Deck 10: Place and Development of Channel Systems

Question 1

Place decisions are easier to change in the short-run than Product, Price, and Promotion decisions.

Answer 1

False
Explanation: Place decisions often have long-run effects. They're usually harder to change than Product, Promotion, and Price decisions.

Question 2

Direct marketing is primarily concerned with Promotion, not Place.

Answer 2

True
Explanation: The term direct marketing is primarily concerned with the Promotion area, not Place decisions.

Question 3

Firms that use direct marketing promotion may or may not use direct distribution.

Answer 3

True
Explanation: Sometimes direct marketing promotion is coupled with direct distribution from a producer to consumers.

Question 4

Product classes help marketing managers understand how much market exposure will be needed in each geographic area.

Question 5

Firms that use direct distribution can usually adjust their marketing mixes faster than firms that use indirect distribution.

Question 6

Place decisions make goods and services available in the right quantities and locations, when customers want them.

Question 7

With the Internet, even very small specialized firms can draw customers from all over the world.

Question 8

A producer who wants to reach certain customers may have no choice about which wholesaler to use.

Question 9

Selling direct-to-customer is more common with business products than consumer products.

Question 10

The Internet gives large firms access to repeat customers, but it does little for small firms trying to develop an initial base of customers.

Question 11

Some firms are forced to use direct distribution when they can't find intermediaries willing to carry innovative, new products.

Question 12

The terms "direct marketing" and "direct distribution" mean the same thing.

Question 13

A wholesaler might help a producer by reducing the producer's need to carry large inventory stocks.

Question 14

Many business products are sold direct, but hardly any services are.

Question 15

Direct-to-customer channels are rarely used in business markets because they are much more expensive and less efficient than using intermediaries.

Question 16

Consumer product companies such as Tupperware that appear to be selling direct may not be because their salespeople are independent distributors, not company employees.

Question 17

Aggressive, market-oriented intermediaries are almost always available and eager to handle the distribution of innovative, new products.

Question 18

A channel of distribution is a series of firms or individuals participating in the flow of products from the producer to the consumer.

Question 19

Place is concerned with the selection and use of marketing specialists--intermediaries and collaborators--and making goods and services available in the right quantities and locations when customers want them.

Question 20

The Internet is making it possible for firms to reach customers that were impossible to reach before.

Question 21

Discrepancies of quantity occur because individual producers want to produce large quantities of products while individual consumers prefer to buy products in small quantities.

Question 22

Accumulating involves dividing larger quantities into smaller quantities as products get closer to the final market.

Question 23

Channel conflict often results when a manufacturer opens a new distribution channel, especially if it directly competes with its existing intermediaries.

Question 24

When a warehouse is rearranged to speed up order processing, "regrouping activities" are being performed.

Question 25

A wholesaler might help a producer by reducing the producer's need for market research.

Question 26

"Sorting" means separating products into grades and qualities desired by different target markets.

Question 27

In an indirect channel of distribution, both vertical conflict and horizontal conflict may arise.

Question 28

Discrepancies of assortment occur because individual producers tend to specialize in producing a large assortment of products while individual consumers prefer to buy a small assortment of products.

Question 29

Accumulating involves collecting products from many small producers--often as a way to get lower transportation rates.

Question 30

One way for a producer to reduce conflict with channel partners is to offer different products in each different channel.

Question 31

"Regrouping activities" involve adjusting the quantities or assortments of products handled at each level in a channel of distribution.

Question 32

Bulk-breaking means separating products into grades and qualities desired by different target markets.

Question 33

Assorting activities involve putting together a variety of products to give a target market what it wants.

Question 34

Distribution costs can be very low for digital products because there is often no physical good to distribute.

Question 35

Assorting means separating products into grades and qualities desired by different target markets.

Question 36

Discrepancy of quantity means the difference between the lines a typical producer makes and the assortment final consumers want.

Question 37

The most important reason to use indirect channels is if intermediaries can help serve customers better and at lower cost.

Question 38

A new channel is more likely to prompt conflict if it focuses on segments not already served by current channels.

Question 39

Discrepancies of quantity and assortment occur because individual producers find it economical to produce and sell small quantities of a large assortment of products while individual consumers prefer to buy large quantities of a small assortment of products.

Question 40

Digital products cost more to distribute than physical products.

Question 41

A "channel captain" is a manager who helps direct the activities of a whole channel.

Question 42

Firms that cooperate to build vertical marketing systems typically share a longer-term commitment.

Question 43

According to the text, it's best for the "channel captain" to be a producer rather than a wholesaler or retailer.

Question 44

In administered channel systems, vertical cooperation is achieved by acquiring firms at different levels of activity.

Question 45

Selective distribution is growing in popularity because it provides 100 percent coverage of the market.

Question 46

Any contractual channel system--by definition--is also an administered channel system.

Question 47

Traditional channel systems are growing faster than vertical marketing systems.

Question 48

Intensive distribution covers the broad area of market exposure between selective and exclusive distribution.

Question 49

Intensive distribution is selling through only those intermediaries who will give the product special attention.

Question 50

Intensive distribution is selling a product through all responsible and suitable wholesalers or retailers who will stock or sell the product.

Question 51

A channel captain helps direct the activities of a whole channel and tries to avoid or solve channel conflicts.

Question 52

Because wholesalers and retailers are closer to the final user, they are in an ideal position to assume the channel captain role.

Question 53

"Ideal market exposure" means selling a product through all intermediaries willing to stock and sell it.

Question 54

Selective distribution is becoming more popular than intensive distribution as firms see that they do not need 100 percent coverage of a market to support national advertising.

Question 55

Most traditional channel systems don't have a channel captain.

Question 56

Vertical marketing systems account for a majority of U.S. retail sales.

Question 57

"Ideal market exposure" should make a product widely enough available to satisfy target customers' needs, but not exceed them.

Question 58

Administered and contractual channel systems are vertical marketing systems which depend on informal agreements--or contracts between channel members--to cooperate.

Question 59

Horizontal marketing systems are channel systems in which the whole channel focuses on the same target market at the end of the channel.

Question 60

Vertical marketing systems are growing in the U.S., but declining in the rest of the world.

Question 61

The "80/20 rule" is more likely to apply to a firm that uses intensive distribution than a firm that uses selective distribution.

Question 62

Exclusive distribution is more likely to involve a more formal arrangement than is selective or intensive distribution.

Question 63

Exporters usually work with specialists who can handle international problems such as customs, taxes, exchange rates, and shipping.

Question 64

Channels used to retrieve products that customers no longer want are called collection channels.

Question 65

Manufacturers are sometimes forced to use "multichannel distribution" because their present channels are doing a poor job or are not reaching some potential customers.

Question 66

Reverse channels may provide a way to retrieve unwanted products from intermediaries, business customers, or final consumers.

Question 67

Vertical agreements to limit sales by customer or territory are always illegal, while horizontal agreements may be legal sometimes.

Question 68

Horizontal agreements to limit sales by territory or customer are always illegal according to the Supreme Court.

Question 69

In a licensing agreement, the licensee takes most of the risk because it must invest some capital to use the right granted by the licensor.

Question 70

Exclusive distribution is selling through only one intermediary in each geographic area.

Question 71

Exporting has an advantage compared to other types of international involvement, because it is usually easier to drop or change arrangements as the firm's needs change.

Question 72

A manufacturer that uses several competing channels to reach the same target market is using "multichannel distribution."

Question 73

Of the five basic kinds of involvement in international marketing, exporting is the least permanent.

Question 74

Exporting is often the first step into international marketing.

Question 75

General Motors (GM), a U.S. automotive manufacturer, has an arrangement with Isuzu Motors of Japan in which the Isuzu Ascender is produced at the same GM manufacturing plant as the Chevrolet TrailBlazer and GMC Envoy. All three vehicles use the same basic platform and engine. This is an example of licensing.

Question 76

Compared to intensive distribution, selective distribution gives a producer a greater opportunity for profit but usually makes it more difficult for intermediaries to make a profit.

Question 77

Exporting is sometimes just a way for a firm to get rid of surplus products.

Question 78

Multichannel distribution occurs when a producer uses several competing channels to reach the same target market perhaps using several intermediaries in addition to selling directly.

Question 79

Reverse channels are used when multichannel distribution fails.

Question 80

A manufacturer may be forced to use multichannel distribution because a big retail chain wants to deal directly with it instead of wholesalers.