Exam

Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
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
Answer: A

2) Which of the following entities in the marketing channel is a merchant?

A) wholesalers
B) brokers
C) sales agents
D) warehouses
E) advertising agencies
Answer: A

3) A(n) ________ is a facilitator who assists in the distribution process.

A) advertising agency
B) sales agent
C) manufacturer's representative
D) broker
E) wholesaler
Answer: A

4) 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
Answer: C

5) 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
Answer: B

6) 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 also ropes in 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
Answer: D

7) 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
Answer: B

8) 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
Answer: B

9) 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
Answer: A

10) 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
Answer: A

11) 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.
Answer: A

15) 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.
Answer: D

16) 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.
Answer: A

17) Which of the following entities is present in a zero-level marketing channel?

A) consumers
B) retailers
C) brokers
D) jobbers
E) wholesalers
Answer: A

18) A direct marketing channel is a ________.

A) one-level channel
B) two-level channel
C) zero-level channel
D) three-level channel
E) reverse-flow channel
Answer: C

19) 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
Answer: A

20) 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
Answer: B

21) 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
Answer: A

22) 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
Answer: B
23) Which of the following terms refers to the add-on services, such as credit, delivery, installation, and repairs,
provided by a marketing channel?
A) service backup
B) product accessories
C) external products
D) product variety
E) service extensions
Answer: A

24) Atburex is a furniture manufacturing company in the United States. The company provides a sixty day credit
period and EMI options to customers and also offers on-site delivery and installation. These special benefits
refer to which of the following service outputs?
A) good service backup
B) large product variety
C) spatial convenience
D) large lot size
E) short waiting time
Answer: A

25) 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
Answer: A

26) Which of the following allows a firm to maintain control over the service level and obtain more dedicated
and knowledgeable selling?
A) selective distribution
B) intensive distribution
C) push strategy
D) exclusive distribution
E) pull strategy
Answer: D

27) 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
Answer: A

28) 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.
Answer: A

29) 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
Answer: A

30) 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
Answer: A

31) An intensive distribution strategy serves well for ________.

A) premium cars
B) commercial trucks
C) private label products
D) industrial equipment
E) newspapers
Answer: E

32) 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
Answer: A

33) 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
Answer: A

34) ________ 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
Answer: D

36) 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
 Answer: A

37) Which marketing channel is associated with the highest value added per sale?
A) retail stores
B) sales force
C) distributors
D) Internet
E) telemarketing
Answer: B

38) Which of the following problems is most likely when a sales agency is used 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.
Answer: A

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 the youth. However, the new line is not well-received by the market, and sales fail to take off
even three months after its launch.

39) 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
Answer: B

40) 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
Answer: A

41) 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
Answer: B

42) ________ 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
Answer: A

43) 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
Answer: A

44) 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
Answer: A

45) 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
Answer: A

46) 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
Answer: A

62) 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.
Answer: A

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
81) Marketing channels are the set of pathways a product or service follows after production, culminating in
purchase and consumption by the final end user.
Answer: True False

82) Sales agents and brokers are called facilitators in a marketing channel.
Answer: True False

83) 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.
 Answer: True False

84) 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.
Answer: True False

85) A marketing channel overcomes the time, place, and possession gaps that separate goods and services from
those who need or want them.
Answer: True False

86) Marketing channel functions such as storage and movement and communications constitute a backward
flow of activities.
Answer: True False

87) All functions in a marketing channel use scarce resources and can be shifted among channel members.
Answer: True False

88) A zero-level marketing channel typically uses a wholesaler and a retailer.

Answer: True False

89) The flow of materials to refurbish products for resale constitutes a reverse flow.
Answer: True False

90) Lot size refers to the total number of units a channel can transmit from the manufacturer's place to the
service outlet.
Answer: True False

91) Add-on services such as credit, delivery, installation, and repairs provided by the marketing channel are
referred to as service backup.
Answer: True False

93) When economic conditions are depressed, producers want to move goods to market using longer channels.
Answer: True False

94) Intensive distribution relies on only some of the intermediaries willing to carry a particular product.
Answer: True False

95) Intensive distribution is becoming a mainstay for specialists looking for an edge in markets increasingly
driven by price.
Answer: True False

96) An intensive distribution strategy serves well for products such as snack foods and soft drinks.
Answer: True False

97) Distributors' territorial rights define the terms under which the producer will enfranchise other distributors.
Answer: True False

98) Manufacturers can obtain greater control over the selling process by using a sales agency.
Answer: True False

99) After a company has chosen a channel system, it must select, train, motivate, and evaluate individual
intermediaries for each channel.
Answer: True False

100) Channel power is the ability to alter channel members' behavior so they take actions they would not have
taken otherwise.
 Answer: True False

101) A manufacturer is using reward power when it offers intermediaries an extra benefit for performing specific
acts or functions.
Answer True False

102) When a manufacturer requests a behavior that is warranted under the contract, the manufacturer is using
coercive power.
Answer: True False

103) A manufacturer obtains referent power when it has special knowledge that intermediaries value.
Answer: True False

104) Coercive and referent power are subjective and depend on the ability and willingness of parties to recognize
them.
Answer: True False

105) In competitive markets with low entry barriers, the optimal channel structure will inevitably change over
time.
Answer: True False

106) Early buyers might be willing to pay for high-value-added channels, but later buyers will switch to
lower-cost channels.
Answer: True False

108) A conventional marketing channel includes the producer, wholesalers, and retailers acting as a unified
system.
Answer: True False

114) Adding more marketing channels increases the channel cost of selling.
Answer: True False

118) Exclusive dealings and tying agreements are illegal and prohibited by law.
Answer: True False