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Chapter 6—Designing Marketing Channels
MULTIPLE CHOICE
1. Channel design refers to all of the following except:
a.
The development of new channels.
b.
The modification of existing channels.
c.
The allocation of distribution tasks among channel members.
d.
The selection of channel members.
e.
The development of methods used to motivate channel members.
2. Channels that have not been designed have taken on their existing structure through:
a.
Modification.
b.
Specialization and division of labor.
c.
Contactual efficiency.
d.
Interorganizational management.
e.
Evolution.
3. In marketing channels, the term “reengineering” refers to:
a.
A change in an intermediary’s product assortment.
b.
Appointment of a new channel manager.
c.
Modification of an existing channel.
d.
Selecting new intermediaries to replace current ones.
e.
Completely redesigning the marketing mix and selecting new channel managers.
4. The perspective used by producers and manufacturers with respect to channel design is one of
a firm looking:
a.
Down the channel toward the market.
b.
Up the channel away from the market.
c.
Both down and up the channel.
d.
Toward and away from the market.
e.
At changes in the environment.
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5. Which of the following does not engage in channel design?
a.
Manufacturers
b.
Wholesalers
c.
Retailers
d.
Producers
e.
Facilitating agencies
6. Which of the following is not a step in the channel design decision process?
a.
Forecast changes in the environment.
b.
Develop alternative channel structures.
c.
Choose the “best” channel structure.
d.
Recognize the need for channel design decisions.
e.
Set and coordinate distribution objectives.
7. Channel design strategy is __________ differential advantage.
a.
the most important component of
b.
usually an insignificant aspect for creating
c.
always playing a part in creating
d.
often one component of
e.
the least important aspect of
8. Using channel design __________ should be uppermost in the channel manager’s thinking.
a.
to accommodate changes in channel variables
b.
as a means for gaining differential advantage
c.
to reduce channel costs
d.
to increase the intensity of distribution
e.
to increase profits
9. When a channel manager undertakes channel design, what distribution decision already
should have been made?
a.
How the changes will be evaluated
b.
The role of distribution in new product strategy
c.
The role of distribution in the firm’s overall objectives and strategies
d.
How the new design will be implemented
e.
The role of distribution in the promotion strategy
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10. Which of the following is not one of the basic phases of the paradigm of the channel design
decision?
a.
Evaluating the variables affecting channel structure
b.
Choosing the “best” channel structure
c.
Recognizing the need for a channel design decision
d.
Developing specialization and division of labor
e.
Setting and coordinating distribution objectives
11. For a producer of computer-based training programs for businesses, all of the following
should precipitate a channel design decision except:
a.
Development of a new product for the government market.
b.
Deleting one training program from the product line.
c.
Deciding to sell the current product line in Canada.
d.
Merging the firm with another company that manufactures products for the
business market.
e.
Identifying home-based business owners as a new target market.
12. There are generally considered to be _______ reasons for making channel design decisions.
a.
10
b.
15
c.
18
d.
20
e.
an indefinite number of
13. According to the text, the most basic variable affecting channel design is:
a.
The target market.
b.
The product.
c.
The number of channel members.
d.
Cost.
e.
The environment.
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14. A key part of Frito-Lay’s success in distributing its snack products at a level that allows the
company to dominate retailers’ shelves is:
a.
Lower prices than competitors.
b.
High retail inventory requirements.
c.
Few products so as to streamline distribution.
d.
Hand-held computers used by drivers/salespeople.
e.
Incentives paid to retailers.
15. Distribution objectives must be set:
a.
Only in relation to considerations of logistics.
b.
To provide for fast distribution of products to the market.
c.
With the major emphasis being on keeping the cost of distribution to a minimum.
d.
With an eye toward objectives and policies of the firm.
e.
To achieve the maximum level of sales volume.
16. Which of the following is not an example of a well-stated distribution objective?
a.
Our distribution objective is to ensure all do-it-yourselfers have the opportunity to
buy our hand tools 75% of the time they shop for home maintenance and repair
materials.
b.
Our distribution objective is to ensure our customers have as many opportunities as
possible to purchase our carpeting and curtains.
c.
Our distribution objective is to assure that half of all high school varsity swimmers
have at least one opportunity per season to purchase our swimwear.
d.
Our distribution objective is to ensure that every consumer with children under the
age of 10 has the opportunity to buy our candies.
e.
Our distribution objective is to broaden our penetration in the school and college
markets and use exclusive contracts where schools agree to sell only our food
product.
17. A congruency check of a distribution objective means that:
a.
All of the channel members have agreed on the distribution objective.
b.
All phases of the channel design decision have been coordinated.
c.
The distribution objective does not conflict with other objectives and policies of
the firm.
d.
The distribution objective will minimize channel conflict.
e.
The distribution objective matches the objectives of the retailers who sell our
product.
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18. The distribution objective must be congruent with:
a.
Channel members’ objectives and strategies.
b.
The other elements of the marketing mix.
c.
Standard industry practices.
d.
Competitors’ objectives and strategies.
e.
Suppliers’ objectives and strategies.
19. The channel manager’s specification of distribution tasks is:
a.
Situationally dependent.
b.
Generalizable across most situations.
c.
One of choosing from among the eight basic marketing functions.
d.
Based mainly on what the existing channel members want.
e.
The first phase of channel design.
20. The specific kind of distribution tasks required are mainly a function of:
a.
The length of the channel.
b.
The distribution objective.
c.
The selectively of distribution.
d.
The kinds of channel members used.
e.
The product mix.
21. The allocation of distribution tasks should include consideration of all of the following except:
a.
Number of levels in the channel.
b.
The saturation at the various levels.
c.
The number of channel managers at each level.
d.
Types of intermediaries at each level.
e.
The selective number of intermediaries at various levels.
22. A major cause of the failure of many dot-com companies can be traced to:
a.
Providing too much information to customers.
b.
Underestimating the distribution tasks needed to link firms with customers.
c.
Setting poorly stated goals and objectives for the firm.
d.
Mis-identifying the target market.
e.
Selecting a product mix that did not meet targeted customer needs.
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23. When developing alternative channel structures, the number of levels the channel manager
considers may be limited by all of the following except:
a.
The industry’s standard practices.
b.
The size of the market.
c.
The availability of intermediaries.
d.
Short-term objectives.
e.
The nature of the market.
24. The Internet has affected the number of levels in a channel by:
a.
Adding a fifth level to the current three and four level channels.
b.
Allowing manufacturers to add a direct two level channel to their existing options.
c.
Increasing the level of product saturation available to manufacturers and
producers.
d.
Fixing the number of levels available to manufacturers.
e.
Changing the environment such that manufacturers are unable to identify the
possible number of levels available.
25. Given five possible channel structures, two degrees of intensity, and four different types of
intermediaries, the maximum number of possible channel alternatives would be:
a.
11.
b.
40.
c.
22.
d.
14.
e.
100.
26. A channel manager may choose more than one channel structure in order to:
a.
Decrease costs of distribution of products.
b.
Maximize consumer awareness of the product.
c.
Reach the target market effectively and efficiently.
d.
Increase net profits.
e.
Achieve corporate objectives.
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27. As a dimension of channel structure, types of intermediaries really pertains to:
a.
The classifications of the Census of Wholesale Trade and the Census of Retail
Trade.
b.
The basic types of distribution tasks performed.
c.
Traditional industry terminology.
d.
The leadership style of channel managers.
e.
The many different retail outlets at which customers buy products.
28. Intensity:
a.
Refers to the number of intermediaries at each level of the marketing channel.
b.
Is generally classified as either intensive or selective.
c.
Referes to the number of independent sales agents a manufacturer uses.
d.
Kiosk retailers.
e.
Picture-capable cell phones.
29. A marketing strategy that focuses on carefully chosen target markets will most likely stress:
a.
Intensive distribution.
b.
Only high-priced retail outlets.
c.
Direct distribution.
d.
Selective or exclusive distribution.
e.
Exclusive distribution only.
30. Selective distribution is:
a.
The use of as many outlets as possible.
b.
Usually preferred for the distribution of industrial operating supplies.
c.
The use of one intermediary in a particular market area.
d.
When not all available distributors are used, rather a carefully chosen group.
e.
Standard practice in the distribution of convenience goods.
31. According to Michael Dell, founder of Dell Computers, the typical computer retailer:
a.
Could not match the extremely low prices he charged for direct sales.
b.
Could not provide as rapid product delivery.
c.
Provided better instruction and support but higher prices.
d.
Had too little inventory to compete.
e.
Lacked technical expertise.
32. The longest channels are expected for all of the following except:
a.
Consumer markets.
b.
Geographically dispersed markets.
c.
Seasonally consumed products.
d.
Goods bought in small quantities.
e.
Goods purchased online by consumers.
33. Short channels are preferred for:
a.
Nontechnical products.
b.
Convenience goods.
c.
Firms with limited financial resources.
d.
Firms that desire a high level of channel control.
e.
Firms with an inexperienced channel manager.
34. More channel levels and more intermediaries are expected for:
a.
Markets requiring many contacts.
b.
Markets requiring personalized contacts.
c.
Markets and producers that have no quantity discrepancies.
d.
Markets and producers with very little spatial separation.
e.
Technically complex products.
35. Heuristics that relate particular variables with possible channel structures should be viewed
as:
a.
Rather clear-cut prescriptions for choosing channel structures.
b.
Of very little value in channel design decisions.
c.
A rough reflection of fairly typical relationships among variables affecting channel
structure.
d.
Good quantitative devices for choosing channel structures.
e.
Part of the management science class of techniques for choosing channels.
36. The usual operational measure of market size is:
a.
The number of buying units (consumer or industrial).
b.
The dollar sales in the market.
c.
The geographical extent of the market.
d.
The density of the buying units.
e.
The design of heterogeneity in the market.
Marketing Channels 8e
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37. In general, the more geographically dispersed the market:
a.
The shorter the channel structure.
b.
The more direct is distribution.
c.
The fewer the number of intermediaries that will likely have to be used.
d.
The more difficult and expensive is distribution.
e.
The more selective is distribution.
38. For distant manufacturers it can be generalized that:
a.
The use of intermediaries will increase distribution costs.
b.
The use of intermediaries will decrease distribution costs.
c.
A direct channel from distant manufacturer to consumer is most efficient with the
lowest distribution costs.
d.
The use of intermediaries increase product costs because of increased
trucking/shipping expenses.
e.
Profits are constant regardless of the use of intermediaries because all distribution
costs are passed onto the consumer.
39. Which of the following is not one of the market behavior variables?
a.
How customers buy
b.
When customers buy
c.
Where customers buy
d.
What customers buy
e.
Who does the buying
40. All other factors being equal, in general there is __________ between the degree of
standardization of products and channel length.
a.
an inverse relationship
b.
a positive relationship
c.
no relationship
d.
a totally unknown relationship
e.
an exponential relationship
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41. Products that are in the introductory stage of the product life cycle often need heavy
promotion. This tends to foster:
a.
An increased use of intermediaries.
b.
Very long channels of distribution.
c.
Shortened channels.
d.
The total elimination of intermediaries.
e.
An emphasis on facilitating agencies.
42. Product variables affecting channel structure include all of the following except:
a.
Availability of inputs/supplies.
b.
Perishability.
c.
Degree of standardization.
d.
Newness.
e.
Unit value.
43. In distribution, economies of scope are needed to overcome:
a.
Low unit value.
b.
A high degree of standardization.
c.
Low technology.
d.
Rapid perishability.
e.
High bulk or weight.
44. Which of the following heuristics about the relationship between a manufacturer’s
characteristics and channel design is false?
a.
The larger the firm the less flexibility it has because of its internal bureaucracy and
the complexity of its product line.
b.
The greater the capital available to a manufacturer, the less its dependence on
intermediaries for the performance of distribution tasks.
c.
Management expertise in distribution increases across time.
d.
Manufacturers should sell directly to users if a product is technically complex.
e.
More intermediaries are needed in a large market.
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45. When the unit value of a product is high relative to its size and weight, what is the best
distribution channel?
a.
Direct distribution
b.
Two levels of intermediaries
c.
Three levels of intermediaries
d.
Four levels of intermediaries
e.
Indeterminate number of intermediaries
46. Assuming total cost for a direct channel of $100,000 and an average gross margin on sales of
25%, the sales volume needed to cover these costs would be:
a.
$2,500,000.
b.
$25,000.
c.
$75,000.
d.
$400,000.
e.
$250,000.
47. The intermediary variables are:
a.
Size, expertise and cost.
b.
Availability, cost and services.
c.
Intensity, type and size.
d.
Financial capacity, services and newness.
e.
Geography, size, and degree of standardization.
48. In practice, the channel manager is usually not able to choose an optimal channel structure in
the strict sense of the term for all of the following reasons except:
a.
He/she is often unable to know what all of the alternative structures are.
b.
Maximizing long-term profits can be achieved with a number of alternative
channel structures.
c.
The time involved would often be prohibitive.
d.
Precise methods generally do not exist for calculating the payoffs associated with
each of the alternative structures.
e.
The costs involved are very high.
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49. According to Aspinwall, short channels are expected for products with a:
a.
High replacement rate.
b.
High gross margin.
c.
Low time of consumption.
d.
Low adjustment needs.
e.
Low searching time.
50. Aspinwall’s approach to channel design:
a.
Assumes there are 15 characteristics that need to be considered when designing the
channel.
b.
Is impossible to operationalize.
c.
Always selects the optimal channel structure.
d.
Puts too much emphasis on product characteristics as the determinant of channel
structure.
e.
Assumes products can be represented on a seven color spectrum.
51. According to the financial approach, choosing a channel structure is analogous to:
a.
Aspinwall’s parallel systems approach.
b.
An investment decision of capital budgeting.
c.
Most of the management science approaches.
d.
The Bayesian approach to channel choice.
e.
Simulations of channel choice decisions.
52. Shortening the channel will __________ the amount of capital necessary for distribution.
a.
increase
b.
decrease
c.
have no affect upon
d.
slightly decrease
e.
There is no relationship between the length of a channel and capital requirements.
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53. The most difficult problem with making the financial approach to choosing a channel
structure operational is:
a.
The reluctance on the part of firms to use it.
b.
Obtaining accurate estimates of future revenues and costs from alternative channel
structures.
c.
The great expense involved in employing this method.
d.
The inadequate capacity of existing computer systems to handle the mass of data
involved.
e.
Poor attitudes on the part of managers toward using it.
54. Approaches that attempt to identify all channel structure variables explicitly and then attempt
to express the relationships among them in quantitative terms were referred to in the text as:
a.
Management science approaches.
b.
Heuristic approaches.
c.
Bayesian approaches.
d.
Distribution costing approaches.
e.
Financial analysis approaches.
55. Which of the following is not a key limitation of Transaction Cost Analysis (TCA)?
a.
It deals only with the dichotomy of vertical integration versus independent channel
members.
b.
The assumption of opportunistic behavior may not be accurate.
c.
It neglects most of the other relevant variables associated with channel choice.
d.
No distinction is made between long-term and short-term issues in channel
structure relationships.
e.
It is difficult to implement.
56. In the weighted factor score approach, all of the following are criteria for choosing channel
structure except:
a.
Decision factors must be less than seven.
b.
Factors are stated explicitly.
c.
Decision factors are weighted.
d.
Each channel alternative is rated.
e.
An overall weighted factor score is computed.
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57. The total score arrived at in the weighted factor score approach represents:
a.
The probability of choosing a particular channel structure alternative.
b.
The probability that the channel structure alternative chosen will be optimal.
c.
A quantitative representation of management’s judgment on the merits of a
particular channel alternative.
d.
The optimal channel choice.
e.
The only logical channel alternative.
58. The distribution costing approach to choosing channel structure:
a.
Requires almost no managerial judgment.
b.
Requires specific factors to be identified.
c.
Requires that management make some cost and revenue estimates.
d.
Will, if done well, generally yield an optimal channel choice.
e.
Assumes a three-level distribution structure.
59. The __________approach to selecting the “best” channel structure focuses on synthesizing
traditional economic analysis with behavioral concepts.
a.
Aspinwall
b.
straight quality judgment
c.
weighted factor score
d.
transaction cost analysis
e.
distribution costing