Question 1

Ford uses __________, whereby the company licenses dealers in North America to sell Ford automobiles subject to various sales and service conditions.

Accepted Answer

Ford uses a manufacturer-sponsored retail franchise system, whereby the company licenses dealers to sell Ford automobiles subject to various sales and service conditions.

Question 2

Ace Hardware is a national __________ that allows its members, retailers of paint and hardware products, to concentrate their buying power through wholesalers and more importantly plan collaborative promotional and pricing activities.

Accepted Answer

Ace Hardware is a retailer-sponsored cooperative, where the members are independent retailers who come together to share their buying power, promotional activities, and pricing strategies. This allows them to compete with larger chains while maintaining their independence.

Question 3

There are four popular types of franchising: (1) manufacturer-sponsored retail franchise systems, (2) __________, (3) service-sponsored retail franchise systems, and (4) service-sponsored franchise systems.

Accepted Answer

Manufacturer-sponsored wholesale franchise systems are a type of franchising where manufacturers license wholesalers to distribute their products.

Question 4

There are four popular types of franchising: (1) manufacturer-sponsored retail franchise systems, (2) manufacturer-sponsored wholesale franchise systems, (3) service-sponsored franchise systems, and (4) __________.

Accepted Answer

The answer of There are four popular types of franchising:...

Question 5

Franchising refers to

Accepted Answer

Franchising is a contractual arrangement where a franchisor (parent company) grants a franchisee (individual or firm) the right to use its business model, brand name, and operating procedures in exchange for a fee or royalty. The franchisee operates under the franchisor's rules and guidelines to ensure consistency across all franchise locations. This enables the franchisor to expand their brand quickly while the franchisee benefits from the established reputation and support of the franchisor.

Question 6

A(n) __________ is common in the soft drink industry where the manufacturer sells its concentrate to wholesalers, that carbonate it and market the finished product to retailers.

Accepted Answer

The given scenario is an example of a manufacturer-sponsored wholesale franchise system, where the manufacturer sells the concentrate to the wholesalers who then carbonate and market the product to retailers. This is a common practice in the soft drink industry, where the concentrate is the main product that is manufactured and sold by the company. The wholesalers play a crucial role in distribution and marketing of the product to retailers, who then sell it to the end consumers.

Question 7

The four most popular types of franchise arrangements are

Accepted Answer

The answer of The four most popular types of franchise...

Question 8

A(n) __________ exists when a franchisor licenses individuals or firms to dispense a service under a trade name and specific guidelines.

Accepted Answer

The question describes a service-based franchise system, which excludes options B and C (which are both manufacturer-based). The answer is not D, as an administered vertical marketing system involves a larger group of firms working together to control distribution channels, rather than one franchisor licensing specific individuals or firms. Therefore, the most appropriate choice is E, a service-sponsored franchise system.

Question 9

An administered vertical marketing system is a marketing system

Accepted Answer

Key term definition-administered vertical marketing systems.

Question 10

The type of vertical marketing system that achieves coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership is referred to as

Accepted Answer

An administered vertical marketing system achieves coordination through the size and influence of one channel member, rather than full ownership of the entire channel like a corporate vertical marketing system, a contractual vertical marketing system, or an integrated vertical marketing system. In an administered vertical marketing system, dominant channel members often use their power and influence to coordinate activities and the flow of goods and services throughout the channel. An interactive vertical marketing system involves full collaboration and communication between channel members, which is different from the one-member domination of an administered system.

Question 11

Jacob has developed a lawn care service that will revolutionize the lawn care industry. However, Jacob has limited operating capital and yet he still wants a wide distribution of his new product. Which of the following options would be the best choice for Jacob?

Accepted Answer

Opening branch offices and establishing a corporate vertical marketing system requires a significant amount of capital, which Jacob does not have. Administered vertical marketing system and wholesaler-sponsored voluntary chains are not suitable for a service business like lawn care. Therefore, the most appropriate choice for Jacob would be to establish a service-sponsored retail franchise system, which provides a wide distribution network at a lower cost as franchisees would be investing their capital.

Question 12

In the automobile industry, many companies use a __________, whereby a manufacturer licenses dealers to sell its cars subject to various sales and service conditions.

Accepted Answer

The description in the question matches with the definition of a manufacturer-sponsored retail franchise system, where a car manufacturer licenses dealerships to sell its vehicles under certain conditions.

Question 13

A contractual arrangement between a parent company and an individual or firm that allows the latter to operate a certain type of business under an established name and according to specific rules is referred to as

Accepted Answer

The contractual arrangement described in the question is commonly known as franchising. It allows the franchisee to use the parent company's established brand name and operating system to run a similar business independently. The parent company provides support and guidance to ensure consistency and quality, and the franchisee pays fees in exchange for the right to operate under the brand. The other options listed in the question relate to different types of marketing systems and do not specifically describe franchising.

Question 14

Which of the following statements best describes the difference between a corporate vertical marketing system and an administered vertical marketing system?

Accepted Answer

The size and influence of a single channel member and ownership status are the key distinctions between corporate and administered vertical marketing systems.

Question 15

There are four popular types of franchising: (1) __________, (2) manufacturer-sponsored wholesale franchise systems, (3) service-sponsored retail franchise systems, and (4) service-sponsored franchise systems.

Accepted Answer

The four popular types of franchising include manufacturer-sponsored retail franchise systems, manufacturer-sponsored wholesale franchise systems, service-sponsored retail franchise systems, and service-sponsored franchise systems.

Question 16

The arrangement in which small, independent retailers form an organization that operates a wholesale facility cooperatively is referred to as

Accepted Answer

The arrangement described in the question is known as a retailer-sponsored cooperative. This type of cooperative is formed by small, independent retailers who pool their resources to operate a wholesale facility that they all benefit from. The retailers maintain their independence while gaining the advantages of scale that come from collective buying power and operating efficiency. This type of arrangement is often used by retailers who face strong competition from larger, national chains.

Question 17

Franchising is one form of

Accepted Answer

Franchising is a type of contractual vertical marketing system where a company (the franchisor) allows another party (the franchisee) to use its trademark, products, and business model in exchange for a fee and ongoing royalties. This arrangement creates a network of independent businesses that operate under a common brand identity and standardized procedures.

Question 18

Retailer-sponsored cooperative refers to

Accepted Answer

A retailer-sponsored cooperative is formed when small, independent retailers come together to operate a wholesale facility cooperatively, allowing them to benefit from economies of scale and increased purchasing power.

Question 19

Firms that have designed a unique approach for performing a service and wish to profit by selling the franchise to others employ

Accepted Answer

A service-sponsored retail franchise system is where a firm develops a unique service method and sells the franchise to others to replicate and profit from it.

Question 20

A(n) __________ is common in the employment services and tax services industries where franchisors license individuals or firms to dispense a service under a trade name and specific guidelines.

Accepted Answer

The description given defines a service-sponsored franchise system, where a franchisor licenses individuals or firms to dispense a service under a trade name and specific guidelines. The other options do not match the given criteria, such as manufacturer-sponsored wholesale/retail franchise systems which are associated with the distribution of physical products. The administered vertical marketing system refers to a system where a dominant channel member exercises leadership by coordinating the activities of other channel members.

Quiz 15: Managing Marketing Channels and Supply Chains