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36) An administered VMS coordinates successive stages of production and distribution through
________.
A) an automated central control unit
B) single ownership
C) the combined efforts of all its members
D) the establishment of contractual obligations
E) the size and power of one of the members
37) A(n) ________ VMS consists of independent firms at different levels of production and
distribution, integrating their programs on a contractual basis to obtain more economies or sales
impact than they could achieve alone.
A) administered
B) contractual
C) corporate
D) regulated
E) referent
38) A group of small sellers take the initiative and organize a new business entity to carry on
wholesaling and possibly some production. This initiative is called a(n) ________.
A) retailer cooperative
B) franchise organization
C) area-based cartel
D) sponsored voluntary chain
E) alternate selling channel
39) In a retailer cooperative, ________.
A) profits are equally divided among members
B) members plan their advertising jointly
C) nonmembers cannot buy through the co-op
D) members rely on distribution programming
E) members standardize their selling practices
40) A group of small grocery shops forms a new business entity to buy products directly from
manufacturers. The group buys products in bulk which are then distributed among members.
This helps the shops obtain better profit margins. Which of the following types of vertical
marketing systems can be observed here?
A) contractual
B) corporate
C) administered
D) controlled
E) regulatory
41) A franchise organization is an example of a(n) ________ vertical marketing system.
A) corporate
B) administered
C) contractual
D) regulatory
E) controlled
42) In a ________ marketing system, two or more unrelated companies put together resources or
programs to exploit an emerging marketing opportunity.
A) reverse flow
B) vertical
C) horizontal
D) lateral
E) forward flow
43) Which of the following is a major advantage of adding more channels for selling?
A) It helps the company increase its market coverage.
B) It helps the company reduce its fixed costs.
C) It reduces the likelihood of channel conflict.
D) It is the best strategy for selling low-involvement consumer products.
E) It results in economies of scale.
44) ________ channel conflict occurs between channel members at the same level.
A) Horizontal
B) Vertical
C) Multichannel
D) Administrative
E) Contractual
45) A franchisee owner is unsatisfied because the manufacturer provides more benefits to a
wholesaler. This conflict is an example of a(n) ________ conflict.
A) horizontal
B) vertical
C) intermediate
D) multichannel
E) parallel
46) A manufacturer wants to achieve rapid market penetration through a low-price policy.
However, its dealers prefer to work with high margins and pursue short-run profitability. The
major reason for this conflict is ________.
A) goal incompatibility
B) unclear roles
C) ambiguous rights
D) differences in perception
E) dependence on the manufacturer
47) General Motors' executives work for a short time in some dealerships, and some dealership
owners work in GM's dealer policy department. This strategy helps the company avoid conflicts
with its dealers. This is an example of the ________ strategy.
A) employee exchange
B) dual compensation
C) joint membership
D) co-optation
E) diplomacy
48) RX Corp. is a large manufacturer of electronic goods and sells its products through
distributors and retailers. In order to keep pace with the growing use of the Internet, the company
decides to start selling online. The company faces stiff opposition from its retailers as they
believe that this will significantly reduce their profits. The company attempts to eliminate this
resistance by offering its retailers commissions for processing and delivering orders received via
the Web. This is an example of which of the following conflict resolution strategies?
A) dual compensation
B) joint membership
C) arbitration
D) co-option
E) strategic pricing
49) Co-optation is an effort by one organization to win the support of the leaders of another by
________.
A) including them in advisory councils
B) engaging in mediation and arbitration
C) encouraging joint memberships in trade associations
D) encouraging employee exchanges
E) offering strategic justifications
50) Which of the following channel conflict resolution techniques is used only if everything else
proves ineffective?
A) legal recourse
B) mediation
C) arbitration
D) co-option
E) superordinate goals
51) A large retail chain in the United States decides to expand its operations by adding an online
site for e-commerce. This is called a(n) ________ company.
A) B2B
B) brick-and-mortar
C) m-commerce
D) pure-click
E) brick-and-click
52) JSE Securities Exchange is the largest stock exchange in Africa. The JSE provides a market
where securities can be traded freely under a regulated procedure. The company acts as an
intermediary between the traders. JSE is an example of a(n) ________.
A) internal broker
B) infomediary
C) customer community
D) market maker
E) third party arbitrator
53) Exxon Consulting, works as an agent on behalf of business consumers to collect information
on various industrial products. When faced with buying decisions, businesses can approach
Exxon to obtain detailed information on the various options available to them. The company
earns revenue by selling such information to various customers. Marten Consulting can be called
a(n) ________.
A) infomediary
B) market maker
C) customer community
D) third party arbitrator
E) informant
54) Consumer surveys suggest that one of the most significant inhibitors of online shopping is
the absence of ________.
A) pleasurable experiences
B) competitive prices
C) adequate technical information
D) after-sales service
E) facilities to compare offerings
55) Which of the following is a major threat facing the brick-and-mortar manufacturers when
they add an e-commerce channel?
A) It creates the possibility of a backlash from the existing intermediaries.
B) It increases the likelihood of product cannibalization.
C) Successful implementation leads to a significant increase in operational costs.
D) It significantly increases the resource requirements of the organization.
E) E-commerce channels often have low potential for attracting customers.
56) Marketing channels are the set of pathways a product or service follows after production,
culminating in purchase and consumption by the final end user.
57) Sales agents and brokers are called facilitators in a marketing channel.
58) A pull strategy is particularly appropriate when there is low brand loyalty in a category,
brand choice is made in the store, the product is an impulse item, and product benefits are well
understood.
59) Companies should first think of the target market and then design the supply chain backward
from that point. This strategy is called demand chain planning.
60) A marketing channel overcomes the time, place, and possession gaps that separate goods and
services from those who need or want them.
61) Marketing channel functions such as storage and movement and communications constitute a
backward flow of activities.
62) A zero-level marketing channel typically uses a wholesaler and a retailer.
63) The flow of materials to refurbish products for resale constitutes a reverse flow.
64) Lot size refers to the total number of units a channel can transmit from the manufacturer's
place to the service outlet.
65) Add-on services such as credit, delivery, installation, and repairs provided by the marketing
channel are referred to as service backup.
66) Intensive distribution relies on only some of the intermediaries willing to carry a particular
product.
67) Distributors' territorial rights define the terms under which the producer will enfranchise
other distributors.
68) After a company has chosen a channel system, it must select, train, motivate, and evaluate
individual
intermediaries for each channel.
69) Channel power is the ability to alter channel members' behavior so they take actions they
would not have taken otherwise.
70) The first step in global channel planning is to get close to customers.
71) A conventional marketing channel includes the producer, wholesalers, and retailers acting as
a unified system.
72) Vertical marketing systems achieve economies through size, bargaining power, and
73) Retailer cooperatives allow nonmember retailers to buy through them and share the profits.
74) Unrelated companies put together resources or programs in horizontal marketing systems.
75) Brick-and-click companies are those that have launched a Web site without any previous
existence as a firm.
76) Explain the three distribution strategies based on the number of intermediaries.
77) What is a vertical marketing system (VMS)? What are the various types of VMSs?
78) Differentiate between pure-click companies and brick-and-click companies.
79) Orion Airlines is an American airline that provides domestic and international air transport
services. Explain the five service outputs provided by marketing channels with reference to
Orion.
80) UltraMotion Pictures produces and distributes music and television entertainment in the
United States. The company distributes music in partnership with a large music retailer, Fromen
Tunes. Fromen executives often work for a short time with UltraMotion and some of the
UltraMotion executives work at the retail outlets to study Fromen's operations. This strategy
minimizes the conflicts between partners. What strategy is being used here? Briefly explain.
