Chapter 15 – Distributing Products
263. Bunny Babbett has just become an independent contractor selling the products of
Tweethouse, a firm that makes elaborate (and expensive) birdhouses and bird feeders.
Bunny was recruited to the firm by Sylvester Katt, who already sells the Tweethouse
products as an independent contractor. Sylvester told Bunny that both he and she would
receive a commission on every item she sold. He also pointed out that she could boost her
income significantly by recruiting more people to sell the products, because she would
receive a commission on her recruits’ sales. The arrangement described by Sylvester
suggests that Tweethouse is using:
A. multilevel marketing.
B. hierarchical distribution.
C. line and staff selling.
D. the Lorenzo method.
Feedback: In multilevel marketing, salespeople are expected to recruit more salespeople.
Each salesperson operates as an independent contractor and receives a commission on the
sales of his or her recruits.
264. In a(n) ____________ distribution system all of the organizations in the channel of
distribution are owned by one firm.
A. administered
B. contractual
C. supply-based
D. corporate
265. In a(n) __________ distribution system the producer manages all of the marketing
functions at the retail level.
A. administered
B. contractual
C. conglomerate
D. master limited
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266. Franchise systems are one type of __________ distribution system.
A. corporate
B. wholesale
C. contractual
D. administered
267. McDonald’s, KFC, Baskin-Robbins, and AAMCO all make use of the __________
form of contractual distribution system.
A. wholesale-sponsored chain
B. franchise
C. retail cooperative
D. horizontally administered
268. In a(n) ___________, independently owned and managed stores sign an agreement to
use the same name, participate in chain promotions, and cooperate as a unified system.
A. administered distribution system
B. corporate distribution system
C. wholesaler-sponsored chain
D. cash-and-carry chain
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272. One thing that franchise systems, wholesaler-sponsored chains and retail cooperatives
have in common is that they are all:
A. distribution systems in which producers also act as intermediaries in the distribution
process.
B. dependent on multilevel marketing strategies.
C. forms of distribution systems in which a single firm owns all of the organizations
involved in distributing the product.
D. forms of contractual distribution systems.
Feedback: The three basic types of contractual distribution systems are franchise systems,
wholesaler-sponsored chains, and retail cooperatives.
273. In administered distribution systems, retailers:
A. are reluctant to cooperate because they must perform many marketing functions for an
uncertain payment.
B. receive a great deal of marketing help from producers.
C. are really subsidiaries of a manufacturer.
D. sign a contract agreeing to cooperate with wholesalers in the channel of distribution.
Feedback: In an administered distribution system, producers manage all of the marketing
functions at the retail level. Retailers often find this an attractive system because they get so
much free help from the producer.
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293. __________ warehouses are used to hold products for a relatively long time.
A. Storage
B. Public
C. Seasonal
D. Distribution
294. Logistics is concerned:
A. with flows of materials, finished products, and information.
B. only with the flow of information, not the flow of materials and products.
C. with the flow of materials to the manufacturer and with the flow of finished products to
the consumer, but not with the flow of information.
D. only with the flow of finished goods from the producer to the final consumer.
Feedback: Logistics involves planning, implementing, and controlling the physical flow of
materials, final goods, and related information.
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298. Items such as snow skis, lawnmowers, and other highly seasonal items are often held
in ___________ warehouses during the months they are not in demand.
A. seasonal
B. distribution
C. set aside
D. storage
Feedback: Storage warehouses are used to store products for extended periods. This type of
warehouse is used to store seasonal items during the time they are not in demand.
299. Which of the following activities would be most closely associated with inbound
logistics?
A. Arranging equipment on the factory floor so that materials move smoothly and
efficiently from one work station to the next
B. Evaluating various shipping methods to find the most efficient way to transport goods
to the final customer
C. Establishing a program to encourage customers to return used products to the
manufacturer so materials can be recycled
D. Working with suppliers to establish a more frequent delivery system that will enable
the manufacturing firm to hold smaller inventories of parts and materials
Feedback: Inbound logistics is concerned with the movement of parts and materials from
suppliers to producers.