Chapter 15—Marketing Channels and Supply-Chain Management
ESSAY
1. How do marketing channel decisions influence the rest of the marketing mix?
2. What is a marketing intermediary, and what are the activities that marketing intermediaries perform?
3. What are the three types of utility that marketing channels create, and what do they involve?
4. How do marketing channels increase efficiency in exchange situations?
5. Wholesalers are often criticized for being inefficient and for causing consumers to pay higher prices
than they would if there were no wholesalers. Discuss.
6. What is supply chain management? How can it help marketing channel members?
7. What are the key tasks in supply chain management? How does each of these facilitate supply chain
management?
8. What advantages do industrial distributors offer? What are some of the disadvantages of using
industrial distributors?
9. Under what circumstances is selective distribution a desirable level of market coverage?
10. Discuss channel cooperation and conflict. How might each one affect distribution channel functions?
11. Discuss the advantages and disadvantages of channel integration. Who benefits from channel
integration?
12. Compare and contrast horizontal and vertical channel integration.
13. Compare and contrast the three major levels of market coverage.
14. Describe the three forms of vertical marketing systems.
15. Discuss the importance of order processing in the physical distribution system.
16. Analyze the total-cost approach to physical distribution.
17. Explain how electronic data interchange (EDI) and just-in-time (JIT) inventory management might be
used in combination to improve physical distribution effectiveness and efficiency.
18. Discuss how the customer demand for “green products” impacts the strategy for supply-chain
management.
19. Why is the choice of warehouse facilities an important strategic consideration?
20. Identify and describe the criteria used for selecting transportation modes.
21. Discuss how the strategic importance of physical distribution is evident in each element of the
marketing mix.
22. Explain the legal ramifications of attempts to control distribution functions.
MULTIPLE CHOICE
23. Long-term partnerships among channel members working together to reduce inefficiencies, costs, and
redundancies in the entire marketing channel is called
a.
supply chain management.
b.
vertical channel integration.
c.
industrial management.
d.
industrial distribution.
e.
marketing management.
24. Rovio, the parent company of the popular Angry Birds app, recently made several marketing mix
decisions that were considered to be part of its distribution. Which of the following was not a decision
that relates to distribution?
a.
downloads of the game Angry Birds
b.
the sale of t-shirts and stuffed birds and pigs through its website
c.
the sale of halloween costumes through Amazon
d.
the opening of retail stores in Finland and China
e.
the licensing of the Angry BirdsTM to producers of t-shirts and costumes
25. The supply chain includes
a.
producers, wholesalers, and retailers.
b.
suppliers, producers, intermediaries, and customers.
c.
suppliers and suppliers’ suppliers.
d.
all entities that facilitate product distribution.
e.
buyers, seller, marketing intermediaries, and agents.
26. Supply chains for durable goods typically begin at _____ and end at _____.
a.
Raw materials; the retailer
b.
Suppliers; the retailer
c.
Raw materials; the customer
d.
Suppliers; the customer
e.
Retailers; the customer
27. All members of the supply chain should determine their position in the chain, identify their partners
and their roles, and establish partnerships whose focus is
a.
shifting costs to suppliers.
b.
maximizing costs.
c.
maximizing technology implementation.
d.
cooperation with competitors.
e.
customer relationships.
28. Walmart is working with its suppliers, using tools such as electronic billing, purchase order
verification, and bar code technology, to integrate data used to improve overall performance. This is an
example of
a.
supply chain management.
b.
a vertical marketing system.
c.
a horizontal marketing system.
d.
channel conflict.
e.
dual distribution.
29. Revlon, a maker of cosmetics and skin-care products, is effectively involved in the management of its
supply chain. It coordinates activities with both its suppliers and its distributors in order to produce
and deliver products that its customers demand. Which of the following statements is most likely to be
true about the impact of Revlon’s supply-chain management?
a.
Revlon demonstrates a product firm orientation which increases its competitiveness.
b.
Revlon demonstrates a market firm orientation which increases its competitiveness.
c.
Revlon demonstrates a sales firm orientation which increases its competitiveness.
d.
Revlon’s supply–chain management overlaps with all of the firm’s marketing functions but
not its financial functions.
e.
Revlon’s primary objective is to maximize efficiency in its supply-chain.
30. A channel of distribution is defined as a group of individuals and organizations that
a.
consumes about one-half of every dollar spent on products in the United States.
b.
directs the flow of products from producers to customers.
c.
links producers to other marketing intermediaries.
d.
takes title to products and resells them.
e.
manages transportation and warehousing functions.
31. The driving force behind marketing channel decisions should be
a.
convenience.
b.
cost reduction.
c.
environmental concerns.
d.
customer satisfaction.
e.
quality.
32. What links producers to consumers through the purchase and reselling of products or contractual
agreements?
a.
Marketing intermediaries
b.
Distributors
c.
Suppliers
d.
Middle marketers
e.
Marketing channels
33. Josh is a vice-president for 20th Century Fox, a movie production company. He has the responsibility
for managing the firm’s marketing channels and its relationships with its marketing intermediaries. As
a manager of its marketing intermediaries, part of Josh’s role is to
a.
link movie wholesalers to other wholesalers.
b.
link film producers to other middlemen.
c.
always oversee the sale of movies to retailers.
d.
maintain quality of the movie product.
e.
engage in short-term commitments to the least expensive channel member.
34. Channel decisions are important to marketers mostly because
a.
they are relatively flexible to change quickly.
b.
consumers value reasonable prices delivered through marketing channels.
c.
they dictate what promotional strategies companies should use.
d.
many businesses are marketing intermediaries.
e.
they involve long-term commitments and affect customer accessibility.
35. If Nokia decides to make changes in its marketing channels, the strategic significance is that channel
decisions are
a.
long-term commitments.
b.
short-term commitments.
c.
easier to change than prices.
d.
easier to change than promotion.
e.
impossible to change.
36. U.S. banks provide their banking services through brick and mortar sites, by phone, and through on–
line access. These various ways in which a customer can access their account information is called
______, while the brick and mortar site would offer the least amount of _____.
a.
place utility; face utility
b.
place utility; time utility.
c.
time utility; place utility.
d.
possession utility; time utility.
e.
place utility; possession utility.
37. Marketing channels create three types of utility for consumers including
a.
place, time, and possession.
b.
location, availability, and suitability.
c.
time, location, and promotion.
d.
retailer, wholesaler, and producer.
e.
position, possession, and place.
38. Possession utility is best described as
a.
products being available in places where the customers wish to purchase them.
b.
the customer having access to the product to use now or store and use later.
c.
having a company’s products available when a customer needs them.
d.
being able to legally own a product despite restrictions on trade.
e.
getting the products to the consumers in as short of time as possible for ownership.
39. Consumers receive the benefits of place utility when
a.
they have to travel excessively to obtain products they want.
b.
retailers remain open 24 hours a day.
c.
they can stock up on products they need but not use them right away.
d.
they make purchases with credit and debit cards.
e.
products are available in locations where consumers want to buy them.
40. In a simple economy of five producers and five consumers, there would be ____ transactions possible
without an intermediary and ____ transactions possible with one intermediary.
a.
ten; twenty-five
b.
thirty; ten
c.
twenty-five; fifteen
d.
sixteen; eight
e.
twenty-five; ten
41. Eliminating a wholesaler from a marketing channel will
a.
cut costs and lower prices.
b.
not eliminate the functions performed by that wholesaler.
c.
eliminate the functions performed by that wholesaler.
d.
lead to lower costs but higher prices.
e.
reduce channel conflict.
42. When three buyers purchase the products of three producers, nine transactions are required. If one
intermediary serves both producers and buyers, the number of possible transactions is
a.
fifteen.
b.
five.
c.
eighteen.
d.
six.
e.
twenty.
43. Without wholesalers and other intermediaries,
a.
most products would be much less expensive because fewer companies would be handling
the product.
b.
products would be cheaper because the functions of intermediaries would be eliminated.
c.
products would likely be more expensive due to the use of less efficient channel members.
d.
products would never be able to make it to the ultimate consumer at any price without
passing through intermediaries.
e.
many products would be more expensive because retailers would expect more profit.
44. Cassie and Julian both are buying new iPhones this week. Cassie goes to the Apple store because she
wants to actually see the phone before she makes a final decision. Julian knows that he does not need
to see the phone, because he just wants to update from his older version. Cassie is purchasing her
phone through_____, while Julian is purchasing his through ___.
a.
an indirect-marketing channel; the most efficient channel of distribution.
b.
the most common type of marketing channel; an indirect channel.
c.
a retailer; a direct-marketing channel.
d.
a business-to-business channel; a direct-marketing channel.
e.
a retail channel; an indirect-marketing channel
45. Select Comfort, a producer of adjustable air mattresses, sells most of its products through direct mail
sales and on its website. This channel would be classified as
a.
direct distribution.
b.
producer, retailer, consumer.
c.
telemarketing.
d.
direct-marketing.
e.
indirect marketing.
46. Netflix sells its movie services using its website while Red Box sells its movie services using vending
machines. From a customer’s point of view, Netflix is using ____ and Red Box is using ___.
a.
a direct marketing channel; a slightly shorter channel.
b.
a direct-marketing channel; an agent.
c.
an Internet wholesalers; a retailers.
d.
an Internet wholesaler; a slightly longer channel.
e.
a direct-marketing channel; a type of retailer.
47. After direct-marketing, the next slightly longer marketing channel adds a(n)
a.
retailer.
b.
producer.
c.
wholesaler.
d.
agent.
e.
consumer.
48. When Sophie buys organic produce for her household using a channel with only one intermediary, that
intermediary is classified as a
a.
retailer.
b.
wholesaler.
c.
broker.
d.
functional middleman.
e.
producer.
49. Large retailers such as J.C. Penney’s and Target are most likely to participate in which of the following
channels?
a.
Producer, industrial distributors, retailers, consumers
b.
Producer, consumers
c.
Producer, wholesalers, retailers, consumers
d.
Producer, retailers, consumers
e.
Producer, agents, wholesalers, retailers, consumers
50. The marketing channel of producer-retailer-consumer is most likely to be used by producers of which
of the following products?
a.
Smart phones
b.
Tobacco
c.
Automobiles
d.
Apples and oranges
e.
Wedding photographs
51. All of the following products are likely to use the producer-retailer-consumer marketing channel
except for _____
a.
Pharmaceutical drugs
b.
U-Pick farm produce
c.
Amazon Kindle Fire
d.
Designer wedding gowns
e.
Microbrew beers
52. Manufacturers of convenience products such as chewing gum reach customers through thousands of
retailers. What marketing channel are these manufacturers most likely to use?
a.
Producer, consumer
b.
Producer, wholesaler, retailer, consumer
c.
Producer, wholesaler, agent, retailer, consumer
d.
Producer, retailer, consumer
e.
Retailer, consumer
53. Which of the following is the most commonly used channel for distributing business products?
a.
Producer, agents, industrial distributors, organizational buyers
b.
Producer, industrial distributors, organizational buyers
c.
Producer, agents, organizational buyers
d.
Producer, organizational buyers
e.
Industrial distributors, organizational buyers
54. Steelcase, Inc. markets furniture directly to businesses. This is an example of a(n) ____ channel.
a.
producer-to-business buyer
b.
producer-to-industrial-distributor–to-business buyer
c.
producer-to-agent-to-business buyer
d.
equipment
e.
consumer
55. Organizational buyers are especially partial to direct marketing channels when
a.
they buy cheap materials in large quantities.
b.
they try a new product for the first time.
c.
they are filling an order for a very important customer.
d.
a modified rebuy type of decision is involved.
e.
expensive and/or complex equipment is involved.
56. Caruthers Paint Manufacturing Company buys the chemicals it needs for producing its products from a
chemical producer, Roth Chemicals. In this instance, the chemicals are being distributed to Caruthers
through which of the following types of channels?
a.
Industrial distributor
b.
Direct distribution
c.
Retail
d.
Wholesaler-sponsored
e.
Producer
57. River City, Inc. is an independent business that takes title to products and carries inventories. River
City, Inc. is most likely a(n)
a.
industrial distributor.
b.
intermediary.
c.
agency.
d.
wholesaler.
e.
producer.
58. Jeff Wood’s company buys machine tools from large producers and sells them to several Midwestern
manufacturing companies. The company Jeff works for carries inventories of the tools, which reduces
capital requirements for the producers. Jeff’s company is an example of a(n) ____ in a distribution
channel.
a.
direct distributor
b.
manufacturers’ agent
c.
industrial distributor
d.
producers’ agent
e.
wholesalers’ agent
59. Which of the following is most likely to be a product stocked solely by an industrial distributor?
a.
Tires
b.
Wind turbines
c.
Roofing nails
d.
Kitchen countertops
e.
Office supplies
60. Which of the following describes a disadvantage of using industrial distributors?
a.
Industrial distributors possess considerable market information.
b.
Their marketing exchange relationships are very focused.
c.
They are unlikely to handle bulky items or items that are slow sellers.
d.
Industrial distributors sell specific brands aggressively.
e.
Industrial distributors acquire title to the products and take possession.
61. Which of the following is an advantage of using an industrial distributor?
a.
These firms are easy to control because they work directly for the producers.
b.
Inventory holding costs are minimized because they can store inventory very cheaply.
c.
They are closer geographically to all of the producers’ customers.
d.
They possess a high level of technical knowledge about their products.
e.
They help reduce a producer’s financial burdens by extending credit to customers.
62. A producer is not likely to receive ____ from an industrial distributor.
a.
selling activities in local markets
b.
market information about consumers
c.
aggressive promotion of its brand
d.
reduced capital requirements
e.
a reduced financial burden from customers
63. A channel that includes both a manufacturers’ agent and an industrial distributor is appropriate under
which of the following circumstances?
a.
When the firm wants specialized personnel to follow up the work of the sales force
b.
When the marketer wishes to enter a new geographic market but does not wish to expand
the existing sales force
c.
When only one or two channels of distribution are available for products
d.
When the sales force is large and the marketer is thinking of cutting it down
e.
When customers are highly concentrated in one geographic area
64. Rob Stevens is the head of a company that produces computer software for production scheduling. The
firm is small and presently does not generate enough volume to justify hiring a sales force. The firm is
probably using ____ to maintain contact with the firms using its products.
a.
wholesalers
b.
brokers
c.
agents
d.
merchants
e.
retailers
65. An independent businessperson who is paid a commission to sell complementary products of different
producers in an assigned territory without actually taking title of the merchandise is a(n)
a.
sole intermediary.
b.
manufacturers’ agent.
c.
producers’ broker.
d.
industrial distributor.
e.
channel facilitator.
66. What is a primary difference between an industrial distributor and a manufacturers’ agent?
a.
A manufacturers’ agent does not acquire title nor usually take possession of the products
whereas an industrial distributor does.
b.
A manufacturers’ agent is employed by the manufacturers while an industrial distributor is
independent.
c.
An industrial distributor is employed by the manufacturers while a manufacturers’ agent is
independent.
d.
A manufacturers’ agent rarely adds any value to the marketing channel while an industrial
distributor reduces costs significantly.
e.
An industrial distributor does not form relationships with customers for repeat business
whereas a key asset of a manufacturers’ agent is his knowledge of his customers.
67. Del Monte markets ketchup for household use to supermarkets through grocery wholesalers. It markets
ketchup for institutional use through industrial distributors and food brokers. Del Monte is using
a.
dual distribution.
b.
industrial distribution.
c.
strategic channel alliance.
d.
supply chain management.
e.
an unethical marketing channel.
68. Many companies use more than one marketing channel to distribute their products to the same target
market, a tactic called
a.
multiple channeling.
b.
strategic channel alliance.
c.
intensive distribution.
d.
dual distribution.
e.
market splitting.
69. Apple makes its computers available through its own stores, its website, and some major retailers. This
is an example of
a.
dual distribution.
b.
vertical integration.
c.
horizontal integration.
d.
tying agreements.
e.
exclusive dealing.
70. Starbucks has an agreement with Pepsi Co. through which Pepsi distributes Starbucks’ coffee drink,
Frappucino, to grocery stores and other retail outlets. This is an example of
a.
a strategic channel alliance.
b.
exclusive distribution.
c.
dual distribution.
d.
horizontal channel integration.
e.
channel leadership.
71. Which of the following is least likely to be a factor affecting the selection of marketing channels?
a.
Customer characteristics
b.
Product attributes
c.
Product packaging
d.
Competition
e.
Environmental forces
72. Fragile products that require special handling are more likely to be distributed through
a.
longer channels.
b.
shorter channels.
c.
direct channels.
d.
strategic alliances.
e.
exclusive outlets.
73. When considering the best channel to use, all of the following are true with regard to larger firms
except they
a.
can use an extensive product mix as a competitive tool.
b.
may be better able to negotiate better deals with vendors or other channel members.
c.
may have more distribution centers.
d.
may have the resources to develop their own sales force.
e.
may be better suited to serve customers in a particular region.
74. The major levels of intensity at which a company can choose to distribute its products are ____
distribution.
a.
vertical and horizontal
b.
cooperative, conflicting, and integrated
c.
intensive, extensive, and exclusive
d.
selective, cooperative, and conflicting
e.
exclusive, selective, and intensive
75. When Busch Light Beer was introduced as part of the Anheuser-Busch product line, the company most
likely used ____ distribution.
a.
horizontal
b.
intensive
c.
selective
d.
agent
e.
exclusive
76. When Amazon.com introduced its Kindle FireHD, it was available through Amazon.com, Staples
office supplies store, and a few other retailers. The Kindle FireHD was most likely distributed through
the _____ of distribution.
a.
selective level
b.
extensive level
c.
intensive level
d.
exclusive level
e.
agent form
77. Paper towels and trash-can bags are most likely to be distributed through ____ and ____.
a.
selective distribution; multiple channels
b.
intensive; dual distribution
c.
strategic channel alliances; intensive
d.
exclusive; a single channel
e.
dual distribution; convenience channels
78. Sales are most likely to have a direct relationship to product availability for products that use ____
distribution.
a.
selective
b.
dual
c.
intensive
d.
extensive
e.
exclusive
79. The Fisher-Price company produces toys and baby-related products. For the introduction of its line of
nursery furniture for infants and small children, the Fisher Company will most likely use ____
distribution for the products.
a.
intensive
b.
exclusive
c.
horizontal
d.
priority
e.
selective
80. Using only some of the available outlets to distribute a product is called
a.
selective distribution.
b.
intensive distribution.
c.
channel conflict.
d.
vertical channel integration.
e.
exclusive distribution.
81. Durable goods such as television sets and appliances generally reach their target markets through
____; goods such as car batteries and tires generally reach their target markets through _____.
a.
intensive distribution; intensive distribution
b.
exclusive distribution; intensive distribution
c.
selective distribution; exclusive distribution
d.
selective distribution; intensive distribution
e.
selective distribution; selective distribution
82. Product and target market characteristics usually determine the type of coverage a product receives.
For which of the following products is selective distribution most appropriate?
a.
Gasoline
b.
Jaguar automobiles
c.
Skippy peanut butter
d.
Laundry detergent
e.
Organic foods
83. Honey Farms is a maker of fine chocolates. The company’s latest product, Fudge-Dipped Strawberries,
is the premier product in its Fudge-Dipped line. The product is very expensive and targeted to upscale
consumers. Which form of distribution would Honey Farms be likely to use for its new product?
a.
Intensive
b.
Selective
c.
Targeted
d.
Exclusive
e.
Premier
84. Expensive, high-quality products that are purchased infrequently often reach consumers through
a.
selective distribution.
b.
highly-selective distribution.
c.
sole-source retailers.
d.
complex marketing channels.
e.
exclusive distribution.
85. For which of the following products would exclusive distribution be most appropriate?
a.
Gasoline
b.
Rolls Royce automobile
c.
Ray-Ban sunglasses
d.
Louis Vitton luggage
e.
Harley Davidson motorcycle
86. Because the iPhone is such a popular product and the company is so powerful, Apple, Inc. is in a
position to exert considerable control over channel structures and the way the iPhone is marketed. This
is an illustration of channel ____ in the distribution channel.
a.
conflict
b.
leadership
c.
dominance
d.
cooperation
e.
negotiation
87. A single leader who controls and organizes a marketing channel is called a
a.
channel champion.
b.
distribution leader.
c.
marketing maverick.
d.
channel captain.
e.
lead distributor.
88. Nike maintains a good deal of control over how its products are promoted, displayed, and sold.
Because of this control, Nike would be appropriately described as the channel
a.
intermediary.
b.
captain.
c.
allocator.
d.
terminator.
e.
price leader.
89. Few supermarkets would try to replace a national brand of baby food with their own brand. Assuming
that this is true, we have a good example of channel leadership by
a.
wholesalers.
b.
producers.
c.
retailers.
d.
agents.
e.
brokers.
90. When one company in a marketing channel has the ability to influence another member’s goal
achievement, the company has
a.
channel control.
b.
channel power.
c.
marketing leadership.
d.
a channel captain.
e.
distributive influence.
91. If Ralston Purina forced Kroger’s grocery chain to place all of its products in the stores’ most favorable
locations, it would be
a.
demonstrating sound channel leadership.
b.
insisting on exclusive exposure.
c.
exercising channel power.
d.
minimizing channel conflict.
e.
creating a coordinate system.
92. Overall channel goals and individual channel member goals cannot be achieved together without
a.
conflict.
b.
captains.
c.
leadership.
d.
cooperation.
e.
tying agreements.
93. Marketing channel members are likely to experience misunderstandings, frustration, and poorly
coordinated strategies as a result of
a.
channel conflict caused by inefficient communication between channel members.
b.
open communication among the channel members.
c.
methods of channel coordination designed to reduce ambiguity.
d.
negotiating territorial issues among regional distributors of a product.
e.
allowing one member of the channel to take the role of channel captain.
94. When produce companies such as Dole Bananas bypass wholesalers and sell directly to retailers, it is
likely to _____
a.
create channel conflict between Dole and these wholesalers.
b.
increase cooperation between Dole and the wholesalers.
c.
show that Dole is integrating its channel intermediaries.
d.
create horizontal integration between channel members.
e.
increase the vertical integration of the channel intermediaries.
95. Goodyear allows companies like Sears and Discount Tire to distribute and discount its tires. This
action significantly increases the possibility of channel ____ with independent Goodyear dealers.
a.
understanding
b.
power
c.
leadership
d.
communication
e.
conflict
96. IMA Wholesalers is a distributor of car repair parts and supplies, selling to both retailers and auto
repair service businesses. Recently, IMA has been promoting the Pennzoil brand of oil over the
Quaker State brand of oil by offering larger discounts to the channel members. If IMA continues to do
this, ____ is likely to result.
a.
channel disintegration
b.
vertical channel integration
c.
horizontal channel integration
d.
channel conflict