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1. Company ABC is trying to determine which products it should introduce. It is more efficient for Company
ABC to produce a large quantity of a limited number of goods.
a. True
b. False
2. Most buyers wish to purchase a larger quantity of a wider variety of goods.
a. True
b. False
3. A distribution channel is a network of firms that are interconnected in their quest to provide sellers a means
of infusing the marketplace with their goods and buyers a means of purchasing those goods, doing all as
efficiently and profitably as possible.
a. True
b. False
4. Everyone in the distribution network is involved with customer-oriented activities.
a. True
b. False
5. Some cost is associated with each link in a distribution channel so all links should contribute value.
a. True
b. False
6. The system with an intermediary channel member is more efficient than all firms going direct to consumers.
a. True
b. False
7. The downstream partners that help a company reach consumers comprise the channel members.
a. True
b. False
8. Inexpensive consumer packaged goods should be distributed intensively.
a. True
b. False
9. Archie and Betty are examining how their firm manages the sales process, and they are considering selling
directly to consumers without maintaining a sales force. In making their decision, they should consider the
complexity of their product.
a. True
b. False
10. Selectivity in channels offers additional benefits to the manufacturer, such as few relationships to manage
and the cost of interactions is less.
a. True
b. False
11. Exclusive channels can be easily accessed by all consumers.
a. True
b. False
12. Companies cannot succeed without distribution partners.
a. True
b. False
13. The types of goods that require a sales force are less expensive than those that don’t.
a. True
b. False
14. Foluke and Rachael need to buy appliances for a restaurant that they will open in a few months. To save
money, they can purchase the appliances through intensive distribution channels.
a. True
b. False
15. ABC Inc. needs to attract more customers to its restaurants. The marketing department sends coupons to its
current customers. Coupons are an example of push marketing.
a. True
b. False
16. When a manufacturer gives an incentive to a retailer as a part of push marketing, the retailer has to pass that
incentive on to the customer.
a. True
b. False
17. The channel design does not need to be consistent with all the other marketing elements (i.e., it is a stand-
alone process).
a. True
b. False
18. The extensiveness of distribution channels is related to the brand’s life cycle or the company’s maturity in
the marketplace.
a. True
b. False
19. “Push” and “pull” refer simply to whether the manufacturer targets consumers or channel partners with its
marketing communications.
a. True
b. False
20. Executives at Inspiron Company disagree as to which channel partners are the best fit for their business.
One executive says that a particular channel partner’s interactions with customers are not in sync with Inspiron
Company’s vision and mission statement. When channel partners differ in their opinions on how to please
customers and maximize profit, such as the case between Inspiron Company and its channel partner, conflict
can arise.
a. True
b. False
21. Channel members frequently bicker over prices and margins.
a. True
b. False
22. When power is used to resolve conflict, the less powerful player can feel resentful and look to leave the
channel arrangement as soon as another opportunity becomes available.
a. True
b. False
23. Transaction cost analysis is a model that does not consider channel members’ marketing costs and
governance costs because they are ideally minimized.
a. True
b. False
24. Channel experts speak of trust as both the willingness and ability to deliver on promises.
a. True
b. False
25. Top managers at S & A, Inc. believe that their staff needs some help understanding the perspectives and
needs of the distributors they work with. It could be a good idea for them to exchange some personnel with
these distributors for a short time in order to achieve this.
a. True
b. False
26. Arbitration is when the third party makes a binding decision for the two conflicting parties.
a. True
b. False
27. Buyers and sellers usually come to the table as equals when bargaining.
a. True
b. False
28. There’s a markup (profit to be made) when the manufacturer yields product to the retailer, and there’s a
second markup (more to be made) when the retailer makes the product available to the consumer.
b. False
29. Maya's family owns the only pharmacy in Smalltown. Adeline's family owns the only grocery store in town.
A few items are sold by both retailers. This is an example of vertical competition.
a. True
b. False
30. ABC Groceries has established private labels in several categories, including locally grown canned fruits
and vegetables. This is an example of backward integration.
a. True
b. False
31. A very popular means of forward integrating has been manufacturers providing their wares online for direct
purchasing.
a. True
b. False
32. If private labels sell well, they give the manufacturer negotiating power with the retailer.
a. True
b. False
33. Retailers are categorized by their level of service, which tends to be positively related to their price points.
a. True
b. False
34. General merchandise retailers may carry depth, but they do not carry breadth, and the product assortment is
broader at specialty stores.
a. True
b. False
35. Wanting to please the customer but being unable to do so is an example of role conflict.
a. True
b. False
36. An important form of international channel support these days is global outsourcing.
a. True
b. False
37. PizzaPie Company plans for explosive growth over the next five years. The company might consider
creating a franchise system to enable multisite expansion.
a. True
b. False
38. If Tara wants to open her own ABC franchise, she will have to pay an upfront fee as well as royalties to the
franchisor.
a. True
b. False
39. ABC Clothing has a catalog that enables consumers to browse and order new clothing. Based on current
research, the company should replace its catalog with an Internet site that customers can browse.
a. True
b. False
40. Network Supplies, Inc. manufactures and sells an undifferentiated product line. Its products are very similar
to others available in the marketplace. Thus, the quality of the company’s sales force is likely to be the most
significant means of differentiation for the firm.
a. True
b. False
41. Selling Company produces its product in batches of 100, yet its average customer only purchases 10 at a
time. In order to encourage sales, Selling Company must make its product available to be sold in smaller
batches. This process is known as
a. quantities.
b. breaking bulk.
c. limited goods.
d. none of these.
42. Coordinating the flow of all goods, services, and information among channel members, and throughout the
channel, is referred to as
a. supply chain management.
b. a distribution channel.
c. logistics.
d. flow marketing.
43. BrainTrust Company produces and sells educational toys for children. In pricing its product, the company
needs to make sure it properly estimates its costs. The company can safely estimate that transportation is what
percentage of total distribution cost?
a. 50%
b. 75%
c. 30%
d. 100%
44. Ordering, handling, and shipping are __________ activities.
a. customer-oriented
c. marketing-oriented
d. coworker-oriented
45. Storage and display are __________ activities.
a. customer-oriented
b. product-oriented
c. marketing-oriented
d. coworker-oriented
46. Promotion and financing are __________ activities.
a. customer-oriented
b. product-oriented
c. marketing-oriented
d. coworker-oriented
47. Pixar makes fun movies. What role does the movie theater play in the distribution channel?
a. manufacturer
b. distributor
c. retailer
d. customer
48. The __________ of channels is a network of suppliers and providers, and the __________ of channels is
efficiency, scales, and consistency in positioning.
a. who, what
b. what, who
c. why, what
d. what, why
