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Chapter 8—Target Markets and Channel Design Strategy
MULTIPLE CHOICE
1. Why does it make sense to sell high-priced and exclusive merchandise such as diamonds, rare
Cognac, or Waterford Crystal, through warehouse club channels?
a.
The warehouse clubs attract thousands of customers each year.
b.
Companies can sell last year’s style/model easily at the warehouse club.
c.
Two-thirds of the shoppers at a warehouse club are business owners, many of
whom are successful and affluent.
d.
These types of manufacturers are changing their distribution channels to include
mass merchandisers, discount stores, and warehouse clubs in order to reach more
potential buyers.
e.
It makes no sense for these manufacturers to sell products at a warehouse club and
diminish the image of their brand or product name.
2. The emphasis on channel design strategy is to help the firm gain ___________.
a.
lower variable costs
b.
a more efficient operation
c.
strong channel members that will help the firm gain sales
d.
a recognizable name and image among buyers
e.
a competitive sustainable advantage
3. The market constructs used in the text to analyze markets in relation to channel design
strategy consists of all of the following dimensions except:
a.
Market density.
b.
Market behavior.
c.
Market reputation.
d.
Market geography.
e.
Market size.
4. According to the text, the most complex market dimension is:
a.
Market geography.
b.
Market size.
c.
Market coverage.
d.
Market behavior.
e.
Market price.
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5. It is the __________ that should drive channel design.
a.
structure of competitive channels
b.
level of costs
c.
needs and wants of the market being targeted
d.
length, breadth, and intensity of channel structure
e.
the proclivities of prospective channel members
6. The __________ variables are the most fundamental variables in channel design.
a.
market variables
b.
target markets and industry size
c.
distributor reputation and market size
d.
cost and analytical technique
e.
Which are most important varies by industry.
7. The fact that South East Asia, as well as the former Eastern Bloc countries of Central and
Eastern Europe have become important locations for emerging markets is most closely related
to which dimension of the Framework for Market Analysis discussed in the text?
a.
Market density
b.
Market size
c.
Market behavior
d.
Market geography
e.
Market heterogeneity
8. What presents the most formidable challenges for distribution channels when firms deal with
distant markets by selling products on the Internet?
a.
Foreign exchange and brand recognition
b.
Language barriers and logistics
c.
Shipping and packing products
d.
Accurate completion of purchase orders and payment
e.
Fulfillment logistics and customer service
9. Market geography refers to:
a.
The regions where the product is available.
b.
How the market buys.
c.
How distant markets are from the producer or manufacturer.
d.
the density of markets.
e.
Where the consumer makes purchases.
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10. According to Bucklin’s distance and lot size model, other things being equal, the greater the
distance between a producer (manufacturer) and his markets, the higher the probability that a
channel using intermediaries will be:
a.
Less expensive.
b.
More expensive.
c.
Optimal.
d.
Short in structure.
e.
Intensively covered by intermediaries.
11. Changing market locations, resulting from geographical boundaries of existing markets
expanding or the opening up of new, more distant markets, should signal the channel manager
that:
a.
Shorter channels are definitely needed.
b.
A higher level of intensity is called for.
c.
Modifications in channel structure may be needed.
d.
Intermediaries should be dropped.
e.
Market density is increasing.
12. In terms of market geography, the channel manager’s responsibilities are to:
a.
Delineate the geographic location of target markets.
b.
Measure, track and forecast geographical changes.
c.
Achieve high customer service in all locations.
d.
Identify where customers make their purchases.
e.
Identify costs in high density and low density regions.
13. Which of the following is not a type of geographical area for which census data are available?
a.
MSAs
b.
PMSAs
c.
MRCs
d.
PIPs
e.
CBDs
Target Markets and Channel Design Strategy
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14. Key published sources for locating markets include all of the following except:
a.
Census Bureau’s Metropolitan Map Series.
b.
Commercial Atlas and Market Guide.
c.
Editor and Publisher Market Guide.
d.
The International Business Guide to Distributors.
e.
Sales Maps for Retail and Industrial Markets.
15. MSA stands for:
a.
Measures and Standards of Accuracy.
b.
Managerial Statistical Analysis.
c.
Management Standards Agency.
d.
Metropolitan Statistical Area.
e.
Marketing Selection Areas.
16. Market size refers to:
a.
The square miles within the market geography.
b.
The dollar volume of sales in a market.
c.
The number of buyers in a given market.
d.
The number of outlets within the market geography.
e.
The number of wholesalers in a specific industry.
17. If market geography and market size are both increasing, the average cost of serving buyers is
sure to:
a.
Increase.
b.
Decrease.
c.
Remain the same.
d.
Cannot be determined with the information provided.
e.
Increase at a faster rate than additional revenues.
18. Market density refers to:
a.
The number of buyers in a geographic unit.
b.
The absolute number of buyers per intermediary.
c.
The ratio of dollar sales to number of buyers.
d.
The ratio of retail outlets to wholesalers.
e.
The number of intermediaries in a geographic unit.
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19. According to the concept of efficient congestion, dense markets can __________ in the
performance of several important distribution tasks.
a.
decrease the level of efficiency
b.
increase the level of efficiency
c.
promote the use of intermediaries
d.
reduce effectiveness
e.
make it impossible for firms to achieve efficiency
20. The opportunity to achieve a relatively high level of customer service at low cost is higher in
more:
a.
Dispersed markets than in more concentrated markets.
b.
Concentrated markets than in more dispersed markets.
c.
Changing markets than in more stable markets.
d.
Dispersed markets than in more dense markets.
e.
Distant markets than in large regional markets.
21. Congested markets promote efficiency in the performance of all of the following distribution
tasks except:
a.
Communication.
b.
Storage.
c.
Transportation.
d.
Negotiations.
e.
Efficiency is promoted for all of the above.
22. Although channel members are faced with intense competition in dense markets, they have
the offsetting advantage of ________ found in high density markets.
a.
increased operations efficiencies
b.
efficient congestion
c.
brand name recognition
d.
numerous opportunities for product placement
e.
efficient use of the sales force
Target Markets and Channel Design Strategy
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23. By 2010, consumer online sales reached approximately what level of sales?
a.
about $1 billion
b.
about $10 billion
c.
about $50 billion
d.
about $100 billion
e.
under $175million
24. In the text’s example on marketing channel structures in Japan, the principal causes of the
long channel structures in Japan are:
a.
The market behavior of the Japanese consumer and the historical background of
Japanese society.
b.
The market density of Japan and the size of markets in that country.
c.
Historical patterns of the Japanese society and the market geography in Japan.
d.
The market behavior of the Japanese consumer and the density of Japanese
markets.
e.
Transportation logistics and market size found in Japan.
25. The four subdimensions of market behavior discussed in the text are:
a.
When, where, how, and why the market buys.
b.
Who does the buying, where, why, and how the market buys.
c.
How, when, and where the market buys, and who does the buying.
d.
Market size, market geography, market density, and who does the buying.
e.
Consumer density, why consumers buy, and who buys.
26. The “Come See the Softer Side of Sears” campaign was an attempt by the retailer to
address_________ consumers shopped for more fashionable clothing.
a.
when
b.
how
c.
where
d.
why
e.
for whom
27. In 2010, it is estimated that about ______ percent of the retail sales were made over the
Internet.
a.
1
b.
4
c.
12
d.
17
e.
74
Marketing Channels 8e
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28. Seasonal variations in buyer behavior tend to create:
a.
Conflict in the channel.
b.
“Peaks and valleys” in the manufacturer’s production scheduling.
c.
Less need for intermediaries.
d.
Shorter channels of distribution.
e.
More intensive distribution.
29. Manufacturers that experience wide seasonal demand variations should:
a.
Include the willingness to buy off-season as a channel member selection criteria.
b.
Expand internationally to smooth out the seasonal demand.
c.
Alter production schedules to match buying schedules.
d.
Produce in the off-season and hold inventory for the heavy selling season.
e.
Have channel members carry all excess inventory.
30. Which of the following is not a consequence of industrial distributors that keep “bankers
hours”?
a.
Making life convenient for themselves rather than their customers
b.
Violating the marketing concept
c.
Likely hurting their suppliers’ competitive position
d.
Less likely to be used by manufacturers who make products conveniently available
to customers
e.
Customer service is enhanced since buyers can easily be served during the
business day
31. Consumers willing to travel somewhat further to gain access to a store with special services
are exhibiting:
a.
Price sensitivity.
b.
Trade-off behavior.
c.
Niche market response.
d.
Convenience minimization behavior.
e.
Service elasticity.
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32. For stores selling shopping goods, a location that is nearer to consumers is generally
__________ would be the case for stores selling convenience goods.
a.
less important than what
b.
more important than what
c.
of the same importance as what
d.
measured differently from what
e.
measured the same from what
33. Customers will often forgo ambiance and atmosphere in favor of ___________ when
shopping for toys or computers.
a.
Internet shopping
b.
lower prices or one-stop shopping
c.
buying at factory outlet stores
d.
buying at nearby stores
e.
excellent customer service
34. Less prime retail locations may be offset somewhat through all of the following except:
a.
Close-to-home convenience.
b.
Larger selection.
c.
Unusual merchandise.
d.
Lower prices.
e.
Special services.
35. Recent research into industrial buyer behavior suggests that:
a.
Industrial buyer behavior is a strictly rational process.
b.
Industrial buyer behavior is very similar to consumer buyer behavior.
c.
Industrial buyers may not behave in a completely rational manner.
d.
Industrial buyers operate largely on the “old boy” favoritism system.
e.
Industrial buyers tend be more impulsive purchasers.
36. “Where customers buy” refers to:
a.
The type of retail outlet.
b.
The aisle within the retail store.
c.
The distance between the customer’s home and the place of purchase.
d.
The geographic region.
e.
The time it takes for the customer to get to the store.
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37. Which of the following is not considered to be an example of the “how” subdimension of
buyer behavior?
a.
Buying only enough food for the weekend
b.
Buying everything on the shopping list at one store
c.
Checking Consumer Reports for information on dishwashers before buying one
d.
Using a MasterCard to make the purchase
e.
Taking time to browse rather than quickly making a purchase
38. When consumers shop in a retailer’s store, buy from its catalog, and buy from its Web site,
this is a phenomenon known as:
a.
Multi-tasking.
b.
Multi-shopping.
c.
Extensive.
d.
Threetailing.
e.
Compulsive buying.
39. When there are changes in how customers make their purchases, the channel manager needs
to determine:
a.
The underlying sociocultural patterns.
b.
Whether these changes are temporary or long-term.
c.
Channel members’ acceptance of the changes.
d.
Environmental changes and analyze them.
e.
Whether to make changes to the distribution channel.
40. The set of people who participate in industrial buying decisions and are responsible for the
consequences resulting from the decision are known as:
a.
Multiple purchase influencers.
b.
Professional buying group.
c.
Buying center.
d.
Industrial purchasing group.
e.
Gatekeepers.
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41. People in industrial organizations who have the power to decide on product requirements
and/or suppliers are known as:
a.
Users.
b.
Influencers.
c.
Approvers.
d.
Buyers.
e.
Deciders.
42. Which of the following purchase roles is the most difficult to analyze?
a.
Buyer
b.
User
c.
Decider
d.
Gatekeepers
e.
User and decider are about equal.
43. Generally, as the channel structure grows longer and the degree of control exercised by the
manufacturer:
a.
Increases.
b.
Decreases.
c.
Remains essentially the same.
d.
Increases dramatically.
e.
Requires a shift to exclusive distribution.