Global Marketing Management, 8e (Keegan)
Chapter 12 Global Marketing Channels
1) Distribution channels are composed of coordinated groups of individuals or firms that add
utility to a product or service.
2) Street vendors are considered distribution channels.
3) Distribution channels in markets around the world are among the most highly uniform aspects
of national marketing systems.
4) Place utility refers to the availability of a product or service when desired by a customer.
5) The starting point in selecting the most effective channel arrangement is a clear focus on a
company’s marketing effort in a target market.
6) Indirect involvement as a channel strategy requires a company to establish franchised outlets.
7) Direct involvement as a channel strategy requires incentives to be paid to independent channel
agents.
8) The need for multiple channel intermediaries increases as the number of customers increases
in a market.
9) Direct selling that bypasses wholesale intermediaries is a cost-effective means of serving
large-volume retailers.
10) The degree of standardization of a product has no influence on channel design and strategy.
11) Companies using direct distribution for consumer products rely on low gross margins to
generate the revenue necessary to compensate salespeople.
12) Bulky products require channel arrangements that minimize the number of times products
change hands between channel intermediaries before reaching customers.
13) Soft drinks are an example of a bulky product whose widespread availability is an important
aspect of an effective marketing strategy.
14) Middlemen often practice cherry picking which is highly advantageous to manufacturers
attempting to break into a market with a new product.
15) Middlemen are in business to maximize their own profit and not that of the manufacturer.
16) A disadvantage to manufacturers for using a distributor’s sales force is that it generally tends
to increase costs.
17) Two of the most important clauses in a distributor contract are the performance and
cancellation clauses.
18) It is expensive and often impossible to terminate distributor and agent agreements.
19) Termination can result in legal expenses.
20) There is a need to delegate a large degree of independence to local channel agents because of
the enormous variety of economic, social, and political environments internationally.
21) Door-to-door selling is a relatively inexpensive form of distribution that requires low gross
margins.
22) Door-to-door selling is growing in popularity in many countries at later stages of market
development.
23) Half of Japan’s cars are sold through door-to-door selling.
24) Companies sometimes establish retail outlets as a means of obtaining marketing intelligence
rather than as a distribution strategy.
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25) In the case of franchise operations, a franchisor agrees to operate a business according to a
plan defined by a franchisee and under a trade name owned by the franchisee.
26) The first step in becoming a global franchisor is to have a well-established and successful
operation in a home market.
27) Japan has a characteristic distribution pattern where several layers of small wholesalers play
an important role in the distribution of food.
28) The larger a market, the less feasible it is for a manufacturer to use its own sales force to
distribute industrial products.
29) The low cost of a direct sales force acts as an incentive for establishing direct distribution in
a new market.
30) The process of disintermediation in the global distribution system has been declining at a
steady rate.
31) Order handling refers to the process by which products are made available to a customer.
32) When entering Japan, it is recommended that foreign companies offer better quality, lower
price, or a distinctive positioning as a foreign product.
33) A ________ is an organized network of agencies and institutions which, in combination,
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perform all the activities required to link producers with users to accomplish the marketing task.
A) fulfillment house
B) demand signal repository
C) general line of merchandise
D) channel of distribution
34) The purpose of marketing channels is to create ________.
A) time utility
B) place utility
C) form utility
D) all of the above
35) Which of the following best explains form utility?
A) the availability of answers to questions about useful product features and benefits
B) the availability of a product that is processed, prepared, ready to use, and in proper condition
C) the availability of a product or service in a location that is convenient to a potential customer
D) the availability of a product or service when desired by a customer
36) In the case of direct involvement, a company that wants to enter a competitive market should
________.
A) establish franchised outlets in the new market
B) approach retailers selling substitute products in the new market
C) approach retailers selling complementary products in the new market
D) establish bonds with distributors or wholesalers in the new market
37) Which of the following is an example of having direct involvement when entering a
competitive market?
A) using independent agents
B) using wholesalers
C) using distributors
D) using retail stores
38) Which of the following statements is true of the influence of customer characteristics on a
company’s channel strategy?
A) The need for multiple channel intermediaries decreases as the number of customers increases.
B) The need for multiple channel intermediaries is high during the early stages of market
development.
C) The need for multiple channel intermediaries increases toward the last stages of market
development.
D) The technique of direct selling is one of the most cost-effective means of serving large-
volume retailers.
39) Which of the following statements is true of the influence of product characteristics on a
company’s channel strategy?
A) Products with low unit prices are usually sold using a company’s sales force.
B) Products that are sold using direct distribution generally require narrow selling margins.
C) Perishability is an important product characteristic that influences channel strategy.
D) Bulky products are ideally distributed through direct-sales systems globally.
40) ________ is the practice of middlemen taking orders from manufacturers whose products
and brands are in demand so as to avoid any real selling effort for a manufacturer’s products that
may require push.
A) Gatekeeping
B) Informal fallacy
C) Cherry picking
D) Selection bias
41) Which of the following is an example of having indirect involvement when entering a
competitive market?
A) using retail stores
B) using distributors
C) using manufacturer’s own sales force
D) selling through company website
42) Which of the following aids in indirect marketing?
A) wholesalers
B) manufacturer-owned stores
C) mail-order selling
D) door-to-door selling
43) Which of the following statements is true of door-to-door selling?
A) It is a relatively inexpensive form of distribution.
B) It is growing in popularity in many countries at later stages of market development.
C) It fails to take advantage of and utilize local market strengths.
D) It requires high gross margins and can result in higher product prices.
44) Which of the following involves a contractual agreement whereby a company grants the right
to sell its goods and services to another company?
A) joint ventures
B) franchising
C) cross-licensing
D) acquisitions
45) The world’s best-known franchises are ________.
A) advertising agencies
B) travel agencies
C) hotel chains
D) fast-food chains
46) While distributing industrial goods, the larger a target market, the more feasible it is for a
manufacturer to ________.
A) rely on distributors or agents
B) increase the number of intermediary levels
C) use its own sales force
D) rely on a wholesaler’s work force
47) Which of the following terms is used to refer to large stores?
A) open shops
B) tuck shops
C) discounters
D) convenience stores
48) Which of the following statements is true of global channel innovation?
A) Threshold levels of economic development are not required for supporting retailing methods.
B) Innovation takes place only in the most highly developed systems.
C) The ability of a system to adapt innovations has no relation to its level of economic
development.
D) The actions of innovative individual firms alone can never accelerate the adaptation of
innovation.
49) Which of the following is a provision for customers to handle and select merchandise
themselves in a store with minimal assistance from sales personnel?
A) self-service
B) self-reference
C) self-organization
D) self-offering
50) Which of the following is often the most effective and the only feasible way for a company
to establish itself in a new market?
A) by setting up a direct sales force
B) by approaching a company producing substitute products
C) by providing special incentives to wholesalers
D) by providing special incentives to retailers
51) ________ refers to the coordination of production and distribution across markets.
A) Horizontal integration
B) Logistical integration
C) Vertical integration
D) Location intelligence
52) Which of the following statements is true of transportation in the context of global product
distribution?
A) Global firms fail to survive in a “two-speed world” that has a high growth rate and low per
capita income.
B) Companies in low-growth markets need to deliver high volumes of low-cost products
profitably with little infrastructure to support it.
C) Companies in high-growth markets need to develop innovative and cost-competitive logistics
to surpass competitors without sacrificing profit margins.
D) A company with home-market competitive advantages in both upstream and downstream
activities may be forced to reconfigure distribution activities to enter new global markets.
53) How do customer characteristics influence channel design?
54) How are industrial products distributed?
55) What role does transportation play in distribution?