Armstrong Mai12 Tif 10

Marketing: An Introduction, 12e (Armstrong/Kotler) Chapter 10 Marketing Channels: Delivering Customer Value 1) Which of the following would be considered an upstream partner in a company's supply chain? A) a firm that resells a finished product and shares the net sales with the producer B) a firm that provides technical expertise in the production of a product C) a firm that markets a product to consumers through social media D) a firm that buys products at wholesale cost from the company E) a firm that exclusively markets a product to other businesses Answer: B Difficulty: Moderate Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 2) Which of the following is true of downstream channels in a company's supply chain? A) They provide their expertise in product design. B) They manufacture the products of the company. C) They supply raw materials and components to the company. D) They contribute financially to the company during production. E) They form an intermediary link between the company and its customers. Answer: E Difficulty: Moderate Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization 3) A ________ is made up of a company, its suppliers, distributors, and, ultimately, customers who "partner" with each other to improve the performance of the entire system. A) manufacturing chain B) distribution center C) marketing intermediary D) value delivery network E) disintermediation system Answer: D Difficulty: Moderate Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization

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4) ________ are sets of interdependent organizations that help make the product or service of a company available for use by consumers or business users. A) Research and development channels B) Upstream channels C) Marketing channels D) Raw materials suppliers E) Backward integration chains Answer: C Difficulty: Easy Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization 5) Producers use marketing intermediaries because they ________. A) create greater efficiency in making goods available to target markets B) supply inexpensive raw materials for manufacturing products C) provide technical expertise for faster production D) monitor day-to-day activities during production E) form a part of the company's direct channel Answer: A Difficulty: Easy Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization 6) From the economic system's point of view, the role of marketing intermediaries is to ________. A) facilitate the production of products without direct customer feedback B) help a company develop a direct channel selling system C) buy small quantities of products from producers and break them down into narrow assortments for customers D) increase the amount of work that must be done by producers and consumers E) transform the assortments of products made by producers into the assortments wanted by consumers Answer: E Difficulty: Moderate Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization 7) Which of the following is true of a direct marketing channel? A) It increases the number of channel transactions. B) It enables retailers to reach many customers. C) It does not use any intermediaries. D) It gives limited distribution control to producers. E) It creates a complex distribution channel. Answer: C Difficulty: Moderate Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization 2 Copyright © 2015 Pearson Education, Inc.

8) Which of the following creates the shortest distribution channel between a producer and a customer? A) retail marketing B) indirect marketing C) share marketing D) direct marketing E) wholesale marketing Answer: D Difficulty: Easy Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization 9) In which of the following situations is a producer guaranteed full control over product sales? A) a corporate marketing channel B) a direct marketing channel C) a contractual distribution channel D) a horizontal marketing system E) an administered marketing system Answer: B Difficulty: Easy Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization 10) A firm that uses direct marketing would most likely sell its products through ________. A) one marketing intermediary B) big box retailers C) large wholesalers D) multiple intermediaries E) the company Web site Answer: E Difficulty: Moderate Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking

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11) Crowbar Records used to sell its music CDs through a network of retail outlets, record stores, and music dealers but stopped using these agents with the advent of MP3 technology. Crowbar now sells its music independently on its Web site, through personal mail, and on social networking sites. Which type of marketing system has Crowbar most likely adopted? A) an administered marketing system B) a contractual marketing system C) a horizontal marketing channel D) a direct marketing channel E) a vertical marketing channel Answer: D Difficulty: Moderate Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 12) Which of the following is a marketing intermediary? A) customers B) producers C) manufacturers D) retailers E) advertisers Answer: D Difficulty: Moderate Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization 13) Kevin Pinker is a freelance computer programmer who writes computer algorithms for companies such as SoftStar and BlueHill. SoftStar and BlueHill use these algorithms to make specific programs based on online market research. These programs are then sold to the online retailer, Abundon, which then sells them to individual consumers and businesses. Which of the following is a marketing intermediary in this chain? A) SoftStar B) BlueHill C) the consumer D) Abundon E) Kevin Pinker Answer: D Difficulty: Difficult Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking

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14) Mintel Agro provides raw materials in the form of agricultural products to Kiltmark Food Company. Kiltmark produces flour-based edible products, which it distributes to a wholesale company called Yellowstar Trading. Yellowstar Trading then sells Kiltmark products to the discount retailer, Stroos. Stroos sells the products to consumers. Which of the following is considered a marketing intermediary in these transactions? A) only Kiltmark B) only Stroos C) only Yellowstar Trading D) both Yellowstar Trading and Stroos E) both Stroos and Mintel Agro Answer: D Difficulty: Difficult Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 15) Which of the following is an example of a horizontal conflict in a distribution channel? A) a Nike shoe dealer complaining that the shoes provided to the dealer are defective B) a Ford car dealer complaining that another Ford dealer is underpricing the same models C) a FedEx agent complaining that a DHL agent is cutting off his business D) a Walmart executive complaining to a Pepsi executive for not replenishing stocks on time E) a Gucci executive complaining to Gucci's suppliers of delays in shipping consignments Answer: B Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 16) Vertical conflicts in distribution channels are conflicts that occur between ________. A) same levels in the same channel B) different levels of the same channel C) same levels of different channels D) different levels of different channels E) retailers and customers Answer: B Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization

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17) Orion Steel is the chief provider of metals to Accline Cars, which manufactures two models of vehicles–cars and large buses. Accline dealers sell the firm's cars to individual citizens, but buses are sold directly to government entities. In such a distribution channel, which of the following would be considered a vertical conflict? A) a conflict between Orion Steel and Accline Cars B) a conflict between Orion Steel and Accline dealers C) a conflict between two Accline car dealers D) a conflict between Accline dealers and government entities E) a conflict between Accline Cars and its dealers Answer: E Difficulty: Difficult Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 18) Jupiter Steel is the chief provider of metals to Greystone Motors. Greystone Motors has two models of cars–one for commercial and ordinary consumers and another for professional car racing teams. Greystone Motors has designated dealers to sell its commercial cars to consumers, while racing cars are sold directly to the racing teams. In such a distribution channel, which of the following would be considered a horizontal conflict? A) a conflict between Jupiter Steel and Greystone Motors B) a conflict between Jupiter Steel and Greystone dealers C) a conflict between two Greystone Motors car dealerships D) a conflict between a Greystone Motors car dealership and a racing team E) a conflict between Greystone Motors and its car dealerships Answer: C Difficulty: Difficult Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 19) Which of the following is true of a conventional distribution channel? A) It has each channel member acting as a separate business unit trying to maximize its own profits. B) It consists of producers selling their products directly to customers without the use of intermediaries. C) It has one channel member owning the other channel members. D) It is a distribution channel where a producer is owner of all the other channel members. E) It has all members of the channel working together as a single organization. Answer: A Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization

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20) In a ________, producers, wholesalers, and retailers act as a unified system. In such a structure, one channel member owns the others, has contracts with them, or has so much power that they all cooperate. A) direct marketing system B) horizontal distribution channel C) lateral marketing system D) conventional distribution channel E) vertical marketing system Answer: E Difficulty: Easy Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 21) Which of the following is true of a vertical marketing system? A) It is formed when two or more companies at one level join together to follow a new marketing opportunity. B) It is formed when a single firm sets up two or more marketing channels to reach one or more customer segments. C) It does not give overall power to any one member in the channel. D) It has each channel member acting as a separate business unit trying to maximize its own profits. E) It has one channel member owning all the other channel members or has contracts with all other channel members. Answer: E Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 22) A(n) ________ marketing system combines successive stages of production and distribution under single ownership, where channel leadership is established through common ownership. A) contractual vertical B) corporate vertical C) administered vertical D) horizontal E) direct Answer: B Difficulty: Easy Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization

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23) A(n) ________ marketing system is a marketing system in which independent firms at different levels of production and distribution join together through binding agreements. A) corporate vertical B) horizontal C) contractual vertical D) administered vertical E) direct Answer: C Difficulty: Easy Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 24) Which type of channel arrangement does a franchise organization most likely follow? A) administered vertical marketing system B) horizontal marketing system C) contractual vertical marketing system D) corporate vertical marketing system E) direct marketing system Answer: C Difficulty: Easy Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 25) Rage, a leading motor vehicle manufacturer, introduces a new superbike model. It invites proposals from independent dealers who are willing to set up exclusive showrooms that only sell Rage's superbikes. Chosen dealers will sell and service the superbikes, and Rage will oversee national advertising. This is most likely an example of a(n) ________. A) administered vertical marketing system B) horizontal manufacturing marketing system C) manufacturer-sponsored retailer franchise system D) manufacturer-sponsored wholesaler franchise system E) direct marketing system Answer: C Difficulty: Difficult Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking

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26) Pastaliano is a restaurant based in Illinois that exclusively sells Italian food. Pastaliano sells the rights to its recipes to a British firm, Clover Trading, which then opens an outlet in London under the Pastaliano brand name. Which kind of channel arrangement does Pastaliano most likely have with Clover Trading? A) a horizontal marketing system B) a direct marketing system C) an administered vertical marketing system D) a contractual vertical marketing system E) a corporate vertical marketing system Answer: D Difficulty: Difficult Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 27) In a(n) ________ marketing system, leadership over production and distribution is assumed through the size and power of one or a few dominant channel members. A) direct B) contractual vertical C) horizontal D) corporate vertical E) administered vertical Answer: E Difficulty: Easy Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 28) Sonic Shack, an audio equipment retailer, signs an agreement with PineWire, a renowned electronics company, to sell PineWire products. The deal requires Sonic Shack to provide PineWire products with superior displays, shelf space, and promotion compared to competing products. Sonic agrees to these terms as PineWire products command a huge share in the market. Which of the following types of channel arrangements do PineWire and Sonic Shack most likely have? A) administered vertical marketing system B) corporate vertical marketing system C) indirect marketing system D) wholesaler franchise system E) horizontal marketing system Answer: A Difficulty: Difficult Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking

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29) A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity is referred to as a(n) ________. A) corporate vertical marketing system B) contractual vertical marketing system C) direct marketing system D) horizontal marketing system E) administered vertical marketing system Answer: D Difficulty: Easy Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 30) TruMart, a leading retail chain, decides to open a restaurant inside its stores, so the firm partners with MeatMe, a popular burger chain. MeatMe opens a restaurant inside TruMart. The MeatMe chain of restaurants also has a deal with Westman Cola to serve only Westman soft drinks at its outlets. This arrangement will benefit all three companies. What kind of channel arrangement is being followed in this case? A) administered vertical marketing system B) horizontal marketing system C) direct marketing system D) contractual vertical marketing system E) corporate vertical marketing system Answer: B Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 31) GreatWords is a book retailer. Due to the increasing demand for audiobooks, the firm decides to sell audiobooks in its stores. GreatWords signs a deal with Carpem, a leading producer of educational audiobooks. According to the deal, GreatWords will sell only Carpem's audio titles in its stores, while Carpem will not sell its books through other retailer stores. GreatWords profits from Carpem's popularity while Carpem, in return, enjoys better sales. This is most likely an example of a(n) ________ marketing system. A) direct B) administered vertical C) corporate vertical D) contractual vertical E) horizontal Answer: E Difficulty: Difficult Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking

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32) Faber Motors manufactures three lines of cars: high-end security cars for government agencies, commercial cars for consumers and individuals, and professional racing cars. The highend security cars are sold directly to government buyers by the company. The consumer cars are sold through dedicated dealers who only sell Faber's lines at their outlets. For its professional racing cars, Faber collaborates with Radium Tires, an innovative and renowned tire manufacturer. Faber provides the engine and body, while Radium provides the tires and its expertise on the racing industry. Which term best describes Faber's channel arrangements? A) direct distribution system B) horizontal marketing system C) corporate vertical franchise system D) multichannel distribution system E) administered vertical marketing system Answer: D Difficulty: Difficult Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 33) Clara's, a cosmetics manufacturer, sells many of its products through retail outlets. However, the firm sells a few expensive, popular products only through direct selling methods. What kind of channel arrangement does Clara's follow for all of its products together? A) horizontal marketing system B) multichannel distribution system C) administered vertical marketing system D) contractual vertical marketing system E) corporate vertical marketing system Answer: B Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 34) For over ten years, Erudite, a publishing and educational company that produces college textbooks, has been selling its books online through studysmart.com, a popular online retailer that sells textbooks published by different companies. Recently, Erudite stopped selling its books through studysmart.com and set up its own website for selling its books. This change in channel organization is called ________. A) disintermediation B) intensive distribution C) brokering D) franchising E) selective distribution Answer: A Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 11 Copyright © 2015 Pearson Education, Inc.

35) ________ distribution is a product distribution strategy that involves stocking a product in as many outlets as possible. A) Selective B) Exclusive C) Intensive D) Exponential E) Comprehensive Answer: C Difficulty: Easy Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization 36) Which of the following is true of an intensive distribution strategy? A) It gives sole rights to select dealers in a given area. B) It strives to make products available where and when consumers want them. C) Compared with other distribution strategies, it uses the least number of intermediaries to sell products. D) Compared with other distribution strategies, it provides the best support for dealers of luxury products. E) It discards traditional intermediaries and uses direct marketing to reach customers. Answer: B Difficulty: Moderate Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization 37) ________ distribution gives a limited number of dealers the sole rights to distribute a company's products in their territories. A) Inclusive B) Horizontal C) Intensive D) Exclusive E) Vertical Answer: D Difficulty: Easy Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization 38) Selective distribution is a strategy in which ________. A) more than one but fewer than all willing intermediaries are used by a seller B) products are stocked in as many outlets as possible by a seller C) products are not sold through intermediaries but directly to customers from producers D) all willing intermediaries are given rights to sell a product E) common household goods are preferred over luxury products by intermediaries Answer: A Difficulty: Moderate Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization 12 Copyright © 2015 Pearson Education, Inc.

39) ________ distribution gives producers good market coverage with more control and less cost than does intensive distribution. A) Vertical B) Selective C) Horizontal D) Comprehensive E) Inclusive Answer: B Difficulty: Moderate Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization 40) When a seller requires that only certain dealers carry its products, its strategy is known as ________. A) horizontal restraint of trade B) intensive distribution C) vertical distribution D) disintermediation E) exclusive distribution Answer: E Difficulty: Easy Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization 41) Which of the following is an advantage of exclusive dealing between a seller and a dealer? A) The seller gains more shelf power compared to competitors' products. B) The seller can avoid using any intermediary and sell the product directly to customers. C) Customers get more loyal and dependable outlets. D) The dealer obtains a steady source of supply and more support from the seller. E) The dealer can freely choose what products to sell without any interference from the seller. Answer: D Difficulty: Moderate Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization 42) ________ is a practice whereby a producer agrees to sell a brand to a dealer only if the dealer agrees to sell some or all of the rest of its products. A) Horizontal price fixing B) Horizontal integration C) Full-line forcing D) Direct marketing E) Disintermediation Answer: C Difficulty: Moderate Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization 13 Copyright © 2015 Pearson Education, Inc.

43) Which of the following is true of an exclusive dealing arrangement between a producer and a dealer? A) It prohibits the producer from selling outside the dealer's territory. B) It prevents the producer from using any other dealer to sell its products regardless of geographical area. C) It gives the producer's products more shelf power compared to a competitor's products being sold by the dealer. D) It can be considered illegal if it increases competition substantially. E) It does not allow other producers to sell to that dealer. Answer: E Difficulty: Moderate Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization 44) The Memphis Rock chain of restaurants has a deal with WestEnd Cola, according to which it will serve only WestEnd sodas at its restaurants. What strategy has most likely been adopted by WestEnd Cola? A) horizontal price fixing B) disintermediation C) exclusive dealing D) selective distribution E) horizontal integration Answer: C Difficulty: Moderate Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 45) Bateman Gray Motors sells the cars it produces using dedicated dealers who only sell Bateman Gray's products at their outlets. What kind of marketing strategy has Bateman Gray adopted with its car dealers? A) direct marketing B) exclusive dealing C) disintermediation D) horizontal integration E) vertical integration Answer: B Difficulty: Moderate Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking

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46) PinWheel, a renowned electronics company, has an arrangement with SoundBite, an audio equipment retailer. Through the agreement, Soundbite is to promote and sell PinWheel's audio electronics and give PinWheel products better shelf space than competitors' products. The agreement also requires that SoundBite sell additional non-audio PinWheel products at all SoundBite stores. Which term best describes PinWheel's strategy? A) horizontal price fixing B) horizontal integration C) full-line forcing D) direct marketing E) disintermediation Answer: C Difficulty: Moderate Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 47) In supply chain management, moving products and materials from suppliers to the factory is known as ________ logistics. A) outbound B) reverse l C) inbound D) downstream E) inventory Answer: C Difficulty: Easy Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 48) Outbound logistics refers to moving ________. A) unwanted, excess products from resellers to producers B) raw materials from suppliers to the factory C) excess materials from the factory to suppliers D) products from the factory to resellers E) broken, damaged products from customers to producers Answer: D Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization

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49) Reverse logistics refers to moving ________. A) unwanted, excess products from resellers to producers B) raw materials from suppliers to the factory C) excess materials from the factory to suppliers D) finished products from the factory to customers E) finished products from producers to resellers Answer: A Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 50) In a logistics system, minimizing distribution costs most likely involves ________. A) flexible assortments B) large shipping lots C) rapid delivery D) large inventories E) liberal return policies Answer: B Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 51) A ________ is highly automated and designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible. A) distribution center B) storage warehouse C) cold storage unit D) controlled-atmosphere unit E) storage silo Answer: A Difficulty: Easy Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization

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52) Which of the following is a difference between storage warehouses and distribution centers? A) Storage warehouses are used to store agricultural products, while distribution centers are used to store nonagricultural products. B) Storage warehouses store goods for moderate to long periods, while distribution centers are used to move goods rather than just store them. C) Storage warehouses are always owned by a producer, while distribution centers are rented. D) Storage warehouses are more likely to use newer, computer-controlled systems, while distribution centers generally use outdated materials-handling methods. E) Storage warehouses are exclusively used by government agencies, while distribution centers are exclusively used by private businesses. Answer: B Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 53) In a just-in-time logistics system, ________. A) retailers carry small inventories of merchandise to last for only a few days B) retailers store products for long periods to avoid an interruption in supply C) producers supply products to resellers before customers place their orders D) producers that are geographically far from their retailers use an express-delivery system E) retailers incur high inventory-carrying and inventory-handling costs Answer: A Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 54) Which of the following is true of RFID or "smart tag" technology? A) "Smart tag" technology eliminates the need for intermediaries and facilitates a direct marketing system. B) "Smart tag" technology can de-automate the entire supply chain. C) The use of "smart tag" technology makes it difficult to know where a product is located physically within the supply chain. D) Retailers and suppliers using "smart technology" have higher risks of shoplifting and robbery. E) "Smart shelves" can tell when it is time to reorder and can place orders automatically. Answer: E Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization

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55) Which of the following is a cost-effective mode for shipping large amounts of bulk products– coal, sand, minerals, and forest products–over long distances? A) air carriers B) water carriers C) pipelines D) trucks E) railroads Answer: E Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 56) Which of the following is most efficient for short hauls of high-value merchandise and is highly flexible in its routing and time schedules? A) water carriers B) pipeline C) trucks D) air carriers E) railroads Answer: C Difficulty: Easy Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 57) Which mode of transportation is best for carrying perishable goods to distant markets? A) railroads B) water carriers C) trucks D) air carriers E) pipelines Answer: D Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 58) ________ involves combining two or more systems of transportation to move products. A) Vertical transportation B) Disintermediation C) Just-in-time management D) Vertical integration E) Multimodal transportation Answer: E Difficulty: Easy Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 18 Copyright © 2015 Pearson Education, Inc.

59) The use of both rail and trucks for transporting goods is called ________. A) trainshipping B) fishybacking C) piggybacking D) airtrucking E) autoracking Answer: C Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 60) Under ________, a customer shares real-time data on sales and current inventory levels with a supplier, and the supplier then takes full responsibility for managing inventories and deliveries. A) periodic inventory systems B) vendor-managed inventory systems C) selective-trading inventory systems D) manual inventory replenishment systems E) customer-managed inventory systems Answer: B Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 61) Introducing intermediaries into a distribution chain increases the number of direct channel transactions between a manufacturer and its customers. Answer: FALSE Difficulty: Easy Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization 62) From a producer's point of view, a greater number of levels in a supply chain means less control and greater channel complexity. Answer: TRUE Difficulty: Moderate Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization 63) A channel level is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer. Answer: TRUE Difficulty: Easy Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization

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64) A company that has no intermediary levels sells its products directly to its customers. Answer: TRUE Difficulty: Easy Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization 65) Historically, conventional distribution channels have provided channel leadership and have had the power to assign roles and manage conflict. Answer: FALSE Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 66) A vertical marketing system is one in which the producer is always the dominant member of the channel. Answer: FALSE Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 67) In a vertical marketing system, producers do not use intermediaries to sell their products. Answer: FALSE Difficulty: Easy Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 68) The franchise organization is an example of a corporate vertical marketing system. Answer: FALSE Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 69) In an administered VMS, the producer assumes the leadership position in a distribution channel by default. Answer: FALSE Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 70) A horizontal marketing system can develop between a company and its competitor. Answer: TRUE Difficulty: Easy Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization

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71) A multichannel marketing system is one in which a producer sells to multiple markets using the same distributional channel. Answer: FALSE Difficulty: Easy Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 72) Disintermediation occurs when product or service producers cut out intermediaries and sell directly to final buyers. Answer: TRUE Difficulty: Easy Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 73) Marketing channel design calls for analyzing consumer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives. Answer: TRUE Difficulty: Easy Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization 74) Companies selling perishable products generally prefer direct marketing, which minimizes delays. Answer: TRUE Difficulty: Easy Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization 75) Intensive distribution occurs when only one intermediary is used by a producer to sell all its products. Answer: FALSE Difficulty: Moderate Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization 76) Exclusive dealing that creates a monopoly comes under the scope of the Clayton Act of 1914. Answer: TRUE Difficulty: Moderate Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization 77) Full-line forcing is a type of intensive distribution. Answer: FALSE Difficulty: Moderate Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization 21 Copyright © 2015 Pearson Education, Inc.

78) Full-line forcing is considered an illegal arrangement that violates the Clayton Act. Answer: FALSE Difficulty: Moderate Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization 79) In exclusive dealing, a producer may agree not to sell to other dealers in a given area. Answer: TRUE Difficulty: Easy Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization 80) Customer-centered logistics starts with the marketplace and works backward to the factory. Answer: TRUE Difficulty: Easy Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 81) Supply chain management involves managing both upstream and downstream value-added flows of materials. Answer: TRUE Difficulty: Easy Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 82) According to the text, the goal of any logistics system should be to maximize sales, not profits. Answer: FALSE Difficulty: Easy Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 83) Inbound logistics involves managing the flow of products from an intermediary to a customer. Answer: FALSE Difficulty: Easy Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 84) With a vendor-managed inventory system, the supplier takes full responsibility for managing inventories and deliveries. Answer: TRUE Difficulty: Easy Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 22 Copyright © 2015 Pearson Education, Inc.

85) An independent logistics provider that performs all of the functions required to get a client's product to market is known as a third-party logistics (3PL) provider. Answer: TRUE Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization 86) What are the different functions of the members of a marketing channel? Answer: Members of a marketing channel perform many key functions. Some help to complete transactions, which include: Information: Gathering and distributing information about consumers, producers, and other actors and forces in the marketing environment needed for planning and aiding exchange. Promotion: Developing and spreading persuasive communications about an offer. Contact: Finding and communicating with prospective buyers. Matching: Shaping offers to meet the buyer's needs, including activities such as manufacturing, grading, assembling, and packaging. Negotiation: Reaching an agreement on price and other terms so that ownership or possession can be transferred. Others help to fulfill the completed transactions, such as: Physical distribution: Transporting and storing goods. Financing: Acquiring and using funds to cover the costs of the channel work. Risk taking: Assuming the risks of carrying out the channel work. Difficulty: Moderate Chapter LO: 1 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 87) Compare a conventional distribution channel and a vertical marketing system. Answer: A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers. Each is a separate business seeking to maximize its own profits, perhaps even at the expense of the system as a whole. No channel member has much control over the other members, and no formal means exists for assigning roles and resolving channel conflict. Historically, conventional distribution channels have lacked leadership and power, often resulting in damaging conflict and poor performance. In contrast, a vertical marketing system (VMS) consists of producers, wholesalers, and retailers acting as a unified system. One channel member owns the others, has contracts with them, or wields so much power that they must all cooperate. The VMS can be dominated by the producer, the wholesaler, or the retailer. Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking

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88) What is a contractual vertical marketing system? Give an example of a type of business that works as a contractual VMS. Answer: A contractual VMS consists of independent firms at different levels of production and distribution that join together through contracts to obtain more economies or sales impact than each could achieve alone. Channel members coordinate their activities and manage conflict through contractual agreements. The franchise organization is the most common type of contractual relationship. In this system, a channel member called a franchiser links several stages in the production-distribution process. Almost every kind of business has been franchised–from motels and fast-food restaurants to dental centers and dating services, from wedding consultants and handyman services to fitness centers and funeral homes. For example, Anytime Fitness, "The club for busy people," grew quickly through franchising. Only a decade or so after its founding, Anytime Fitness now operates more than 2,100 clubs with 2 million members in all 50 states and 15 countries. Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 89) Differentiate between the three types of franchises and provide examples of each type. Answer: There are three types of franchises. The first type is the manufacturer-sponsored retailer franchise system–for example, Ford and its network of independent franchised dealers. The second type is the manufacturer-sponsored wholesaler franchise system–Coca-Cola licenses bottlers (wholesalers) in various world markets that buy Coca-Cola syrup concentrate and then bottle and sell the finished product to retailers locally. The third type is the service-firmsponsored retailer franchise system–for example, Burger King and its nearly 12, 300 franchiseeoperated restaurants around the world. Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 90) Explain multichannel distribution systems with an example. Answer: Multichannel distribution occurs when a single firm sets up two or more marketing channels to reach one or more customer segments. For example, John Deere, a manufacturer of agricultural machinery, sells its familiar green-and-yellow lawn and garden tractors, mowers, and outdoor power products to consumers and commercial users through several channels, including John Deere retailers, Lowe's home improvement stores, and online. It sells and services its tractors, combines, planters, and other agricultural equipment through its premium John Deere dealer network. It sells large construction and forestry equipment through selected large, fullservice John Deere dealers and their sales forces. Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization

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91) What are the advantages and disadvantages of using a multichannel distribution system? Answer: Multichannel distribution systems offer many advantages to companies facing large and complex markets. With each new channel, the company expands its sales and market coverage and gains opportunities to tailor its products and services to the specific needs of diverse customer segments. But such multichannel systems are harder to control, and they can generate conflict as more channels compete for customers and sales. For example, when John Deere, a manufacturer of agricultural machinery, began selling selected consumer products through Lowe's home improvement stores, many of its dealers complained loudly. To avoid such conflicts in its Internet marketing channels, the company routes all of its Web site sales to John Deere dealers. Difficulty: Moderate Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization 92) What is disintermediation? With a suitable example, explain the opportunities and problems that disintermediation presents for producers and resellers. Answer: Disintermediation occurs when product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones. Disintermediation presents both opportunities and problems for producers and resellers. Channel innovators who find new ways to add value in the channel can sweep aside traditional resellers and reap the rewards. In turn, traditional intermediaries must continue to innovate to avoid being swept aside. For example, superstore booksellers Borders and Barnes & Noble pioneered huge book selections and low prices, sending most small independent bookstores into ruin. Then, along came Amazon.com, which threatened even the largest brickand-mortar bookstores through online book sales. Now, both offline and online sellers of physical books are being threatened by digital book downloads and e-readers. Rather than being threatened by these digital developments, however, Amazon.com is leading them with its highly successful Kindle ereaders. By contrast, Barnes & Noble–the giant that helped put so many independent bookstores out of business–is a latecomer with its Nook e-reader and now finds itself locked in a battle for survival. Like resellers, to remain competitive, product and service producers must develop new channel opportunities, such as the Internet and other direct channels. However, developing these new channels often brings them into direct competition with their established channels, resulting in conflict. To ease this problem, companies often look for ways to make going direct a plus for the entire channel. Difficulty: Difficult Chapter LO: 2 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking

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93) How does a company determine its channel objectives? What factors influence the channel objectives of a company? Answer: Companies should state their marketing channel objectives in terms of targeted levels of customer service. Usually, a company can identify several segments wanting different levels of service. The company should decide which segments to serve and the best channels to use in each case. In each segment, the company wants to minimize the total channel cost of meeting customer service requirements. The company's channel objectives are also influenced by the nature of the company, its products, its marketing intermediaries, its competitors, and the environment. For example, companies selling perishable products may require more direct marketing to avoid delays and too much handling. In some cases, a company may want to compete in or near the same outlets that carry competitors' products. In other cases, companies may avoid the channels used by competitors. Finally, environmental factors such as economic conditions and legal constraints may affect channel objectives and design. For example, in a depressed economy, producers will want to distribute their goods in the most economical way, using shorter channels and dropping unneeded services that add to the final price of the goods. Difficulty: Difficult Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 94) Differentiate between intensive distribution, exclusive distribution, and selective distribution strategies, Provide examples of products that would be appropriate for each. Answer: Companies must determine the number of channel members to use at each level of a value network chain. Three strategies are available: intensive distribution, exclusive distribution, and selective distribution. Producers of convenience products and common raw materials typically seek intensive distribution–a strategy in which they stock their products in as many outlets as possible. These products must be available where and when consumers want them. For example, toothpaste, candy, and other similar items are sold in millions of outlets to provide maximum brand exposure and consumer convenience. Kraft, Coca-Cola, Kimberly-Clark, and other consumer goods companies distribute their products in this way. By contrast, some producers purposely limit the number of intermediaries handling their products. The extreme form of this practice is exclusive distribution, in which the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories. Exclusive distribution is often found in the distribution of luxury brands. Between intensive and exclusive distribution lies selective distribution–the use of more than one but fewer than all of the intermediaries who are willing to carry a company's products. Most television, furniture, and home appliance brands are distributed in this manner. Difficulty: Difficult Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking

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95) What are the responsibilities of channel members? Answer: The producer and the intermediaries need to agree on the terms and responsibilities of each channel member. They should agree on price policies, conditions of sale, territory rights, and the specific services to be performed by each party. The producer should establish a list price and a fair set of discounts for the intermediaries. It must define each channel member's territory, and it should be careful about where it places new resellers. Mutual services and duties need to be spelled out carefully, especially in franchise and exclusive distribution channels. In turn, franchisees must meet company standards for physical facilities and food quality, cooperate with new promotion programs, provide requested information, and buy specified food products. Difficulty: Moderate Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization 96) What criteria should a firm consider before choosing a channel alternative? Answer: If a company has identified several channel alternatives and wants to select the one that will best satisfy its long-run objectives, then each alternative should be evaluated against certain economic, control, and adaptability criteria. Using economic criteria, a company compares the likely sales, costs, and profitability of different channel alternatives. The company must also consider control issues. Using intermediaries usually means giving them some control over the marketing of the product, and some intermediaries take more control than others. Other things being equal, the company prefers to keep as much control as possible. Finally, the company must apply adaptability criteria. Channels often involve long-term commitments, yet the company wants to keep the channel flexible so that it can adapt to environmental changes. Thus, to be considered, a channel involving long-term commitments should be greatly superior on economic and control grounds. Difficulty: Moderate Chapter LO: 3 Course LO: Compare and contrast different approaches to value chain organization 97) How do companies generally manage and motivate their channel members? What technological tools are available to help with this task? Answer: Channel members must be continuously managed and motivated to do their best. The company must sell not only through the intermediaries but also to and with them. Most companies see their intermediaries as first-line customers and partners. They practice strong partner relationship management to forge long-term partnerships with channel members. This creates a value delivery system that meets the needs of both the company and its marketing partners. In managing its channels, a company must convince suppliers and distributors that they can succeed better by working together as a part of a cohesive value delivery system. Many companies are now installing integrated high-tech partnership relationship management (PRM) systems to coordinate their whole-channel marketing efforts. Companies can now use PRM and supply chain management (SCM) software to help recruit, train, organize, manage, motivate, and evaluate relationships with channel partners. Difficulty: Moderate Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization AACSB: Information technology 27 Copyright © 2015 Pearson Education, Inc.

98) Describe the legal aspects of exclusive arrangements such as exclusive dealing and exclusive distribution. Answer: When a seller allows only certain outlets to carry its products, this strategy is called exclusive distribution. When the seller requires that these dealers not handle competitors' products, its strategy is called exclusive dealing. Both parties can benefit from exclusive arrangements: the seller obtains more loyal and dependable outlets, and the dealers obtain a steady source of supply and stronger seller support. But exclusive arrangements also exclude other producers from selling to these dealers. This situation brings exclusive dealing contracts under the scope of the Clayton Act of 1914. They are legal as long as they do not substantially lessen competition or tend to create a monopoly and as long as both parties enter into the agreement voluntarily. Exclusive dealing often includes exclusive territorial agreements. The producer may agree not to sell to other dealers in a given area, or the buyer may agree to sell only in its own territory. The first practice is normal under franchise systems as a way to increase dealer enthusiasm and commitment. It is also perfectly legal–a seller has no legal obligation to sell through more outlets than it wishes. The second practice, whereby the producer tries to keep a dealer from selling outside its territory, has become a major legal issue. Difficulty: Difficult Chapter LO: 4 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking 99) What is marketing logistics? What are the components of marketing logistics? Answer: Marketing logistics–also called physical distribution–involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption, to meet customer requirements at a profit. Marketing logistics involves (a) outbound logistics, which is moving products from the factory to resellers and ultimately to customers, (b) inbound logistics, which is moving products and materials from suppliers to the factory, and (c) reverse logistics, which is reusing, recycling, refurbishing, or disposing of broken, unwanted, or excess products returned by consumers or resellers. Difficulty: Moderate Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization

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100) Explain integrated logistics management and the different ways through which a company can achieve it. Answer: The concept of integrated logistics management recognizes that providing better customer service and trimming distribution costs require teamwork, both inside the company and among all the marketing channel organizations. Inside, the company's various departments must work closely together to maximize its own logistics performance. Outside, the company must integrate its logistics system with those of its suppliers and customers to maximize the performance of the entire distribution network. This can be achieved by: 1. Cross-functional teamwork inside the company: This can be achieved by creating close working relationships between departments. Some companies have created permanent logistics committees composed of managers responsible for different physical distribution activities. Companies can also create supply chain manager positions that link the logistics activities of functional areas. Companies can also employ sophisticated, system-wide supply chain management software, now available from a wide range of software enterprises. 2. Building logistics partnerships: This can be achieved by working with other channel partners to improve the whole-channel distribution. The success of each channel member depends on the performance of the entire supply chain. Smart companies coordinate their logistics strategies and forge strong partnerships with suppliers and customers to improve customer service and reduce channel costs, while other companies partner through shared projects. 3. Outsourcing logistics to third-party logistics (3PL) providers: Companies use third-party logistics providers for several reasons. First, because getting the product to market is their main focus, using these providers makes the most sense, as they can often do it more efficiently and at a lower cost. Outsourcing typically results in a 15 to 30 percent cost savings. Second, outsourcing logistics frees a company to focus more intensely on its core business. Finally, integrated logistics companies understand increasingly complex logistics environments. Difficulty: Difficult Chapter LO: 5 Course LO: Compare and contrast different approaches to value chain organization AACSB: Analytic thinking

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