Chapter 13—Marketing Channels
TRUE/FALSE
1. A marketing channel is a set of interdependent organizations that ease the transfer of ownership as
products move from producer to business user or consumer.
2. As products move through the marketing channel, channel members provide specialization and
division of labor, overcome discrepancies, and provide contact efficiency.
3. The Beistle Company manufactures Halloween decorations year-round, but customer demand is
concentrated only during the month of October. By maintaining inventories of the Beistle Company’s
products, marketing channels overcome this spatial discrepancy.
4. 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.
5. Consider a scenario in which there are five manufacturers, no intermediaries, and four consumers.
Twenty 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. Transactional functions include contacting potential customers and assuming the risk of owning
inventory.
10. Tammy Bowles makes handmade, wooden children’s toys, which she sells online to end users. Tammy
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. 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.
14. 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.
15. Exclusive distribution increases direct competition among retailers.
16. At one end of the channel relationship continuum is the “Arm’s-Length” relationship.
17. 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.
18. Integrated channel relationships tend to be more flexible than cooperative relationships.
19. 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.
20. 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.
21. Interactional justice implies that each firm in a marketing channel treats the others equitably according
to predefined terms or processes.
22. 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.
23. “Gray” marketing channels assist brand name manufacturers in marketing their products more
efficiently.
24. Unlike marketers of physical products, marketers of services do not need to address the question of
logistics since services do not require a distribution strategy.
25. When discussing the distribution of services, you will often hear channel members discussing the need
to minimize wait times.
26. The Internet is quickly becoming an alternative channel for delivering services.
MULTIPLE CHOICE
1. A _____ is a business structure of interdependent organizations that are involved in the process of
making a product or service available for use or consumption by end customers or business users.
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. Scholastic Press published millions of copies of Mockingjay, the final installment in Suzanne Collin’s
popular Hunger Games trilogy of books. However, each reader wants to purchase just one copy. The
difference between the number of books Scholastic Press published and the number a consumer wants
to buy is referred 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. Lawn Boy manufactures 13 models of walk-behind lawn mowers and 6 of types of riding mowers.
Even though lawn mowers is a product category that does not sell year round, sales remain steady all
year because Lawn Boy 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 Target store is an example of a(n):
a.
merchant wholesaler
b.
retailer
c.
broker
d.
agent
e.
exporter
22. 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
23. 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
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 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. _____ considerations affecting the wholesaler choice include how often a product is purchased and
how long a customer is willing to wait to receive the product.
a.
market
b.
transactional
c.
product
d.
buyer
e.
logistic
28. 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
29. Which of the following is a transactional function performed by intermediaries?
a.
Sorting
b.
Researching
c.
Risk taking
d.
Physically distributing
e.
Storing
30. 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
31. 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 is called:
a.
systematization
b.
logistics
c.
engineering
d.
distribution
e.
coordination
32. 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
33. Marketing channels perform all of the following logistical activities EXCEPT:
a.
sorting
b.
storing
c.
physically distributing
d.
risk taking
e.
breaking bulk
34. All of the following are sorting activities EXCEPT:
a.
assorting
b.
accumulation
c.
sorting out
d.
allocation
e.
possession
35. A worker who categorizes eggs into Grade AA, Grade A, and Grade B categories is engaging in the
_____ process.
a.
sorting-out
b.
accumulating
c.
storing
d.
downsizing
e.
distributing
36. 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
37. 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
38. _____ 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
39. 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
40. 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
41. 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
42. 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
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. A _____ channel is commonly used for low-cost consumer items that are frequently purchased, such
as candy, cigarettes, and magazines.
a.
retailer
b.
agent/broker
c.
industrial distributor
d.
producer
e.
wholesaler
45. Which of the following is most likely to use a retailer channel of distribution?
a.
car dealer
b.
convenience store
c.
farmer
d.
neighborhood diner
e.
freelance editor
46. 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
47. _____ 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
48. 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
49. Nontraditional channel arrangements:
a.
tend to make a firm’s product seem the same as the competition
b.
usually broaden a brand’s coverage
c.
can give a producer serving a niche market a way to gain market access without having to
establish channel intermediaries
d.
are not usually useful for larger firms
e.
All of the above are true.
50. 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
51. 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
52. 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
53. Which of the following statements concerning how market factors affect channel decisions is NOT
true?
a.
Industrial customers tend to buy in larger quantities and require more customer service
b.
Geographically concentrated target markets should be served with an indirect sales force
c.
Widely dispersed markets require fewer intermediaries
d.
New firms in extremely competitive markets will be more successful if they use indirect
channels
e.
A very large market requires fewer intermediaries
54. Canesta Company has developed a virtual keyboard out of light to be used with cell phones and
personal digital assistants (PDAs). The product beams an image of a keyboard on a desk, allowing the
user to type on the image. The words are picked up by the user’s digital device. When introduced to the
market, the device will sell for less than $50. If, in choosing its channel, Canesta is most concerned
about the life cycle of the device, then its choice of channels will largely be influenced by:
a.
factors of production
b.
customer characteristics
c.
ownership factors
d.
product factors
e.
market factors
55. Canesta Company has developed a virtual keyboard out of light to be used with cell phones and
personal digital assistants (PDAs). The product beams an image of a keyboard on a desk, allowing the
user to type on the image. The words are picked up by the user’s digital device. When introduced to the
market, the device will sell for less than $50. If, in choosing its channel, Canesta is most concerned
about its lack of financial, managerial, and marketing resources to support the product’s introduction,
then its choice of channels will largely be influenced by:
a.
factors of ownership
b.
market factors
c.
producer factors
d.
product factors
e.
internal environmental characteristics
56. _____ is distribution aimed at maximum market coverage. It is used for many convenience goods and
supplies that need to be available in every outlet where the potential customer might want to buy them.
a.
Selective distribution
b.
Channel franchising
c.
Intensive distribution
d.
Horizontal channeling
e.
Exclusive distribution
57. Chewing gum and soft drinks are sold in grocery stores, service stations, convenience stores,
drugstores, discount stores, and motel vending machines. This is a example of a(n) _____ distribution
strategy.
a.
exclusive
b.
reciprocal
c.
selective
d.
horizontal
e.
intensive
58. Which of the following manufacturers most likely uses intensive distribution?
a.
Snickers candy bars
b.
Bose speakers
c.
Aveda aromatherapy products
d.
Rolex watches
e.
Godiva chocolates