Chapter 12—Marketing Channels and Supply Chain Management
TRUE/FALSE
1. A marketing channel is a business structure composed of interdependent organizations that reach from
the point of product origin to the final consumer.
2. As products move through the marketing channel, channel members provide specialization and
division of labor, overcome discrepancies, and provide contact efficiency.
3. A consumer stopped by the convenience store to buy a bag of charcoal briquettes. She only needs one
bag, but the manufacturer produces millions of bags. For consumers, the convenience store overcomes
a discrepancy of dimensions.
4. Residents of Sobarro, New Mexico, live in an isolated area of the state. Residents must travel two
hours to receive medical treatment. Luckily, a physician has just opened a new practice in Sobarro. In
this case, the physician has overcome service discrepancies by opening an office close to consumers.
5. Consider a scenario in which there are four manufacturers, no intermediaries, and three consumers.
Twelve transactions would be required for each consumer to receive products from each manufacturer.
The introduction of one intermediary reduces the required number of transactions to four and
demonstrates the idea of contact efficiency.
6. A merchant wholesaler is an institution that buys goods from manufacturers and resells them to
businesses, government agencies, and other wholesalers or retailers.
7. Carl represents a manufacturer of floor coverings and gets paid a commission for finding buyers and
linking them up with the manufacturer. Carl is an example of a merchant wholesaler
8. The three basic functions a channel intermediary provides are transactional, logistical, and facilitating
functions.
9. The logistical functions performed by intermediaries include physically distributing, storing, sorting,
and financing.
10. Harriet Lowe makes children’s clothing, which she sells at craft festivals to end users. Lowe does not
use channel intermediaries, which means she uses a direct channel.
11. The direct channel is used more often in consumer markets than in business-to-business markets.
12. LoneStar Bar & Grill is a small chain of restaurants that feature marinated steaks. The marinade is so
popular that LoneStar sells it at its restaurants and also sells it at Kroger supermarkets. This is an
example of intensive distribution.
13. Supply chain management is completely producer-driven.
14. Companies that use supply chain management techniques typically also use a push promotional
strategy.
15. Supply chain management is a key means of differentiation for a firm and a critical component in
marketing and corporate strategy.
16. Metallurgical Designs makes gold and silver charms for necklaces and bracelets. It markets its charms
to a few retailers in any one region and promotes them intensively to those retailers. This is an
example of intensive distribution.
17. Shopping goods are usually distributed selectively. Consumers are willing to look around for them but
may not be willing to search or travel extensively to acquire the product.
18. Exclusive distribution is the most extensive form of market coverage.
19. At one end of the channel relationship continuum is the “Arm’s Length” relationship.
20. Highly integrated channel relationships are the preferred relationship because there is no large outlay
of assets required to keep the channel members all working toward the same results.
21. Integrated channel relationships tend to be more flexible than cooperative relationships.
22. EDI is often used to replace paper documents with electronic documents containing the same
information.
23. Managing inventory from the supplier to the manufacturer is called distribution resource planning
(DRP).
24. The goal of a materials-handling system is to handle products as infrequently as possible.
25. The six criteria important in selecting a transportation mode are relative cost, transit time, reliability,
capability, accessibility, and traceability.
26. Air transportation is faster, cheaper, and more dependable than rail transportation.
27. Traceability with respect to transporting modes refers to the relative ease with which a shipment can
be located and transferred.
28. Both water transportation costs and transit speed are low when compared with any other transportation
mode.
29. Another name for outsourcing is contract logistics.
30. Digital distribution is a distribution technique that includes any kind of product or service that can be
distributed electronically.
31. Global supply chains are particularly at risk regarding supply chain security.
32. Manufacturers who require suppliers to meet certain environmental standards are implementing green
supply chain management.
33. An international consumer products manufacturer requires all of its suppliers to provide the lowest
possible cost and to adhere to a just-in-time inventory system. Wholesalers and manufacturers
generally yield to the authority of this large manufacturer. This consumer products manufacturer
exercises channel power.
34. Reciprocal conflict occurs among channel members on the same level, such as two or more different
wholesalers or two or more different retailers that handle the same manufacturer’s brands.
35. Many regard vertical conflict as healthy competition.
36. Because distribution creates the same problems whether it is in Ethiopia, Indonesia, or Canada, you
will find that channel structures and types around the world are very similar to those in the United
States.
37. Gray marketing channels assist brand name manufacturers in marketing their products more
efficiently.
38. Unlike marketers of physical products, marketers of services do not have to address the question of
logistics since services do not require a distribution strategy.
39. When discussing the distribution of services, you will often hear channel members discussing the need
to minimize wait times.
MULTIPLE CHOICE
1. A _____ is a business structure of interdependent organizations that reaches from the point of product
origin to the consumer.
a.
facilitating agency or place member
b.
marketing mix intermediary
c.
selective distribution channel
d.
marketing channel or channel of distribution
e.
transportation channel or channel of movement
2. Jones Soda is positioned as the anti-Coke. In the early years, few mainstream retailers sold Jones soda.
Fans had to get their Jones fix in surf shops, tattoo parlors, and bookstores, adding to the brand’s
mystique. Jones Soda used its _____ to create a competitive advantage.
a.
channel ascendancy
b.
distribution channel
c.
channel conflict
d.
channel focus
e.
vertical integration
3. Kayak.com is a company that allows customers to efficiently search databases to find the best airline
and hotel deals all over the Web. Kayak does not make bookings, but rather provides
recommendations for the best travel plans. Travel providers pay Kayak a commission when customers
click through to their sites. Kayak.com, travelers, the airlines, and the hotels are all part of a:
a.
facilitating agency
b.
marketing mix intermediary
c.
selective promotion channel
d.
marketing channel or channel of distribution
e.
transportation channel or channel of movement
4. Marketing channels can achieve economies of scale through:
a.
overcoming spatial discrepancies
b.
contact expertise
c.
specialization and division of labor
d.
overcoming temporal discrepancies
e.
overcoming discrepancies of quantity
5. Distribution channels aid in overcoming barriers to exchange that are created in the production process
by overcoming all of the following types of discrepancies EXCEPT:
a.
possession
b.
assortment
c.
quantity
d.
spatial
e.
temporal
6. A discrepancy of _____ is the difference between the amount of product produced and the amount an
end user wants to buy.
a.
space
b.
quantity
c.
assortment
d.
accumulation
e.
possession
7. Kraft Foods produces millions of packages of Chips Ahoy cookies each year, but consumers only want
to purchase one package at a time. This difference between the amount Kraft produces and the amount
a consumer wants to buy is refer to as a:
a.
discrepancy of quantity
b.
discrepancy of assortment
c.
spatial discrepancy
d.
temporal discrepancy
e.
discrepancy of possession
8. Which of the following is the lack of all the items a customer needs to receive full satisfaction from a
product or products?
a.
discrepancy of assortment
b.
discrepancy of quantity
c.
spatial discrepancy
d.
temporal discrepancy
e.
discrepancy of possession
9. McKesson Wholesalers provides health care products to pharmacies. It purchases bandages, gauze,
antibacterial cream, and ointments from a variety of different manufacturers and resells them to
pharmacies so that many of the items a customer might need for a cut will be available in the store.
McKesson is aiding consumers by overcoming a:
a.
spatial discrepancy
b.
discrepancy of quantity
c.
discrepancy of assortment
d.
demand discrepancies
e.
discrepancy of possession
10. Certified Grocers Midwest, Inc., the Chicago-based grocery wholesale cooperative, provides all kinds
of meats, cereals, canned and fresh fruits and vegetables, beauty aids, health care items, and pet
products to the supermarkets in its channel. Certified Grocers is aiding consumers by overcoming:
a.
spatial discrepancy
b.
discrepancy of quantity
c.
discrepancy of assortment
d.
demand discrepancies
e.
discrepancy of possession
11. A(n) _____ discrepancy is created when a product is produced but a consumer is not ready to purchase
it.
a.
quantity
b.
supply
c.
possession
d.
temporal
e.
assortment
12. Cutter & Buck is a high-end fashion sportswear company. Even though swimwear is a product
category that does not sell year round, its sales remain steady all year because Cutter & Buck sells to
wholesale distributors that stock the product. Its wholesale distributors are helping to overcome a(n)
_____ discrepancy.
a.
assortment
b.
spatial
c.
possession
d.
quantity
e.
temporal
13. Vicobello is a major manufacturer of outdoor fountains that are currently popular in gardens. Even
though fountains represent a product category that does not sell year round due to inclement weather,
Vicobello’s sales remain steady all year because it sells to wholesale distributors that stock the product.
Its wholesale distributors are primarily helping to overcome a(n) _____ discrepancy.
a.
assortment
b.
spatial
c.
possession
d.
quantity
e.
temporal
14. The difference between the location of a producer and the location of widely scattered markets
represents a(n) _____ discrepancy.
a.
spatial
b.
temporal
c.
assortment
d.
quantity
e.
ownership
15. YKK slide fasteners (zippers) are made in Macon, Georgia, yet manufactures all over the world use
zippers to manufacture, clothes, luggage, shoes, and other items. Wholesalers around the world
primarily help to overcome a(n) _____ discrepancy.
a.
creation
b.
temporal
c.
assortment
d.
spatial
e.
ownership
16. Marketing channels make distribution simpler by reducing the number of transactions required to get
products from manufacturers to consumers. This is called:
a.
forward integration
b.
contact efficiency
c.
elimination of temporal discrepancies
d.
sorting
e.
reciprocity
17. When an intermediary in the channel of distribution owns the merchandise and controls the terms of
the sale, this is referred to as:
a.
complete control
b.
exclusive distribution
c.
taking title
d.
contact efficiency
e.
economies of scale
18. The major characteristic that is used to differentiate among types of intermediaries is whether they:
a.
install exchange barriers such as location, time, and quantity
b.
create specialization of labor
c.
create economies of scale
d.
take title to the products they sell
e.
raise profit margins for independent middlemen
19. Retailers and merchant wholesalers are examples of intermediaries that:
a.
take title to a product
b.
create temporal and spatial discrepancies
c.
use consumer promotions
d.
do not benefit from any economies of scale
e.
are accurately described by all of these statements
20. Which of the following intermediaries sell mainly to consumers?
a.
retailers
b.
merchant wholesalers
c.
agents
d.
brokers
e.
specialists
21. A(n) _____ is an institution that buys goods from manufacturers, takes title to these goods, and resells
them to businesses, government agencies, and/or other wholesalers or retailers.
a.
merchant wholesaler
b.
agent
c.
drop shipper
d.
channel cooperative
e.
marketing cooperative
22. W.W. Grainger, Inc., is one of the world’s largest business-to-business distributors of equipment,
component parts, and supplies in the United States and Canada. It has ownership title to over 220,000
products, which are stocked in one national and nine regional warehouses to guarantee product
availability and quick service to the many manufacturers who are its customers. W.W. Grainger is an
example of a(n):
a.
agent or broker
b.
merchant wholesaler
c.
retailer
d.
consumer market
e.
hypermarket intermediary
23. Long Island Lefty provides retailers and other businesses with the latest and the best products for left-
handed consumers. It buys all types of products from a variety of manufacturers and stores the
merchandise in its New York warehouse until purchased by buyers. Long Island Lefty does not sell to
end users and is an example of a(n):
a.
agent or broker
b.
merchant wholesaler
c.
retailer
d.
consumer market
e.
hypermarket intermediary
24. Agents and brokers:
a.
have a great deal of control and risk invested in the goods
b.
only represent manufacturers in sales situations
c.
have a great deal of input on the terms of the sale
d.
generally are on salary with the manufacturer
e.
do not take title to merchandise
25. _____ are wholesaling intermediaries who facilitate the sales of a product from producer to end user
by representing retailers, wholesalers, or manufacturers and providing little input as to the terms of the
sale.
a.
Marketing facilitators
b.
Channel cooperatives
c.
Agents and brokers
d.
Merchant wholesalers
e.
Channel functionaries
26. Generally, _____ determine what type of intermediary a manufacturer should use:
a.
product characteristics, buyer consideration, and market characteristics
b.
internal environmental characteristics only
c.
competitive conditions and government regulations
d.
all controllable marketing factors
e.
only noncontrollable environmental factors
27. The three basic functions channel intermediaries perform are:
a.
transactional, logistical, and facilitating
b.
contacting, negotiating, and ownership
c.
promoting, distributing, and bulk-breaking
d.
assorting, accumulating, and allocating
e.
financing, mediating, and storing
28. Which of the following is a transactional function performed by intermediaries?
a.
sorting
b.
researching
c.
risk taking
d.
physically distributing
e.
storing
29. Transactional channel functions include all of the following activities EXCEPT:
a.
contacting buyers
b.
promoting the products to be sold
c.
taking the risks associated with product inventories
d.
negotiating the sale
e.
physical distribution and sorting
30. Which of the following is a logistical function performed by intermediaries?
a.
sorting
b.
negotiating
c.
financing
d.
risk taking
e.
all of these choices
31. Marketing channels perform all of the following logistical activities EXCEPT:
a.
sorting
b.
storing
c.
physically distributing
d.
risk taking
e.
breaking bulk
32. All of the following are sorting activities EXCEPT:
a.
assorting
b.
accumulation
c.
sorting out
d.
allocation
e.
possession
33. Breaking bulk at the wholesale level is called:
a.
allocating
b.
accumulation
c.
storing
d.
downsizing
e.
grading
34. With respect to the sorting logistical function, _____ is the combining of similar stocks into a larger
homogeneous supply.
a.
sorting out
b.
accumulating
c.
allocating
d.
breaking bulk
e.
assorting
35. Which of the following are examples of facilitating functions performed by wholesaling
intermediaries?
a.
sorting and storing
b.
risk taking and promotion
c.
assorting, accumulating, grading, and allocating
d.
researching and financing
e.
financial management and storing
36. _____ is the efficient and cost-effective forward and reverse flow and storage of goods, services, and
related information, into, through, and out of channel member companies.
a.
Disintermediation
b.
Logistics
c.
Materials handling
d.
Intermodal transportation
e.
Contract logistics
37. _____ describes the process of strategically managing the efficient flow and storage of raw materials,
in-process inventory, and finished goods from point of origin to point of consumption.
a.
Contract logistics
b.
Logistics
c.
Cross-docking
d.
Disintermediation
e.
Channel facilitation
38. Serenity is a manufacturer of outdoor fountains that are currently popular in gardens. Even though
fountains represent a product category that does not sell year round due to inclement weather,
Serenity’s sales remain steady all year because it sells to wholesale distributors that stock the product.
Serenity sells to wholesale distributors that perform _____ functions for the manufacturer.
a.
financial
b.
transactional
c.
facilitating
d.
logistical
e.
promotional
39. One configuration of a marketing channel entails producers selling to consumers with no
intermediaries involved. This is called a:
a.
limited distribution system
b.
conventional channel
c.
vertical marketing system
d.
reciprocal channel
e.
direct channel
40. The only way Jim Keeler in New Mexico can get a box of Carolyn Popwell’s Festive Holiday Truffles
from Washington is to order it through the mail. Popwell, who makes the candy by hand, uses a(n)
_____ exclusively.
a.
exclusive distribution system
b.
conventional channel
c.
vertical marketing system
d.
reciprocal channel
e.
direct channel
41. Vutek manufactures printing machines used to print high resolution graphics for billboards, bus cards,
banners, and posters. For distribution, you would expect Vutek to use a:
a.
network of facilitating agents
b.
horizontally integrated channel
c.
reciprocal channel
d.
direct channel
e.
vertical marketing system
42. Centigon is a manufacturer of customized armored vehicles for military, private, presidential, and
commercial uses. Each armored vehicle is designed to deliver security on the road while also
achieving optimum levels of performance and comfort. For distribution, you would expect Centigon to
use a:
a.
network of facilitating agents
b.
horizontally integrated channel
c.
reciprocal channel
d.
direct channel
e.
vertical marketing system
43. All of the following are typical channel members in marketing channels for consumer products
EXCEPT:
a.
retailer
b.
agent/broker
c.
industrial distributor
d.
producer
e.
wholesaler
44. Companies selling standardized items of moderate or low value to other businesses (not to consumers)
often use:
a.
retailers
b.
industrial distributors
c.
wholesalers
d.
bulk breakers
e.
industrial resellers
45. _____ distribution occurs when a producer selects two or more different channels to distribute the
same products to target markets.
a.
Selective
b.
Intensive
c.
Dual
d.
Contractual
e.
Cumulative
46. Customers can purchase HP computers from retail stores like Best Buy and Office Depot, online
directly from HP, and through various catalogs. HP is using a(n) _____ distribution arrangement.
a.
intensive
b.
multiple
c.
exclusive
d.
cumulative
e.
aggregated
47. Which of the following enables a company to use another manufacturer’s already established channel?
a.
strategic channel alliances
b.
relationship channels
c.
reverse channels
d.
multiple distribution systems
e.
nontraditional channelization
48. Selfridges is the second-largest department store in Great Britain. It works with House of Frasier, one
of its competitors, to reduce operating costs by sharing channels of distribution to ship goods from
1,500 plus suppliers. Selfridges and House of Frasier are engaged in:
a.
vertical conflict
b.
an integrated supply chain
c.
a strategic channel alliance
d.
an information-based distribution channel
e.
a distribution cooperative
49. When Delphi-Grundig, a manufacturer of state-of-the-art car radios, decided to expand its marketing
efforts into countries in which its products are not currently available, it did not have the time or
resources to spend on developing new channels of distribution. Delphi-Grundig should consider a(n):
a.
industrial distributor
b.
franchising system
c.
reverse channel
d.
strategic channel alliance
e.
channel cooperative
50. The connected chain of all of the business entities, both internal and external to the company, that
perform or support the logistics function is known as the:
a.
channel of distribution
b.
intermediary link
c.
physical distribution integration
d.
reseller network
e.
supply chain
51. _____ coordinates and integrates all of the activities performed by channel members into a seamless
process, from the source to the point of consumption, resulting in enhanced customer and economic
value.
a.
Yield management
b.
Channel power
c.
Materials handling
d.
Supply chain management
e.
Physical distribution
52. All of the following accurately describe supply chain management EXCEPT:
a.
physical flow process
b.
customer-driven
c.
provides enhanced customer and economic value
d.
plays the role of communicator of customer demand
e.
relies on a “push” strategy
53. Peachtree Windows does not make a window until an order is received. It can promise delivery in five
working days because of the excellent relationships it has established with its suppliers. The partnering
relationship that Peachtree Windows has established with its suppliers indicates the use of: