Marketing Management, 15e (Kotler)
Chapter 17 Designing and Managing Integrated Marketing Channels
1) ________ are sets of interdependent organizations participating in the process of making a
product or service available for use or consumption.
A) Marketing channels
B) Interstitials
C) Communication channels
D) Sales territories
E) Marketing terrains
2) A merchant is a(n) ________ in the marketing channel.
A) wholesaler
B) broker
C) sales agent
D) warehouse
E) advertising agency
3) A manufacturer uses the company’s sales force and trade promotions to carry, promote, and
sell products to end users. Which of the following strategies is this manufacturer using?
A) personalization strategy
B) tailoring strategy
C) push strategy
D) pull strategy
E) consumer promotion strategy
4) Total Beverages, a maker of fruit juices and health drinks, recently launched a new brand of
packaged drinking water called AquaPure. In order to induce distributors to carry the product,
Total offers all its intermediaries a free refrigerator to store bottles of AquaPure. This is an
example of a ________.
A) consumer promotion
B) push strategy
C) backward flow
D) reverse flow
E) pull strategy
5) Spike Inc. is a sportswear manufacturer that recently launched its new line of customizable
running shoes. The shoes come with a digital component that allows them to adapt to the runner’s
biomechanics. To promote this new product, Spike launches an advertising campaign and entices
a famous athlete to endorse the product. This is an example of a ________.
A) trade promotion
B) reverse flow
C) push strategy
D) pull strategy
E) backward flow
6) When is a pull strategy appropriate?
A) when there is low brand loyalty
B) when consumers are able to perceive differences between brands
C) when brand choice is made in the store
D) when it is a low involvement purchase
E) when the product is an impulse item
7) Using the push strategy is most appropriate when ________.
A) consumers are able to perceive differences between brands
B) the product being sold is an impulse item
C) there is high brand loyalty for the product
D) the product is a high involvement purchase
E) consumers choose the brand before they go to the store
8) A firm uses its sales force to sell to large accounts and outbound telemarketing to sell to
medium-sized accounts. The firm is using ________ marketing.
A) hybrid
B) pull
C) personalized
D) vertical
E) internal
9) A computer manufacturing company allows customers to place orders online, which they can
later pick up from a convenient retail location. Which of the following terms best represents this
practice?
A) channel integration
B) mass customization
C) online personalization
D) push strategy
E) internal marketing
10) Which of the following is the most accurate description of a value network?
A) a system of partnerships and alliances that a firm creates to source, augment, and deliver its
offerings
B) a system of organizations and resources involved in moving a product from supplier to
customer
C) an arrangement whereby an organization transforms inputs into finished goods
D) a network that allows an organization take the finished products to the end-users
E) a communication network that allows an organization to transfer information to end–
customers
11) Companies should first think about the target market and then design the supply chain
backward from that point. This strategy is called ________ planning.
A) demand chain
B) resource
C) external channel
D) materials
E) strategic business
12) Marketing channels are the set of pathways a product or service follows after production,
culminating in purchase and consumption by the final end user.
13) Sales agents and brokers are called facilitators in a marketing channel.
14) 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.
15) 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.
16) What are marketing channels? Briefly explain some of the different types of intermediaries.
17) Explain the concept of a value network.
18) Sweet Treats is a startup confectionery manufacturer that sells chocolates, toffees,
marshmallows, jelly candies, and so on. Should the firm adopt a push or a pull strategy? Explain
your answer.
19) 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.
20) 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?
21) 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.
22) Which of the following channel functions constitute only a backward flow?
A) movement of physical goods
B) placing orders with manufacturers
C) persuasive communication
D) storage of physical goods
E) overseeing actual transfer of ownership
23) Identify the channel function that constitutes both backward and forward flow.
A) obtaining funds for financing
B) storage of physical goods
C) persuasive communication
D) movement of physical goods
E) overseeing actual transfer of ownership
24) Producers often shift some functions to intermediaries. Which of the following is the most
significant benefit of doing this?
A) It increases customer loyalty.
B) It provides the producer with greater control over operations.
C) It reduces the amount of direct customer interaction.
D) It lowers the producer’s costs and prices.
E) It ensures greater information security.
25) Which of the following is an example of a zero-level channel?
A) A company takes online orders from customers and ships the products to them.
B) An organization uses a combination of direct salespeople and sales agencies to increase sales.
C) A company sells its products through wholesalers and retailers.
D) A company sells its products through chains of supermarkets and other large sellers.
E) A large company forms alliances with smaller companies to increase sales coverage.
26) Which of the following entities is present in a zero-level marketing channel?
A) consumers
B) retailers
C) brokers
D) jobbers
E) wholesalers
27) A direct marketing channel is a ________ channel.
A) one-level
B) two-level
C) zero-level
D) three-level
E) reverse-flow
28) A jobber in a three-level marketing channel is a(n) ________.
A) small-scale wholesaler
B) external broker
C) advertising agent
D) independent evaluator
E) communication channel
29) Door-to-door sales, home parties, mail order, telemarketing, TV selling, Internet selling, and
manufacturer-owned stores are examples of ________.
A) zero-level channels
B) jobbers
C) wholesalers
D) manufacturer’s representatives
E) consumers
30) Which of the following activities is a reverse-flow channel of marketing?
A) raw materials movement
B) product recycling
C) materials ordering
D) finished goods storage
E) customer order placement
31) A marketing channel overcomes the time, place, and possession gaps that separate goods and
services from those who need or want them.
32) Marketing channel functions such as storage and movement and communications constitute a
backward flow of activities.
33) All functions in a marketing channel use up scarce resources and can be shifted among
channel members.
34) A zero-level marketing channel typically uses a wholesaler and a retailer.
35) The flow of materials to refurbish products for resale constitutes a reverse flow.
36) What are the various functions performed by members of a marketing channel? Provide
examples.
37) Briefly explain the various levels of marketing channels.
38) 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.
39) Dell computers is a manufacturer of computers. Dell accepts orders for computers online and
ships the products to the customer. Explain the likely physical flow of materials in this case.
40) 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.
41) Toyota has an advantage over Lexus due to the fact that there are more Toyota dealers,
which helps customers save on transportation and search costs in buying and repairing an
automobile. Which of the following service outputs relates to this competitive advantage?
A) spatial convenience
B) service backup
C) lot size
D) waiting time
E) delivery time
42) As a service output produced by marketing channels, product variety refers to the ________.
A) units the channel permits a customer to purchase at once
B) assortment provided by the marketing channel
C) add-on services provided by the channel
D) ability of a product to provide incremental value
E) degree to which the channel makes it easy for customers to purchase a product
43) Which of the following terms refers to add-on services such as credit, delivery, installation,
and repairs, and is provided by a marketing channel?
A) service backup
B) product accessories
C) external products
D) product variety
E) service extensions
44) Atburex is a furniture manufacturing company in the United States. The company provides a
60-day credit period and also offers on-site delivery and installation. These special benefits refer
to which of the following service outputs?
A) service backup
B) large product variety
C) spatial convenience
D) large lot size
E) short waiting time
45) Which of the following types of distribution involves severely limiting the number of
channel intermediaries?
A) exclusive
B) selective
C) intensive
D) aggressive
E) retail
46) Which of the following allows a firm to maintain control over service level and obtain more
dedicated and knowledgeable selling?
A) selective distribution
B) intensive distribution
C) push strategy
D) exclusive distribution
E) pull strategy
47) Which of the following channel alternatives is most suited to handle complex products and
transactions?
A) sales forces
B) the Internet
C) dealers
D) telemarketers
E) direct mails
48) Which of the following is a major disadvantage of using the Internet as a marketing channel?
A) It is less effective for complex products.
B) It lacks convenience and practicality.
C) It cannot be used to reach a wide audience.
D) It is considered expensive.
E) It causes the company to lose direct contact with customers.
49) Armon Apparels designs, manufactures, and distributes athletic apparel and accessories for
men and women. The company has only nine distributors across the United States. These
distributors control a nationwide network of 600 retailers. The company does not sell its products
through other channels. This is an example of ________ distribution.
A) selective
B) intensive
C) exclusive
D) internal
E) passive
50) Exclusive dealing arrangements are mainly used by companies looking for an edge in
markets increasingly driven by ________.
A) price
B) efficiency
C) product variety
D) add-on services
E) spatial convenience
51) An intensive distribution strategy serves well for ________.
A) premium cars
B) commercial trucks
C) private label products
D) industrial equipment
E) newspapers
52) Which of the following products is most likely to be sold using an exclusive distribution
strategy?
A) designer luggage
B) cigarettes
C) alcoholic beverages
D) car fuel
E) medicine
53) Which of the following covers payment terms and producer guarantees?
A) conditions of sale
B) pricing policies
C) exclusive dealings
D) mutual services
E) territorial rights
54) ________ call(s) for the producer to establish a schedule of discounts and allowances that
intermediaries see as equitable and sufficient.
A) Exclusive dealings
B) Mutual services
C) Territorial rights
D) Price policy
E) Tying agreements
55) Electrobar, a European manufacturer of industrial kitchenware, sells to industrial canteens,
restaurants, hotels, and so forth. The company provides a one-year warranty on all products and
also allows customers to pay in installments — they pay 50 percent on delivery and the rest as
equal installments. This refers to which element in the “trade-relations mix”?
A) price policy
B) conditions of sale
C) distributors’ territorial rights
D) exclusive dealings
E) mutual services and responsibilities
56) Which of the following channels is associated with the lowest cost per transaction?
A) Internet
B) telemarketing
C) retail stores
D) distributor
E) sales force
57) Which marketing channel is associated with the highest value added per sale?
A) retail stores
B) sales force
C) distributors
D) Internet
E) telemarketing
58) Which of the following problems is most likely when a company chooses to use a sales
agency instead of company salespeople?
A) The company will find it difficult to control the sales process.
B) They do not take title to goods or negotiate purchases or sales.
C) The value-added per sale is the lowest for sales agencies.
D) Agencies will pay less attention to customers who buy the most or in large volumes.
E) Sales agencies are often difficult to access due to strict contractual obligations.
59) Lot size refers to the total number of units a channel can transmit from the manufacturer’s
place to the service outlet.
60) Add-on services such as credit, delivery, installation, and repairs provided by the marketing
channel are referred to as service backup.
61) Products such as heating and cooling systems are usually sold and maintained by the
company or by franchised dealers.
62) When economic conditions are depressed, producers want to move goods to market using
longer channels.
63) STIHL, which manufactures handheld outdoor power equipment sold to six independent US
distributors and six STIHL-owned marketing and distribution centers who sell to a nationwide
network of more than 8,000 servicing retail detailers, is a good example of intensive distribution.
64) Intensive distribution relies on only some of the intermediaries willing to carry a particular
product.
65) Intensive distribution is becoming a mainstay for specialists looking for an edge in markets
increasingly driven by price.
66) An intensive distribution strategy serves well for products such as snack foods and soft
drinks.
67) Selective distribution severely limits the number of intermediaries and is appropriate when
the producer wants to maintain control over the service level and outputs offered by the resellers.
68) Distributors’ territorial rights define the terms under which the producer will enfranchise
other distributors.
69) Manufacturers can obtain greater control over the selling process by using a sales agency.
70) Briefly explain the various service outputs that marketing channels produce.
71) Explain the three distribution strategies based on the number of intermediaries.
72) 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.
73) Ravake is a manufacturer of high-end designer apparel. Competition in the apparel industry
is severe and the market is driven by price. What distribution strategy would be best suited to
help Ravake obtain an edge over its competitors?
74) 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?
Use of Power (Scenario)
Broomer manufactures fashion apparel for women, men, and children. Its products are in high
demand and apparel stores are more than willing to carry and sell Broomer’s garments. The
company recently introduced a new clothing line named “Inducer,” targeted at youth. However,
the new line is not well received by the market, and sales fail to take off even three months after
its launch.
75) In an effort to boost sales, Broomer offers its retailers a higher margin for promoting and
selling products from the “Inducer” line to customers. This is an example of ________ power.
A) coercive
B) reward
C) passive
D) expert
E) referent
76) Because of the acceptance that the other Broomer products have in the market, retailers are
willing to stock items from the new “Inducer” line of clothing. This is an example of ________
power.
A) referent
B) passive
C) legitimate
D) coercive
E) reward
77) Broomer threatens to withdraw all its other products from the retailers’ stores if they are
unwilling to push products from the “Inducer” line. This is an example of ________ power.
A) reward
B) coercive
C) legitimate
D) expert
E) referent