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Chapter 3—The Environment of Marketing Channels
MULTIPLE CHOICE
1. For channel managers, which of the following is a variable in the external environment?
a.
Interest rates
b.
Emerging competitors
c.
Birth rates
d.
Inflation rates
e.
All of the above
2. For the channel manager, the external environments can be ranked, from most important
to least important, as:
a.
Economic, competitive, sociocultural, technological, legal.
b.
Legal, competitive, technological, economic, sociocultural.
c.
Economic, legal, competitive, technological, sociocultural.
d.
There is no single sequence for all industries at all times.
e.
All are equally important.
3. The channel manager must analyze the external environment in terms of its impact on:
a.
Target markets.
b.
Facilitating agencies.
c.
Intermediaries.
d.
All channel participants.
e.
Retailers and brokers.
4. Adam Page, channel manager at Wood Products, Inc., read in this morning’s paper that
two large Midwest furniture retailing chains had merged. Page needs to recognize the
potential impact of this change in the external environment on all of the following except:
a.
Wood Products, Inc.
b.
Public warehouses, trucking firms, and other Midwest facilitating agencies.
c.
All Midwest furniture retailers.
d.
Consumers.
e.
The change in interest rates on business loans.
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5. According to the text, the most pervasive and obvious environmental force affecting
managers in all kinds of business and nonbusiness organizations has been:
a.
Economic environment.
b.
Sociocultural environment.
c.
Competitive environment.
d.
Legal environment.
e.
Technological environment.
6. By the close of the 20th century, it was said about recessions that:
a.
There would be more recessions in the future and they would be more severe than
past recessions.
b.
Information technology could be used to warn businesses of potential economic
slowdowns and companies could make adjustments.
c.
Although there would no longer be any recessions, the new economy would
experience more depressions.
d.
The business cycle of ‘boom’ and ‘bust’ would be more rapid.
e.
Economic slowdowns could be diverted by increasing interest rates and decreasing
inflation.
7. To deal with inflation and recession, channel managers should do all of the following
except:
a.
Take responsibility for helping intermediaries weather the situation.
b.
Have contingency plans prepared to implement when economic conditions
warrant.
c.
Increase spending on advertising.
d.
Use special trade promotions.
e.
Increase production and inventory.
8. The “official” definition of a recession among professional economists is:
a.
One quarter of decline in GDP.
b.
Two consecutive quarters of decline in GDP.
c.
Three consecutive quarters of decline in GDP.
d.
Four consecutive quarters of decline in GDP.
e.
Any three quarterly declines during a two-year period.
9. As consumer spending slows down in recessionary periods, marketing channels for
__________ usually feel the impact earliest.
a.
consumer packaged goods
b.
consumer durable goods
c.
health services
d.
tobacco and alcohol products
e.
None of the above.
10. Which of the following is a false statement about the 2007-2008 recession?
a.
Many consumers shifted to lower priced products and brands.
b.
Consumer spending in multiple business categories.
c.
Consumer spent less on the Internet.
d.
Unemployment rates rose.
e.
The business sector found that it had excess production capacity.
11. In a recession, intermediaries are at greatest risk if:
a.
They cannot sell their heavy inventories.
b.
They do not reduce prices to final consumers.
c.
They do not increase promotional spending.
d.
They do not expand their product lines.
e.
They do not enhance information technology capabilities.
12. During recessionary periods, channel members at the wholesale and retail levels are
likely to:
a.
Try to increase their inventory levels.
b.
Lose sales volume.
c.
Broaden their product line.
d.
Increase financial borrowing.
e.
Improve product quality.
13. In inflationary times, channel members can expect consumer spending to:
a.
Slow down.
b.
Increase.
c.
Be unpredictable.
d.
Drop off for durable goods but remain fairly steady for non-durables.
e.
Drop off for services but remain fairly steady for tangible products.
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14. In inflationary times, intermediaries generally can be expected to:
a.
Stock up on inventory at today’s prices.
b.
Be enthusiastic about manufacturer’s new product introductions.
c.
Pressure manufacturers for special deals.
d.
Increase the product line.
e.
Increase the amount of money borrowed from banks.
15. To help intermediaries through periods of high inflation, manufacturers can do all of the
following except:
a.
Increase pull promotion.
b.
Emphasize lower-priced products in its product line.
c.
Provide low cost financing for inventory purchases.
d.
Decrease inventory turnover.
e.
Provide faster order processing.
16. Deflation on a wide scale resulting in a decline in prices across a broad spectrum of
goods and services:
a.
Has been a characteristic of the 1990s economy.
b.
Occurs about once each decade.
c.
Almost always results from inflation.
d.
Has not occurred in the U.S. since the 1930s.
e.
Always follows periods of inflation.
17. Other economic issues of concern to channel members include all of the following
except:
a.
The federal budget deficit.
b.
High interest rates.
c.
The trade deficit.
d.
National debt.
e.
New companies entering the marketplace.
18. The real interest rate is:
a.
The same as the nominal rate.
b.
About twice the nominal rate.
c.
Higher when inflation is higher.
d.
The nominal rate of interest minus the inflation rate.
e.
The nominal rate of interest plus the inflation rate.
Marketing Channels 8e
19. When the value of the U.S. dollar is high:
a.
The price of U.S. products decreases relative to foreign products.
b.
The price of U.S. products increases relative to foreign products.
c.
It takes fewer foreign dollars to buy U.S. products.
d.
U.S. products become more competitive in foreign markets.
e.
It takes more U.S. dollars to buy foreign products.
20. During periods of low inflation:
a.
It is easier to pass price increases through the channel.
b.
Manufacturers, wholesalers, and retailers rarely face built-in cost pressures.
c.
It becomes more difficult to pass price increases through the channel.
d.
Increasing prices to offset cost pressures is more feasible.
e.
Members of the channel are less sensitive to higher prices.
21. During periods of low inflation, passing price increases through the channel:
a.
Becomes more difficult.
b.
Becomes less difficult.
c.
Makes no difference.
d.
Increases the length of the channel.
e.
None of the above.
22. To cope with periods of slow economic growth, channel managers need to:
a.
Increase productivity.
b.
Expand product lines.
c.
Increase sales personnel.
d.
Decrease capital expenditures.
e.
Decrease sales to foreign markets.
23. Competition between Kmart and Wal-Mart is an example of:
a.
Horizontal competition.
b.
Intertype competition.
c.
Vertical competition.
d.
Channel system competition.
e.
Horizontal-vertical competition.
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24. “Competition between an independent hardware store and the hardware department of a
Sears store is an example of:
a.
Vertical competition.
b.
Channel system competition.
c.
Horizontal competition.
d.
Intertype competition.
e.
Vertical marketing competition.
25. McDonald’s competition with Burger King is an example of:
a.
Vertical competition.
b.
Horizontal competition.
c.
Intertype competition.
d.
Vertical-intertype competition.
e.
Vertical marketing system competition.
26. A wholesaler attempts to secure retailer acceptance for its own brand of guitars. That
wholesaler also carries similar guitars from a manufacturer of a nationally known brand.
This is an illustration of:
a.
Horizontal competition.
b.
Vertical competition.
c.
Channel system competition.
d.
Intertype competition.
e.
Multiple channel competition.
27. Vertical marketing systems are typically divided into the following three basic categories:
a.
Corporate, contractual, and horizontal.
b.
Contractual, vertical, and franchise.
c.
Administered, contractual, and corporate.
d.
Corporate, voluntary associations, and administered.
e.
Retailers’ cooperatives, contractual, and corporate.
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28. Pure Play e-tailers, such as Amazon and Etoys, competing with ‘bricks and mortar’
companies is an example of what type of competition?
a.
Vertical
b.
Channel system
c.
Intertype
d.
Vertical Marketing systems
e.
Horizontal
29. Gift wrapping paper on a grocer’s shelf is an example of:
a.
Vertical integration.
b.
Scrambled merchandise.
c.
Retail assortment.
d.
Horizontal integration.
e.
Channel dysfunction.
30. Retailers like to sell their own brands because of all of the following except:
a.
Gross margins are higher.
b.
They control their own destiny.
c.
Competitive comparisons are more difficult.
d.
They are exclusive to the retailer.
e.
Consumers prefer private label products.
31. The most important of the sociocultural factors listed in the text include all of the
following except:
a.
Globalization.
b.
Consumer mobility and connectedness.
c.
Demographics.
d.
Social networking.
e.
The Green Movement.
32. _______________ is the tem most commonly used to describe interconnectedness and
interdependencies of countries around the world.
a.
Globalization.
b.
Consumer mobility and connectedness.
c.
Demographics.
d.
Social networking.
e.
The Green Movement.
The Environment of Marketing Channels
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33. “____________ has created world-class customer expectations that need to be satisfied
through world-class channel strategy, design and management.”
a.
Globalization.
b.
Consumer mobility and connectedness.
c.
Demographics.
d.
Social networking.
e.
The Green Movement.
34. In some of the countries in Tropical Africa, very long channels with many layers of
intermediaries are common. Such channel structures within the sociocultural context of
Tropical Africa are:
a.
Highly inefficient.
b.
Highly irrational.
c.
Not suited to the needs of the consumers.
d.
Rational and reasonably efficient.
e.
Archaic and cumbersome.
35. The Japanese distribution system that links together manufacturers, wholesalers and retail
sales outlets is called:
a.
Trading companies
b.
Export management companies.
c.
Category killers.
d.
Keiretsu.
e.
Merchant Wholesaler.
36. Regarding the implications of the connectivity and mobility revolution that relates to m-
commerce, which of the following is true:
a.
Virtually all channel members will need to include m-commerce channels in their
channel mixes.
b.
Channel members will need to sort out the role m-commerce plays in their
respective multi-channel mix.
c.
Channel members will need to sort out the potential of m-commerce channels.
d.
Channel members will need to sort out the limitations of m-commerce channels.
e.
All of the above.
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37. ___________ is the term that refers to interaction in networks comprised of individuals
or organizations that are linked together based on some type of common interest.
a.
Globalization.
b.
Consumer mobility and connectedness.
c.
Demographics.
d.
Social networking.
e.
The Green Movement.
38. From a marketing channels perspective, social networking has:
a.
Caused consumers to make poor product choices.
b.
Not lived up to the expectations that the Internet would allow consumers to be
better informed.
c.
Helped consumers make better product choices but has had no effect on their
channel choices.
d.
It has made consumers more demanding about the channels they choose.
e.
All of the above.
39. Changes in technology occur:
a.
Smoothly and predictably over time.
b.
At a decelerating pace.
c.
Do not occur evenly or predicatively change over time.
d.
Only at the manufacturing level of the marketing channel.
e.
At accelerating rates in developing countries.
40. Which of the following is a consequence of the digital revolution?
a.
Less than 10% of retailers have web sites.
b.
Online shopping via the Internet has become a mainstream marketing channel for
B2C but not B2B markets.
c.
4.8 % of manufacturers now have web sites.
d.
Online shopping via the Internet has become a mainstream marketing channel for
both B2B and B2C markets.
e.
Retailers are working hard to avoid use of web sites.
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41. A widespread acceptance of teleshopping and/or computer shopping might very well do
all of the following except:
a.
Reduce the need for traditional retail stores.
b.
Decrease changes made by channel participants.
c.
Increase consumer shopping efficiency.
d.
Give rise to new types of facilitating agencies.
e.
Give small retailers the same access to markets as large retailers.
42. Computerized inventory control systems available to all channel members will mean:
a.
Increased dominance by manufacturers over retailers.
b.
More time for the manufacturer to plan production schedules.
c.
Slower responses by retailers to slow-moving items.
d.
Decreased profits.
e.
Better forecasting techniques.
43. A relatively new technology that uses an electronic tag to track people or products using
radio waves is called?
a.
Electronic scanners
b.
Computerized inventory control tags
c.
RFID tag
d.
Portable computers
e.
Universal product codes
44. All technology has both up sides and down sides. To manufacturers, the downside of
electronic scanners and computerized inventory control systems is:
a.
Retailers react very quickly to sales and thus can suddenly stop ordering slow-
selling product.
b.
Manufacturers are too dependent on retailers for information.
c.
Retailers pressure manufacturers for large quantities of fast-selling products.
d.
An inability to predict customer needs.
e.
Manufacturers are unable to control who has access to information.
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45. Which of the following is not a relatively new type of technology that can have a major
impact on marketing channels?
a.
Uniform Product Codes
b.
Smartphones
c.
Mobile robots
d.
3-D modeling
e.
Ultra-wideband technology
46. An Internet-based technology that enables both large and small businesses and
organizations to utilize computer applications without having to have their own hardware,
software, office computing space, and staff is called:
a.
Raid systems.
b.
Cloud computing.
c.
RFID tags.
d.
Mobile robots that delivery in large offices.
e.
Computerized inventory system.
47. The channel manager must __________ the legal environment as it affects the channel.
a.
be an expert on
b.
have a general knowledge of
c.
be familiar only with four basic pieces of federal legislation relevant to
d.
follow closely and in detail all court cases impinging on
e.
retain an attorney that has knowledge of
48. The Simplicity Pattern case indicates that manufacturers:
a.
Should treat wholesalers and retailers the same.
b.
Cannot assume the courts will rule that retailers with different operating
characteristics are not in competition.
c.
Can refuse to deal with channel members who undercut suggested retail prices.
d.
Do not need to document their cases.
e.
Cannot force franchises to buy all of their supplies from a designated source.
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49. K&B Products, a producer of perfumes, prohibits its intermediaries from selling
competitive perfume products. K&B is engaged in:
a.
Selective distribution.
b.
Full-line forcing.
c.
Exclusive dealing.
d.
Refusal to deal.
e.
Pushing.
50. A piece of federal legislation that specifically deals with price discrimination is the:
a.
Clayton Act.
b.
Baitman-Roberson Act.
c.
Patman-Morgan Act.
d.
Price Maintenance Act.
e.
Robinson-Patman Act.
51. The _______________ Act passed in 1914 granted powers to investigate and enforce
unfair methods of competition in interstate commerce.
a.
Celler-Kefauver
b.
Sherman Anti-Trust
c.
Robinson-Patman
d.
Federal Trade Commission
e.
Clayton
52. A federal act that specifically deals with the anticompetitive issues of acquisitions and
mergers through vertical integration is the:
a.
Sherman Antitrust Act.
b.
Federal Trade Commission Act.
c.
Celler-Kefauver Act.
d.
Morgan Stanley Act.
e.
Robinson-Patman Act.
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53. An increasing number of manufacturers are opening their own stores that carry the same
merchandise sold by independent retailers. This practice introduces a potential legal
question regarding:
a.
Resale restrictions.
b.
Dual distribution.
c.
Exclusive dealing.
d.
Intensive distribution.
e.
Bilateral distribution.
54. When Häagen Dazs, the Pillsbury-owned premium ice cream company, told its
wholesalers that its policy was to sell only through wholesalers that did not sell
competing products, Häagen Dazs was engaging in:
a.
Exclusive dealing.
b.
Selective distribution.
c.
Refusal to deal.
d.
Full-line forcing.
e.
None of the above.
55. When a supplier requires its channel members to carry a broad group of its products in
order to sell any particular product in the supplier’s line, the supplier is involved in:
a.
Selective distribution.
b.
Exclusive dealing.
c.
Full-line forcing.
d.
Resale restrictions.
e.
Price maintenance.
56. Price maintenance laws enacted by state governments that allowed retail price fixing,
were no longer exempted from federal antitrust legislation with the repeal of the:
a.
Robinson-Patman Act.
b.
Miller-Tydings and McGuire Acts.
c.
Robeson-Johnson and Hastings Acts.
d.
Celler-Kefauver Act.
e.
McGuire-Tydman and Morgan Acts.
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57. The “Colgate Doctrine” is:
a.
The legal basis for the American Dental Association’s endorsement of toothpastes.
b.
The common term for state level “fair trade laws”.
c.
The legal basis for sellers to use their own criteria and judgment in selecting
channel members
d.
The legal basis for manufacturers retaining some customers as “house accounts”.
e.
Allows the practice of price maintenance in the marketing channel.
58. Territorial restrictions constitute one of the major types of:
a.
Tying agreement restrictions.
b.
Full-line forcing restrictions.
c.
Dual distribution restrictions.
d.
Price discrimination.
e.
Resale restrictions.
59. Interbrand competition versus intrabrand competition has been evaluated by the courts in
considering:
a.
Fair trade laws.
b.
Dual distribution.
c.
Tying agreements.
d.
Vertical integration.
e.
Resale restrictions.
60. Dual distribution occurs when:
a.
A manufacturer uses more than one channel.
b.
A manufacturer sells its products under different brand names to the same
customer.
c.
Two or more different channel structures for the same product exist.
d.
A firm distributes through its own vertically-integrated channel.
e.
A manufacturer sells the same product through two competing retail outlets.
61. The Business Electronics Corp. v. Sharp Electronics Corp. case has generally:
a.
Made it harder for manufacturers to exercise price control over channel members.
b.
Made it easier for manufacturers to exercise price control over channel members.
c.
Had no effect on the manufacturer’s ability to control prices.
d.
Resulted in strict prohibition of price control by manufacturers over channel
members.
e.
Eliminated totally “free riders” from marketing channels.
Marketing Channels 8e
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62. An example of ____________ occurred when Microsoft included the Internet Explorer
software into its Windows operating system.
a.
a tying agreement
b.
dual distribution
c.
full-line forcing
d.
intrabrand competition
e.
vertical integration
63. _____________ exist(s) when a supplier requires its channel members to carry a broad
line of its products.
a.
Dual distribution
b.
Full-line forcing
c.
Exclusive dealing
d.
Vertical integration
e.
Tying Agreements