68) 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
69) 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
70) Winstar is a large scale manufacturer which has more than a hundred partners across the
globe. When making decisions concerning distribution and channel optimization, the company
invites members from its channel partners to be part of its advisory committee. This helps the
company maintain harmony with its partners. Which of the following conflict resolution
techniques is Winstar using?
A) diplomatic counselling
B) mediation
C) arbitration
D) co-option
E) joint membership
71) 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
72) Which of the following is the most complete and accurate description of a pure-click
company?
A) These are companies that launch a Web site without any previous existence as a firm.
B) These firms’ business models are based on advertising revenue.
C) These are established companies that have an online site for selling products.
D) These companies get paid every time a user visits their Web site.
E) These companies sell online space to other Web sites and are paid for the service.
73) 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
74) An Internet service provider (ISP) is a(n) ________ company.
A) pure-click
B) brick and click
C) brick-and-mortar
D) m-commerce
E) one-level
75) 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
76) 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
77) 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
78) 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.
79) Which of the following is an example of a brick-and-click company?
A) IFB Industries, a company that sells products using various channels such as Internet,
retailers, direct outlets, and franchisees.
B) Opera, a Web browser and Internet suite developed by Opera Software, performs common
tasks such as displaying Web sites and sending and receiving e-mail messages.
C) Atrutron, a company that offers its customers access to the Internet using data transmission
technology.
D) eBay Inc., an American company, facilitates online auctions and shopping to people and
businesses across the globe to buy and sell a broad variety of goods and services.
E) Yahoo! Inc., an American corporation, provides services via the Internet such as directories,
e-mail, news, advertising, online mapping, and so on.
80) M-commerce refers to ________.
A) conducting business using mobile channels
B) the use of mass media communications to attract customers
C) providing mobile and on-site services to customers
D) the use of a specific medium to communicate with prospects
E) using the Internet as a medium for doing business
81) Marketing channels are the set of pathways a product or service follows after production,
culminating in purchase and consumption by the final end user.
82) Sales agents and brokers are called facilitators in a marketing channel.
83) 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.
84) 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.
85) A marketing channel overcomes the time, place, and possession gaps that separate goods and
services from those who need or want them.
86) Marketing channel functions such as storage and movement and communications constitute a
backward flow of activities.
87) All functions in a marketing channel use scarce resources and can be shifted among channel
members.
88) A zero-level marketing channel typically uses a wholesaler and a retailer.
89) The flow of materials to refurbish products for resale constitutes a reverse flow.
90) Lot size refers to the total number of units a channel can transmit from the manufacturer’s
place to the service outlet.
91) Add-on services such as credit, delivery, installation, and repairs provided by the marketing
channel are referred to as service backup.
92) Products such as heating and cooling systems are usually sold and maintained by the
company or by franchised dealers.
93) When economic conditions are depressed, producers want to move goods to market using
longer channels.
94) Intensive distribution relies on only some of the intermediaries willing to carry a particular
product.
95) Intensive distribution is becoming a mainstay for specialists looking for an edge in markets
increasingly
driven by price.
96) An intensive distribution strategy serves well for products such as snack foods and soft
drinks.
97) Distributors’ territorial rights define the terms under which the producer will enfranchise
other distributors.
98) Manufacturers can obtain greater control over the selling process by using a sales agency.
99) After a company has chosen a channel system, it must select, train, motivate, and evaluate
individual
intermediaries for each channel.
100) Channel power is the ability to alter channel members’ behavior so they take actions they
would not have taken otherwise.
101) A manufacturer is using reward power when it offers intermediaries an extra benefit for
performing specific acts or functions.
102) When a manufacturer requests a behavior that is warranted under the contract, the
manufacturer is using coercive power.
103) A manufacturer obtains referent power when it has special knowledge that intermediaries
value.
104) Coercive and referent power are subjective and depend on the ability and willingness of
parties to recognize them.
105) In competitive markets with low entry barriers, the optimal channel structure will inevitably
change over time.
106) Early buyers might be willing to pay for high-value-added channels, but later buyers will
switch to lower-cost channels.
107) The first step in global channel planning is to get close to customers.
108) A conventional marketing channel includes the producer, wholesalers, and retailers acting
as a unified system.
109) Vertical marketing systems achieve economies through size, bargaining power, and
110) A corporate vertical marketing system combines successive stages of production and
distribution under single ownership.
111) Advanced supply-distributor arrangements for administered vertical marketing systems do
not rely on distribution programming.
112) Retailer cooperatives allow nonmember retailers to buy through them and share the profits.
113) Unrelated companies put together resources or programs in horizontal marketing systems.
114) Adding more marketing channels increases the channel cost of selling.
115) Conflicts between various franchisees of a company are an example of vertical channel
conflict.
116) Multichannel conflicts are common when the members of one channel get a lower price
based on larger-volume purchases.
117) Dual compensation pays existing channels for sales made through new channels.
118) Exclusive dealings and tying agreements are illegal and prohibited by law.
119) Brick-and-click companies are those that have launched a Web site without any previous
existence as a firm.
120) Price pressure will be more for undifferentiated products than differentiated products.
121) What are marketing channels? Briefly explain some of the different types of intermediaries.
122) Explain the concept of a value network.
123) What are the various functions performed by members of a marketing channel? Provide
examples.
124) Briefly explain the various levels of marketing channels.
125) Briefly explain the various service outputs that marketing channels produce.
126) Explain the three distribution strategies based on the number of intermediaries.
127) What is channel power? Explain the various types of channel powers.
128) Comment on the challenges and opportunities that international markets pose.
129) What is a vertical marketing system (VMS)? What are the various types VMSs?
130) Differentiate between pure-click companies and brick-and-click companies.
131) Sweet Treats is a startup confectionery manufacturer that sells chocolates, boiled sweets,
toffees, marshmallows, jelly candies, and so on. Should the firm adopt a push or a pull strategy?
Explain your answer.
132) The Norticon Group provides and manages computers and network systems for businesses
and communities. Norticon sells its products through various means–it uses its sales force to sell
to large customers and telemarketing to sell to smaller customers. The company also sells its
products via the Internet. Briefly explain the marketing approach being used by the company.
133) Garolds Stores operates as a low price retailer. It offers home fashion products, such as wall
decor, frames, candles, bath and bedding products, furniture, home accents, and kitchen
products. The firm has showrooms and retail stores across United States. Customers can buy
products in three different ways: (1) they can place orders online and have the products shipped
to their homes; (2) they can buy directly from the showrooms and retail outlets; or (3) they can
place orders online and pick them up from the nearest showroom. What are the benefits that
Garolds Stores could achieve by using various channels to sell to customers?
134) Cortron Consultants provides business consulting services for startups. It helps customers
design their supply chains by first evaluating the target market and then proceeds backward from
that point. What is this strategy of reverse design called? Briefly explain.
135) Members of a marketing channel perform three types of functions. Provide examples of
these three functions in the context of a publishing company that publishes books and magazines.
136) Dell computers is a manufacturer of computers. Dell accepts orders for computers online
and ships the products to the customer. Depict the likely physical flow of materials in this case.
137) Eureka Forbes, an Asian consumer appliances company, sells its vacuum cleaners through
door-to door sales. This allows the company to obtain a high conversion ratio. Comment on the
length of the channel in the case of Eureka Forbes’ vacuum cleaners.
138) 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.
139) Ravake is a manufacturer of high-end designer apparel. Competition in the apparel industry
is very severe and the market is driven by price. What distribution strategy would be best suited
to help Ravake obtain an edge over its competitors?
140) National Beverage Corp. produces and distributes a wide range of beverages. It offers a
selection of flavored soft drinks, juices, sparkling waters, energy drinks, nutritionally-enhanced
waters, and other specialty beverages. What distribution strategy will be most suitable for the
company’s products?
141) Apple Inc., together with subsidiaries, designs, manufactures, and markets personal
computers, mobile phones and media devices. It also sells software, services, and third-party
digital content. Apple is a highly respected brand across the globe. What kind of channel power
does this respect give Apple?
142) Atronix Solutions is a major manufacturer of electronic measuring devices in the U.S. The
company often threatens to terminate its relationship with its intermediaries if they do not agree
with its terms and conditions. What channel power does Atronix use? What are its effects?
143) A group of entrepreneurs is planning to start a food processing company. Comment on the
likely evolution of the company’s marketing channels.
144) DMM Industries, a manufacturer of composite metal products, sells its products using a
conventional marketing channel. The company decides to adopt a vertical marketing system to
improve its performance. What advantages could this provide?
145) Altrudex, Inc., is involved in the manufacture, distribution, and sale of consumer
electronics. The company sources over half the products it sells from companies it partly or
wholly owns. It also owns a large retail chain and sells its products through them. What
marketing system is Altrudex using?
146) True Value is a retailer-owned cooperative with over 4,000 independent retail locations
worldwide. Members of True Value own their individual stores and operate independently. True
Value helps its members procure materials at a low cost. What kind of a marketing system is
True Value? Explain briefly.
147) Flash Designs is an apparel manufacturing company and has adopted a franchising model to
distribute and sells its garments. The company recently received complaints from a particular
franchisee that another competing franchisee was infringing on its territory. What type of conflict
is this?
148) Crafted Jewels is a jewelry manufacturer that sells its designs to various jewelry retailers.
The retailers often complain that the company’s online store acts as a competitor and reduces
their profitability. What type of conflict is this? Briefly explain.
149) 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.
150) eBay Inc. is an online auction and shopping company. Procter & Gamble is an American
multinational corporation that manufactures a wide range of consumer goods. Both companies
sell their products online. How are these companies different from a marketing channel
perspective?