then sell it to store patrons. D) Farmer Mintz sells corn to the Hughes household, who will eat it for supper. E) A farmer in Colombia sells flowers to an international broker, who makes sure the flowers reach consumers in the United States. Answer: D 43) A husband and wife have a small store that is located at a beach resort. The only products sold at this store are hand-dipped and sculptured candles made by this couple. Marketers would classify the channel of distribution for these candles as ________. A) indirect B) direct C) logistic D) reverse E) inbound Answer: B 44) Steve's Physco Skates sells its products to Walmart, who then sells them to the consumer. This is an example of a(n) ________. A) direct marketing channel B) producer channel C) indirect marketing channel D) horizontal marketing system E) corporate vertical marketing system Answer: C 45) Proud Pets, a producer of clothing and accessories for pets, has recently partnered with a regional chain of pet stores. Which of the following would Proud Pets be LEAST likely to expect from its new channel member? A) promoting its products through advertising B) assembling and packaging its products for final sale C) distributing relevant market information D) identifying raw materials and other productive inputs E) taking a risk that items may not sell Answer: D 46) Burt can visit his local hardware store and buy one 4-inch paint brush and not the case of 24 brushes that the retailer had to buy. This is an example of how the channel of distribution facilitates ________. A) assortment creation B) risk taking C) breaking bulk D) relationship management E) logistics Answer: C 47) Nita can visit her local supermarket and buy a dozen roses, a gallon of milk, two birthday cards, a bag of cat litter, and a pan for roasting a turkey. This illustrates how channels of distribution benefit consumers by ________. A) creating atmospherics B) creating assortments C) directing logistics D) managing knowledge E) managing relationships Answer: B 48) Which of the following is NOT a channel intermediary? A) the supplier of the raw materials used to make glass windows B) the distributor who sells stained glass windows C) the wholesaler who buys the stained glass window from its creator D) the showroom that displays glass windows for customers to see E) the manufacturers' agent who sells the stained glass windows Answer: A 49) Tony Pool Chemical Co. purchased 144 buckets of chlorine tablets over the Internet from Chemical, Inc., which then placed the order with the manufacturer and arranged for its transportation by truck to the Tony Pool store. Chemical, Inc. is an example of which of the following? A) a piggyback marketer B) a reverse flow marketer C) a dis-intermediator D) a hybrid marketer E) a wholesaling intermediary Answer: E 50) A business buys candy and gum from many different manufacturers and then resells the items to a variety of different stores. The business is an example of a(n) ________. A) independent intermediary B) manufacturer-owned intermediary C) dis-intermediator D) reverse marketer E) brokerage company Answer: A 51) You own an independent store in your neighborhood and like to offer fresh seafood in your meat display case. Which type of wholesaler is likely to best serve you? A) cash-and-carry wholesaler B) drop shipper C) rack jobber D) selling agent E) commission merchant Answer: A 52) Tony Pool Chemical Co. purchased 144 buckets of chlorine tablets over the Internet from Chemical, Inc., then placed the order with the manufacturer and arranged for its transportation by truck to the Tony Pool store. Chemical, Inc. took title to the pool chemicals but never actually took possession of them. Chemical, Inc. is an example of a ________. A) drop shipper B) truck jobber C) rack jobber D) mail-order wholesaler E) cash-and-carry wholesaler Answer: A 53) An independent hardware retail store 100 miles from the nearest city of more than 5,000 people but providing needed supplies for area ranchers would most likely buy its plumbing and electrical supplies through a ________. A) truck jobber B) commission merchant C) mail-order wholesaler D) rack jobber E) merchandise broker Answer: C 54) Which of the following is an example of a dual distribution system? A) Walmart locating in several countries B) J.C. Penney's catalog and retail store sales C) Avon's door-to-door distribution D) Starbucks located inside a bookstore E) a hotel providing guest privileges at a nearby health spa Answer: B 55) Channels that contain intermediaries are indirect. Answer: True 56) Due to the success of the Internet, few producers sell through intermediaries today. Answer: False 57) The producer and the final consumer are part of every type of channel of distribution. Answer: True 58) Middlemen is an older term for intermediaries. Answer: True 59) Rooms-To-Go furniture retailers perform a channel intermediary facilitating function by providing financing for customers' purchases. Answer: True 60) There will always be a need for channel intermediaries that physically handle the product. Answer: False 61) Traditional record labels are now able to control the online distribution piracy problems that had plagued the music industry in the past. Answer: False 62) Limited-service wholesalers do not take title to the merchandise they handle. Answer: False 63) Rack jobbers are important to both the producers and the customers of bulky products such as coal, oil, or lumber. Answer: False 64) Sales branches are independent wholesalers that are allowed to operate only in specific geographical territories. Answer: False 65) A restaurant that features a serve-yourself buffet, which eliminates the need for a full wait staff, is using disintermediation. Answer: True 66) A U.S. wool producer that wants to export its product to Europe could use a selling agent or a merchandise broker. Answer: True 67) Always Fresh Produce Company has a route selling to more than 100 groceries, schools, and restaurants at wholesale prices. Last week the owners opened up a walk-in discounted consumer produce outlet. Always Fresh is now using a dual distribution system. Answer: True 68) How do channel members add value to a distribution channel? Answer: Intermediaries reduce the amount of work that must be done by both producers and consumers. They transform the assortment of products made by producers into the assortment wanted by consumers. They buy large quantities from many producers and break them down into the smaller quantities and broader assortments wanted by consumers. Intermediaries also provide facilitating functions that make the purchase process easier; examples of these facilitating functions include offering credit, providing maintenance service, taking risk, and providing communication and transaction functions. Channel members add value by bridging the major time, place, and ownership gaps that separate goods and services from those who would use them. 69) Compare the responsibilities associated with full-service merchant wholesalers to those associated with limited-service merchant wholesalers. Answer: Full-service merchant wholesalers provide a wide range of services for their customers, including delivery, credit, product-use assistance, repair, advertising, and other promotional support. At times market research is also completed by full-service merchant wholesalers. In contrast, limited-service merchant wholesalers provide fewer services. A limited-service merchant wholesaler is less likely to provide credit or marketing assistance to retailers. However, both full-service and limited-service merchant wholesalers take title to merchandise. 70) What are the similarities and differences between manufacturers' agents and selling agents? Answer: Manufacturers' agents are independent salespeople who carry several lines of noncompeting products. They have contractual arrangements with manufacturers that outline territories, selling prices, and other specific aspects of the relationship. Selling agents market a whole product line or one manufacturer's total output. Unlike manufacturers' agents, they have unlimited territories and control over pricing. 71) Explain the concept of a hybrid marketing system. What might be the advantages of a company implementing this type of marketing system? Answer: Hybrid marketing systems use a number of different channels and communication methods to serve a target market. A hybrid marketing system might use all or some of the following: direct sales, distributors, retail sales, and direct mail. Hybrid marketing systems can offer companies certain competitive advantages, including increased coverage of the market, lower marketing costs, and a greater potential for customization. 72) What are some advantages of a farmer selling strawberries grown on his farm directly to consumers instead of using channel intermediaries? Answer: The farmer will be able to directly serve the customer and may be able to sell the strawberries at a lower price but higher profit margin than if an intermediary were involved. Also, the farmer has control of the product and the sale, making sure that the berries are sold when they are still fresh. 73) An appliance, television, and stereo dealer serves as an authorized repair center, provides maintenance contracts, and sells essential supplies to customers. What types of channel functions are being implemented by this dealer? Answer: The dealer is offering facilitating functions; the dealer is making the purchase process easier for customers by having so many added benefits available at one location. 74) How would the Internet most likely affect the distribution channel of an artisan who makes handmade dolls that had previously been sold only at craft shows? Answer: The Internet has become an important place for consumers to shop. By using the Internet, this artisan can market her dolls with the same competitive advantages as larger companies who market their products around the globe. 75) How do merchant wholesalers and agents/brokers differ? Answer: Merchant wholesalers "take title to" (or own) what they sell; agents/brokers serve as liaisons, bringing buyers and sellers together. 76) A major manufacturer of bread sells its finished products to a grocery store chain. This grocery store then sells the bread to its customers. What type of channel of distribution is this, and what are the levels of distribution? Answer: This is a typical consumer channel of distribution. There are three levels of distribution: the producer (the bread manufacturer), the retailer (the grocery store), and the consumer. 77) Why are direct channels of distribution common in business-to-business markets dealing with high-dollar, high-profit items? Answer: Business-to-business marketing often means selling high-dollar, high-profit items, such as a single piece of industrial equipment that may cost hundreds of thousands of dollars to a market of only a few customers who can use the product. In such markets, it makes sense financially for a company to develop its own sales force that sells the products directly to customers. 78) Explain the concept behind a dual distribution system. Answer: Dual or multiple distribution systems are in use when producers, dealers, wholesalers, retailers, and customers alike interact with more than one type of channel. 79) Which of the following should be the first step in distribution planning? A) identifying the channel leader B) determining a distribution budget C) developing distribution objectives D) evaluating the internal and external environments E) determining the desired level of distribution intensity Answer: C 80) Once an organization has developed its distribution objectives, it should next ________. A) identify the channel leader B) determine a distribution budget C) select the optimum number of channel levels D) define the target market and articulate the market segmentation strategy E) evaluate the internal and external environments Answer: E 81) Conventional distribution channels consist of one or more ________ producers, wholesalers, and retailers. A) independent B) product-related C) contract D) merchant E) domestic Answer: A 82) Which of the following is NOT a true statement about conventional marketing systems? A) Conventional marketing systems are multilevel distribution channels. B) Most conventional marketing systems are highly successful. C) Members of conventional marketing systems work independently of one another. D) Members of conventional marketing systems do not work toward the same broad goals. E) Relationships between members of conventional marketing systems are limited to simply buying and selling from one another. Answer: D 83) A channel consisting of one or more independent producers, wholesalers, or retailers, each seeking to maximize its own profits with little concern for other channel members, is a(n) ________. A) independent vertical marketing system B) conventional marketing system C) independent channel D) corporate vertical marketing system E) administered vertical marketing system Answer: B 84) A corporate VMS has the advantage of controlling the entire distribution chain under ________. A) a profit-maximizing strategic plan B) single ownership C) mass distribution D) a limited number of intermediaries E) contractual agreements Answer: B 85) What are the three major types of vertical marketing systems? A) corporate, contractual, and chain B) contractual, corporate, and independent C) corporate, contractual, and administered D) administered, independent, and franchised E) corporate, franchised, and task Answer: C 86) Leadership in which type of marketing system is assumed not through common ownership or contractual ties but through the size and power of a single dominant channel member? A) a horizontal marketing system B) an administered vertical marketing system C) a corporate vertical marketing system D) a conventional marketing system E) a multiple distribution system Answer: B 87) Which of the following statements about a vertical marketing system (VMS) is true? A) A VMS is a channel in which there is cooperation among channel members at two or more different levels of the channel. B) Members of a VMS operate totally independently of one another outside of buying and selling one another's products. C) The three types of vertical marketing systems are independent, conventional, and customized. D) Channel conflict is a more serious problem in a vertical marketing system than in a conventional marketing system. E) Conventional marketing systems are more efficient than vertical marketing systems. Answer: A 88) A retailer cooperative is a form of a(n) ________ vertical marketing system (VMS). A) administered B) conventional C) corporate D) horizontal E) contractual Answer: E 89) Burger King, Holiday Inn, Avis, and H&R Block tax service are all franchises, which means they are also members of a(n) ________ vertical marketing system (VMS). A) administered B) conventional C) corporate D) horizontal E) contractual Answer: E 90) In a ________, two or more companies at the same channel level join together to develop a new marketing opportunity. A) franchise B) corporate VMS C) horizontal marketing system D) multiple distribution system E) conventional marketing system Answer: C 91) When determining the number of channel members to use at each level, three strategies are available: intensive, exclusive, and ________ distribution. A) multiple B) selective C) international D) direct E) extensive Answer: B 92) Which type of distribution is used when the producer wants to place its products with more than one, but fewer than all, of the intermediaries who are willing to carry its products? A) exclusive B) intensive C) selective D) dual E) multiple Answer: C 93) Which type of distribution means limiting distribution of a product to a single outlet in a particular region? A) exclusive B) intensive C) selective D) independent E) insourced Answer: A 94) A selective distribution strategy is most suitable for which consumer product category? A) convenience goods B) unsought goods C) shopping products D) luxury products E) materials and supplies Answer: C 95) Which of the following is another name for the channel leader? A) materials expert B) distribution facilitator C) franchiser D) channel captain E) logistics leader Answer: D 96) Increasingly commonplace today is the appearance of two different franchise chains under the same roof, such as Pizza-Hut and Taco Bell. This is an example of a(n) ________ marketing system. A) administered B) conventional C) cooperative D) vertical E) horizontal Answer: E 97) Chewing gum is stocked in many outlets in the same market or community; in fact, it is placed in as many outlets as possible. This is an example of ________ distribution. A) exclusive B) selective C) dual D) intensive E) disintermediated Answer: D 98) Which of the following is most likely intensively distributed? A) Olympus digital cameras B) BMW automobiles C) Diesel blue jeans D) Coca-Cola beverages E) Nike running shoes Answer: D 99) Which of the following is most likely exclusively distributed? A) BMW automobiles B) Diesel blue jeans C) Bazooka bubble gum D) Prairie Farms yogurt E) Coca-Cola beverages Answer: A 100) Tiffany & Co jewelry can only be found in a very limited number of intermediaries. This is an example of ________ distribution. A) exclusive B) intensive C) independent D) quality E) high-end Answer: A 101) Which type of vertical marketing system (VMS) gives an organization more control over both supply sources and resale of its products, while at the same time increasing the organization's capital investment and its fixed costs? A) administered B) contractual C) conventional D) corporate E) horizontal Answer: D 102) A brand of variety stores is part of a wholesaler-sponsored voluntary chain. This means these retailers are members of a(n) ________ vertical marketing system (VMS). A) administered B) conventional C) corporate D) horizontal E) contractual Answer: E 103) The first step in planning a channel strategy is to determine what markets need to be reached. Answer: False 104) An environmental analysis is an important step in distribution planning. Answer: True 105) When Sherwin-Williams Paint Company has single ownership of integrated, successive stages of production and distribution, it has created a corporate VMS. Answer: False 106) A franchise organization is a type of contractual VMS. Answer: True 107) Intensive distribution seeks many outlets in a market, while selective distribution seeks only one outlet in a given market area. Answer: False 108) Selective distribution strategies are most suitable for convenience products. Answer: False 109) In a conventional marketing system, no channel member has much control over the other members, and no formal means exists for assigning roles and resolving channel conflict. Answer: True 110) When the New Way Dry Cleaners and The Easy Laundromat in your hometown join forces to pursue a new marketing opportunity, they are forming a horizontal marketing system. Answer: True 111) Compare and contrast a conventional marketing system with a vertical marketing system (VMS). Answer: A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers. Each is a separate business seeking to maximize its own profits. No channel member has much control over the other members. On the other hand, a vertical marketing system is a unified system made up of producers, wholesalers, and retailers. While members of a conventional distribution channel seek to maximize their own profits, members of a vertical marketing system all cooperate because one member owns the others, one has contracts with the others, or one wields more power than the others. 112) Compare and contrast the three distribution strategies, giving examples of products that might be distributed through each strategy. Answer: Producers of convenience products and staples typically seek intensive distribution as a strategy to stock their products in as many outlets as possible. For example, products such as chewing gum are available just about wherever and whenever consumers want them. Selective distribution is used when selling to more than one but fewer than all of the intermediaries who are willing to carry a company's products in a given market. Examples are name-brand blue jeans and computers. Exclusive distribution is used when the producer wants to stock its products with only one dealer in an area. Examples are expensive cars and prestige clothing. 113) Describe the three sources of power for a channel captain. Answer: There are three potential sources of power for channel captains. A channel captain has economic power when it has the ability to control resources. A channel captain has legitimate power when it has the legal authority to call the shots. A channel captain has reward or coercive power if it engages in exclusive distribution and has the ability to give profitable products and to take them away from the channel intermediaries. 114) Explain channel power in a vertical marketing system. Answer: One channel member owns the others, has contracts with them, or wields so much power that they must all cooperate. 115) How can a firm benefit from involvement in a contractual VMS? Answer: A contractual VMS consists of independent firms at different levels of production and distribution that join together through contracts to obtain efficiency, effectiveness, and low costs. 116) How can a firm benefit from participating in a horizontal marketing system? Answer: Two or more companies at one level may join together to follow a new marketing opportunity; by working together, companies can combine their financial, production, or marketing resources to accomplish more than any one company could alone. 117) What types of products are intensively distributed? Answer: These products must be available where and when consumers want them; examples include chewing gum, soft drinks, toothpaste, and candy. 118) What types of products are exclusively distributed? Answer: Exclusive distribution is often used for expensive automobiles and prestige clothing. 119) What types of products are selectively distributed? Answer: With this type of distribution, more than one, but fewer than all, of the intermediaries who are willing to carry a company's products are used. Products include appliances, furniture, and some name-brand clothing. 120) Which of the following is the process of designing, managing, and improving the movement of products through the supply chain? A) logistics B) warehousing C) materials handling D) inventory management E) distribution strategy Answer: A 121) Marketing logistics involves which of the following types of distribution flows? A) outbound and inbound only B) outbound, inbound, and reverse C) outbound and reverse only D) inbound and reverse only E) outbound only Answer: B 122) During ________ the company receives materials it needs to manufacture its products. A) inbound logistics B) operations C) outbound logistics D) marketing and sales E) service Answer: A 123) Which stage of activity in logistics involves shipping the product out to customers? A) inbound logistics B) operations C) outbound logistics D) reverse logistics E) services Answer: C 124) Which stage of activity in logistics involves waste disposal and recycling? A) inbound logistics B) operations C) outbound logistics D) reverse logistics E) services Answer: D 125) Which of the following integrates information from across the company in order to automate order processing? A) just-in-time inventory techniques (JIT) B) radio frequency identification (RFID) C) vertical marketing system (VMS) D) horizontal marketing system E) enterprise resource planning system (ERP) Answer: E 126) The difference between distribution centers and storage warehouses is that distribution centers are designed to ________. A) have greater capacity B) store goods for longer periods C) perform other functions, such as breaking bulk D) primarily be owned by the manufacturer E) be automated Answer: C 127) What type of utility does warehousing provide to consumers by holding onto products until consumers need them? A) time B) ownership C) production D) form E) packaging Answer: A 128) Which of the following do manufacturers typically NOT use as a factor in deciding which mode of transportation to use for a product? A) dependability B) cost C) accessibility D) responsiveness E) traceability Answer: D 129) The fastest and most expensive mode of transportation is ________. A) railroads B) water C) the Internet D) pipeline E) air Answer: E 130) Which of the following is a logistics activity that involves developing and implementing a process to ensure the firm always has sufficient goods available to meet customers' demands, no more and no less? A) materials handling B) inventory control C) supply chain supervision D) order processing E) distribution implementation Answer: B 131) To reduce inventory management costs, many companies use a system called ________, which involves carrying only small inventories of parts or merchandise, often only enough for a few days of operation. A) just in time (JIT) B) supply chain management C) value chain management D) logistics management E) enterprise resource planning (ERP) Answer: A 132) Through the use of ________, a company is able to know exactly where a product is located within the distribution channel. A) ERP B) RFID C) PRM D) VMS E) JIT Answer: B 133) A firm that brings in outside companies to accomplish supply chain activities is using ________. A) insourcing B) outsourcing C) crowdsourcing D) intensive distribution E) exclusive distribution Answer: B 134) Which of the following includes all the activities necessary to convert raw materials into a good or service and put it in the hands of the consumer or business customer? A) the supply chain B) the value chain C) the channel of distribution D) the retailer chain E) the industrial network Answer: A 135) Which of the following figures is needed to calculate inventory turnover? A) annual cost of sales B) number of levels in the distribution channel C) slotting allowance fees D) number of product returns E) number of stockouts Answer: A 136) Through the practice of insourcing, a company brings in an external company to run its ________. A) human resource management B) nonessential operations C) essential operations D) value proposition E) facilitating functions Answer: C 137) At some catalog retailers, employees on roller skates called pickers are handed a printout of the products a customer wants, and then the pickers skate through large warehouses accumulating the desired products into one central location. The pickers are engaged in ________. A) enterprise resource planning B) transportation C) materials handling D) warehousing E) inventory control Answer: C 138) Jewels for the Rich and Famous sells very exclusive jewelry with a minimum price of $25,000 to customers around the world. Speed of delivery to distant markets is a must. Management should use ________ as its main carrier. A) railroads B) air C) trucks D) water E) pipeline Answer: B 139) Grayville Rock and Gravel, located in a seaport town, sells rock, gravel, and sand to local markets. It has just been awarded a contract with a company 500 miles down the coast. Management should consider switching from truck to ________ transport to save money. A) water B) railroads C) pipeline D) air E) none of the above Answer: A 140) Which of the following modes of transportation would most likely be used to quickly haul lettuce from California, where it was grown, to markets in Nevada? A) trucks B) railroads C) air D) pipeline E) water Answer: A 141) Reverse logistics are becoming even more important as more firms seriously consider sustainability as a competitive advantage. Answer: True 142) When shipping large amounts of bulk products such as forest products, coal, sand, or rock over large distances, a company should choose large trucks because of their low cost per ton shipped. Answer: False 143) Railroads are best for carrying coal, iron ore, grain, and lumber over long distances. Answer: True 144) The supply chain only includes components dealing with the flow of materials internal to the firm. Answer: False 145) Explain the rationale for identifying the best modes of transportation for a product. Answer: Mode of transportation decisions entail a compromise between minimizing costs and providing the service customers want. Factors to consider are dependability, cost, speed of delivery, accessibility, capability, and traceability. Each mode of transportation has different strengths and weaknesses that make it a good choice for different transportation needs. For example, railroads have a moderate speed of delivery and average cost, while air has a high cost and very fast speed of delivery. 146) Explain why inventory control has such a major impact on the costs of logistics. Answer: If supplies of a product are too low to meet fluctuations in customer demand, a firm may have to make expensive emergency deliveries or lose customers to competitors. If inventories are above demand, unnecessary storage expense and the possibility of damage or deterioration can occur. Channel members want to minimize the cost of holding inventory while at the same time ensuring that inventory will be there when customers need it. 147) Explain the concept of the supply chain. Answer: The supply chain encompasses all the activities necessary to turn raw materials into a good or service and put it in the hands of the consumer or business customer. Firms may decide to outsource or insource some of these activities. Distribution channels are a subset of the supply chain, and logistics management is the process of actually moving goods through the supply chain. 148) How can a company benefit from just-in-time inventory techniques? Answer: With such systems, producers and retailers carry only small inventories of parts or merchandise, often only enough for a few days of operations. This creates substantial savings in inventory-carrying and handling costs. 149) A supply chain relies on profitable relationships all along the way. How might Walmart rely on its marketing partners in order to offer low prices? Answer: Walmart must rely on suppliers that will provide merchandise at low costs, a low-cost and efficient distribution system, and a strong partnership with each member of its supply chain. Test Bank for Marketing: Real People, Real Choices Michael R. Solomon, Greg W. Marshall, Elnora W. Stuart 9780132948937, 9780135199893, 9780134292663, 9780135209929
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