78) ________ power can be effective, but its exercise produces resentment and can lead the
intermediaries to organize countervailing power.
A) Coercive
B) Reward
C) Legitimate
D) Expert
E) Referent
79) A manufacturer offers its intermediaries an extra benefit for performing a promotional
activity. This is an example of the use of ________ power.
A) reward
B) coercive
C) functional
D) expert
E) referent
80) A manufacturer is using legitimate power when it ________.
A) requests a behavior that is warranted under the selling contract
B) threatens to withdraw a resource or terminate a relationship
C) offers intermediaries an extra benefit for performing specific acts or functions
D) makes the intermediaries sell more of a particular product by offering rewards
E) sells more products by making use of its reputation in the market
81) Hewlett-Packard is a highly respected brand. Many retailers want to be associated with the
brand because of this reputation. What kind of power does Hewlett-Packard obtain due to this
reputation?
A) referent
B) functional
C) legitimate
D) coercive
E) reward
82) Which of the following types of power is objectively observable?
A) coercive power
B) legitimate power
C) group power
D) expert power
E) referent power
83) A new firm typically starts as a local operation selling in a fairly circumscribed market by
________.
A) finding and developing new intermediaries
B) using a few existing intermediaries
C) forming partnerships with the market leader
D) creating a special channel
E) forming partnerships with other firms
84) Who will most likely be willing to pay for high-value-added channels?
A) early buyers of a product
B) internal customers of a company
C) small and matured buyers of an industry
D) consumers of low involvement products
E) repeat customers of a product
85) A producer must modify its channel design and arrangements if ________.
A) consumer buying patterns change
B) the competition in the market stabilizes
C) the product is in the growth stage of its life cycle
D) the market size remains unchanged for a particular period
E) the firm’s profits stabilize
86) After a company has chosen a channel system, it must select, train, motivate, and evaluate
individual intermediaries for each channel.
87) Channel power is the ability to alter channel members’ behavior so that they take actions they
would not have taken otherwise.
88) A manufacturer is using reward power when it offers intermediaries an extra benefit for
performing specific acts or functions.
89) When a manufacturer requests a behavior that is warranted under the contract, the
manufacturer is using coercive power.
90) A manufacturer obtains referent power when it has special knowledge that intermediaries
value.
91) Coercive and referent power are subjective and depend on the ability and willingness of
parties to recognize them.
92) In competitive markets with low entry barriers, the optimal channel structure will inevitably
change over time.
93) Early buyers might be willing to pay for high-value-added channels, but later buyers will
switch to lower-cost channels.
94) What is channel power? Explain the various types of channel power.
95) Describe the challenges and opportunities that international markets pose.
96) 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?
97) Atronix Solutions is a major manufacturer of electronic measuring devices in the United
States. 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?
98) A group of entrepreneurs is planning to start a food processing company. Comment on the
likely evolution of the company’s marketing channels.
99) What is the major difference between a conventional marketing channel and a vertical
marketing system (VMS)?
A) Elements in a conventional marketing channel act as separate businesses whereas the
elements in a VMS act as a unified system.
B) A VMS has many intermediaries whereas a conventional marketing channel has a limited
number of intermediaries.
C) A VMS is characterized by an independent producer whereas a conventional marketing
channel is characterized by multiple producers.
D) A conventional marketing channel has elements such as retailers and wholesalers whereas
these elements are not present in a VMS.
E) Producers have complete control over the other members in a conventional marketing channel
whereas this control is minimal in a VMS.
100) A(n) ________ includes the producer, wholesaler(s), and retailer(s) acting as a unified
system.
A) parallel marketing channel
B) vertical marketing system
C) extensive marketing channel
D) internal marketing system
E) conventional marketing channel
101) A(n) ________ vertical marketing system combines successive stages of production and
distribution under single ownership.
A) corporate
B) administered
C) contractual
D) regulatory
E) controlled
102) The most advanced supply-distributor arrangements for ________ vertical marketing
systems rely on distribution programming.
A) corporate
B) administered
C) contractual
D) regulatory
E) controlled
103) Rotter Garder Inc. is a large-scale paint manufacturer and is known for its wide range of
decorative paint products and industrial coatings. In addition to making paints, the company also
owns and operates the retail stores that sell its products. This is an example of a(n) ________
vertical marketing system.
A) administered
B) contractual
C) referent
D) corporate
E) regulated
104) 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
105) 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
106) A group of small sellers takes the initiative and organizes a new business entity to carry on
wholesaling and possibly some production. This entity is called a(n) ________.
A) retailer cooperative
B) franchise organization
C) area-based cartel
D) sponsored voluntary chain
E) alternate selling channel
107) 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
108) A group of small grocery shops forms a new business entity to buy products directly from
manufacturers. The group buys products in bulk that 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
109) A franchise organization is an example of a(n) ________ vertical marketing system.
A) corporate
B) administered
C) contractual
D) regulatory
E) controlled
110) 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
111) 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.
112) Vertical marketing systems achieve economies through size, bargaining power, and
113) A corporate vertical marketing system combines successive stages of production and
distribution under single ownership.
114) Advanced supply-distributor arrangements for administered vertical marketing systems do
not rely on distribution programming.
115) Retailer cooperatives allow nonmember retailers to buy through them and share the profits.
116) Adding more marketing channels increases the channel cost of selling.
117) What is a vertical marketing system (VMS)? What are the various types of VMSs?
118) 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?
119) 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?