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101. Different consumers have different needs during the purchase process.

101. Different consumers have different needs during the purchase process. Researchers Nunes and Cespedes argue that, in many markets, buyers fall into four categories. List and briefly define these four categories.

102. Demand chain planning yields several insights for manufacturers who follow this view of the supply chain. Explain what these insights are and how companies can use them to their best advantage.

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103. What are some of the advantages available to producers using intermediaries?


104. In designing a marketing channel system, the marketer must understand the service output levels desired by target customers. Channels provide five service outputs. List and briefly describe each of these outputs.

105. Manufacturers are constantly tempted to move from exclusive distribution or selective distribution to more intensive distribution. Give a reason why this might not be a good long-term strategy for a manufacturer.


106. Explain the differences between a vertical marketing system (VMS) and a conventional marketing system?


107. The most advanced supply-distributor arrangements for administering VMSs involve distribution programming. Explain the components of distribution programming.

jointly plan merchandising goals, inventory levels, space and visual merchandising plan, sales-training requirements, and advertising and promotion plans.

108. For a brick-and-click company to add e-commerce to its marketing mix, the firm must be aware that it creates the threat of a backlash from its channel partners. The question remains: How to sell both through intermediaries and online? Three strategies for successfully answering this question were postulated in the chapter. List and briefly define these three strategies.


Multiple Choice

109. Your product enjoys high brand loyalty and high involvement in the category. It has perceived differences that consumers recognize between brands and is one of the few that its consumers choose before selecting the retail store/Web site to purchase the product. Which promotion strategy would hold the greatest opportunity for incremental sales for your product?

a. Branding

b. Pull

c. Push

d. Hybrid

e. None of the above

110. Your product has low brand loyalty in its category; brand choice is often made by the consumer in the store, often at the very moment of purchase. Which promotion strategy would hold the greatest opportunity for incremental sales for your product?

a. Branding

b. Pull

c. Push

d. Hybrid

e. None of the above


When managing a hybrid channel, the channel manager must ensure that these different channels work seamlessly in the consumer’s opinion. When the consumer can order a product online and pick it up at the nearby retail store or be able to return the Internet-ordered product to the retail store, we state that the channel has ________.

f. channel strong core operations

g. channel integration

h. channel synergy

i. channel cooperation

j. channel committing to TQM

111. Jenny gathers information from a variety of channels, conducting extensive research on the advantages/disadvantages of the products available. She visits a number of high-priced retailers, asks numerous questions, and tries many of the products. When the time comes to purchase, she always purchases through the lowest-cost channel. Jenny is best described as a ________.

a. high-involvement shopper

b. variety-loving shopper

c. high-value deal seeker

d. habitual shopper

e. none of the above

112. Palm, the leading manufacturer of handheld devices, consists of a whole community of suppliers and assemblers of semiconductor components, plastic cases, LCD displays, and accessories; of off-line and online resellers; of 275,000 developers in the Palm Developer Network who have created over 21,000 software programs and 100 hardware add-ons for the Palm operating system for handheld computers and smartphones. Combined, these make up Palm’s ________.

a. demand chain planning

b. channel integration

c. enterprise resource planning

d. hybrid channel

e. value network

113. A company selling exercise equipment may need to establish three channels of distribution—a sales channel, a delivery channel, and a ________.

a. customer’s channel

b. dealer channel

c. service channel

d. speed channel

e. direct channel


Tupperware manufactures kitchen goods and has its representatives sell them through home parties. This is an example of a ________.

f. one-level channel

g. two-level channel

h. three level channel

i. direct marketing channel

j. none of the above

114. ________ deals between suppliers and retailers, such as Disney’s Consumer Products deal with Wal-Mart, are becoming a mainstay for specialists looking for an edge in a business world that is increasingly driven by price.

a. Exclusive

b. Selective

c. Intensive

d. Blanket

e. None of the above

115. In rolling out your company’s newest product, you decided to use manufacturers’ representatives as your sales agents. Part of your ________ was to establish territories based upon counties per state.

a. “trade-relations mix”

b. franchise agreements

c. pricing policies

d. product specs

e. conditions of sale

116. The sales of your product are low compared to your competition. The decision facing you is whether to use a sales agency (brokers, manufacturers’ representatives) or hire a field sales force. The fixed costs of engaging a sales agency are lower than those of establishing a company sales force, but costs rise faster through an agency. When figuring out sales and costs, the intersection of the costs between sales agencies and sales force (SB) means that ________.

a. above SB means that the company’scosts escalate

b. the sales agency is the better choice for any sales volume below this point

c. the sales force is the better choice for any sales volume below this point

d. the sales agency is the better choice for any sales volume above this point

e. both choices are equally good—choose the one that you are most comfortable with


117. Rolex is very selective when choosing the retailers that will sell its watches. The company needs to view its retailer in the same way as it views its end users. The firm needs to determine intermediaries’ needs and construct a channel positioning such that its channel offering is tailored to provide ________ to these retailers.

a. customer responsiveness

b. superior value

c. integrated marketing communications

d. market logistics

e. supply chain management

118. As more women entered the workforce and were unavailable to Avon’s traditional door-to-door system for selling cosmetics, Avon ventured into selling its cosmetics in JCPenney. Avon revised its channel strategy due to ________.

a. presence of a gap between the traditional distribution system and costs/profit constraints forcing new distribution methods

b. presence of a gap between the traditional and the ideal system that would satisfy the target markets needs and desires

c. desire to open new markets

d. desire to lower costs

e. desire to increase profits

119. When Kodak coordinates successive stages of production and distribution and receives cooperation from major retailers in connection with displays, shelf space, promotions, and pricing policies due exclusively to Kodak’s size and power , we call this a(n) ________.

a. conventional marketing channel

b. administered VMS

c. corporate VMS

d. contractual VMS

e. none of the above

120. The emergence of rental car counters, hair salons, banks, and dry cleaners found in such stores as Wal-Mart, Target, grocery retailers, and others is an example of ________ marketing systems.

a. horizontal

b. vertical

c. multichannel

d. integrated

e. none of the above


121. As a recent college graduate, you dream of opening up your own business. You have explored franchising. In fact, one of the companies that you are strongly interested in is a service organization (fast food) that has a whole system designed to bring its service efficiently to consumers. This is an example of a ________.

a. manufacturer-sponsored retailer franchise

b. wholesaler-sponsored voluntary chains

c. retailer cooperatives

d. national retailer

e. service-firm-sponsored retailer franchise

122. A soft-drink concentrate producer makes a 20% margin on its regular soda and 25% on its diet version of the same drink. The soft-drink bottlers, however, are required to sell both the regular and diet versions to the retailers at the same price. This is a classic example of ________.

a. unclear roles and rights

b. goal incompatibility

c. channel coordination

d. channel conflict

e. direct conflict

123. In deciding to take your product to market, one of the first considerations must be your channel or channels of distribution. If you decide to sell your product (a) in exclusive franchisee operations and (b) to mass distributors/retailers concurrently, to the same target market, this may lead to a ________.

a. rapid market penetration

b. good business marketing

c. vertical channel conflict

d. horizontal channel conflict

e. multichannel conflict

124. As a marketing manager for a national company that uses brokers as your field sales agents, you suggest to your senior management the creation of an “advisory team” composed of retailers, food brokers, sales managers, and inside marketing and management personnel. Your objective is to win support of the leaders of another organization by including them in planning discussions. You are advocating what type of conflict management resolution?

a. Arbitration

b. Mediation

c. Co-optation

d. Diplomacy

e. None of the above


The text would define eBay, a third party that creates markets by linking buyers and sellers, as a ________.

f. market maker

g. infomediaries

h. customer communities

i. supplier

j. none of the above

125. Harley-Davidson’s entry into the Web for their parts and accessory business called for them to “protect” their retailers by referring customers to the local Harley-Davidson dealer. One additional strategy available to firms wishing to protect their channels of distribution yet capitalize on Internet sales is ________.

a. offer fewer services to Web customers than retail customers

b. offer online partners higher commission rates

c. offer off-line partners higher commission rates

d. sell identical brands/products

e. do not allow customers to order through the Web site

Short Answer

126. Define the term “marketing channels.”

127. Why is a marketing channel system so important to the manufacturer?

128. The ability by the consumer to access information via the Internet, conduct business transactions either by phone, Internet, or in person is an example of a company using what type of marketing channels?


129. When you deliver the products to the customer, exchange title of the goods, or even conduct a sales promotion, you are conducting a forward flow of activity through the channel. Explain the elements for a backward flow from customers to the company.

130. In setting up your distribution channel, you note that you must account for the physical transfer of the product from your location to the consumer and must receive payment for the goods sold. These are part of the channel functions. All channel functions must be performed and have three things in common. List the three things that all functions have in common.

131. Your company has decided to use a distribution channel that consists of a wholesaler, a jobber, and a retailer to reach your final consumer or user of your product. How many channel levels are involved in the distribution of your product to the final user?

132. When we talk about manufacturers’ redemption centers, community groups, trash-collection specialists, recycling centers, and central processing warehouses, we are talking about what kind of distribution channels?

133. The ability of a shopper of laundry detergents to visit a grocery retailer and see a wide variety of brands, sizes, and units for purchase is an example of what elements of the channel service output?


134. As the “channel manager” for your firm, you have been asked by senior managers to identify new distribution channels for the launch of a new product. Your presentation describes a channel alternative as having three sets of elements. What are the three elements that would be contained in your presentation?

135. A leading manufacturer of watches maintains a set of very exclusive networks of retailers (exclusive distribution) that are authorized to sell its watches. This exclusivity ensures that the company can control the service level, distribution, and outputs offered by the retail stores doing business with them. Recently, however, there has been pressure on the company (by Wall Street investors) to expand its products to more and more retailers (intensive distribution) in order to increase sales. What are some of the dangers that the company might encounter when moving from one form of distribution to another?

136. List the main elements in the “trade-relations mix” between producers and channel members.

137. As the channel manager at a consumer products firm, you develop a channel incentive program in which channel members receive an extra 2% discount on all purchases when the channel members agree to pass half of this discount along to their customers in terms of a price decline. This is an example of what type of channel power?


138. When you purchase a Subway franchise, the corporate office delivers to you an entire system designed to bring the services efficiently to the consumer. This is an example of what type of contractual VMS?

139. When independent operators such as optometrists or nail and hair salons locate in the front part of selected retail superstores, this is an example of what type of marketing system?

140. A textbook manufacturer uses a direct sales force to reach the college market, a telemarketing division to reach small independent bookstore owners, and rack jobbers to reach retail outlets. This is an example of what type of marketing systems?

141. What three important benefits can companies gain by adding more channels?

142. Identify four things that marketers can do to better integrate their online and off-line channels.


143. You own a franchise of a national chain of quick luncheon meals. The corporate office is conducting a nationwide marketing campaign introducing a $5.00 value meal option. This $5.00 value meal option severely cuts into you operating margins. Numerous complaints to the corporate office have resulted in the corporate office taking the position that “the franchisees need to be competitive and this $5.00 meal is competitive.” You disagree, noting that even with an increase in store traffic, the reduction in revenue and margin produced by this value menu will result in a net loss for your store. What type of channel conflict is evident here?

144. When one Pizza Hut franchisee noticed that his counterpart in the south part of town was using “nonapproved” ingredients in its Pizza Hut pizzas, he complained to the franchise office. This is an example of what type of channel conflict?

145. In setting up your company’s channel of distribution, you arranged for the company’s products to be carried by a select set of outlets and required that these outlets not carry competitive products. What are the benefits to the company and to the distributor in entering into such an exclusive distribution and exclusive dealing arrangement?

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