Chap012

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McMaster University *

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Feb 20, 2024

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Chapter 12 - Distribution Channels Chapter 12 Distribution Channels     Multiple Choice Questions   1. Distribution channels add value for customers because they:  A. are the most important component of product promotions B. conduct multiple quality reviews for a product C. do not include external entities or vendors D. get products to buyers quickly and at low cost E. are crucial only for technical offerings of products Students of marketing often overlook or underestimate the importance of place in the marketing mix simply because it happens behind the scenes. Yet distribution channels, or place, add value for customers because they get products to customers efficiently: quickly and at low cost.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-01 The Importance of Distribution   12-1
Chapter 12 - Distribution Channels 2. Which one of the following statements is NOT true about distribution channels:  A. Distribution channel is part of the overall supply chain. B. Wholesalers and retailers are potential intermediaries in distribution channels. C. Ownership transfer of goods are required in a distribution channel. D. Distribution channels add value for customers E. Distribution strategy is independent of other marketing elements. Distribution strategy is integrated with other marketing mix elements.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Difficult Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-01 The Importance of Distribution   12-2
Chapter 12 - Distribution Channels 3. Most U.S. companies pay listing fees to get shelf space in retail outlets. Which of the following factors has contributed the most to the advent of listing fees?  A. Retail business is negatively influenced by the economic slowdown. B. The Internet has emerged as a strong distribution channel. C. The number of retail chains have increased drastically. D. Many new products are being introduced each day. E. The importance given to product quality has strengthened. With dozens of new products being introduced each day, the fight for shelf space is fierce. For many companies, distribution is not only difficult, but also expensive and involves paying listing fees to get shelf space.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-01 The Importance of Distribution   4. The set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption is called the:  A. distribution channel. B. operational structure. C. production structure. D. marketing channel. E. procurement channel. A distribution channel is the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption; as such, it consists of all the institutions and marketing activities in the marketing process.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-3
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Chapter 12 - Distribution Channels 5. Firms that buy products from manufacturers and resell them to firms that sell products directly to consumers are called:  A. producers. B. promoters. C. manufacturers. D. retailers. E. wholesalers. Wholesalers are firms that buy products from manufacturers and resell them to retailers, and retailers sell products directly to consumers. A simplified supply chain would be one in which manufacturers make products and sell them to intermediaries such as retailers or wholesalers.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   6. AK Associates is a firm that buys products from various manufacturing companies and resells the goods to other businesses. AK Associates is an example of a:  A. wholesaler. B. promoter. C. manufacturer. D. retailer. E. producer. AK Associates is an example of a wholesaler. Wholesalers are firms that buy products from manufacturers and resell them to retailers, and retailers sell products directly to consumers.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-4
Chapter 12 - Distribution Channels 7. Furntech Inc. sells office furniture. The firm procures merchandise from different manufacturers in Canada and sells it to smaller sellers in Lethbridge. Furntech is an example of a:  A. producer. B. promoter. C. manufacturer. D. retailer. E. wholesaler. Furntech is an example of a wholesaler. Wholesalers are firms that buy products from manufacturers and resell them to retailers, and retailers sell products directly to consumers.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   8. Firms that sell products directly to consumers are called:  A. promoters. B. retailers. C. wholesalers. D. producers. E. suppliers. Retailers are firms that sell products directly to consumers. A simplified supply chain would be one in which manufacturers make products and sell them to intermediaries such as retailers or wholesalers.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-5
Chapter 12 - Distribution Channels 9. Novelty Stores is a small firm that sells its products directly to consumers. The company stores many brands of consumer goods and other low-value items. Novelty Stores is a(n):  A. organizer. B. retailer. C. producer. D. supplier. E. wholesaler. Novelty Stores is a retailer. Retailers sell products directly to consumers. Manufacturers ship to a wholesaler, or, in the case of many multistore retailers, to the retailer's distribution centre or directly to stores.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   10. Prime Stores is located in Prince Albert, Saskatchewan. The store displays different types of home furniture, and most of the store's business comes from individual consumers. The firm displays products of many manufacturers. Prime Stores is a(n):  A. organizer. B. producer. C. retailer. D. supplier. E. wholesaler. Prime Stores is a retailer. Retailers sell products directly to consumers. Manufacturers ship to a wholesaler, or, in the case of many multistore retailers, to the retailer's distribution centre or directly to stores.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-6
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Chapter 12 - Distribution Channels 11. Wills Cycles is the largest seller of Rober Bicycles in Manitoba. The firm ships products directly from Rober's manufacturing plant and sells the products to smaller firms across Manitoba. Wills Cycles is a:  A. promoter. B. supplier. C. retailer. D. manufacturer. E. wholesaler. Wills Cycles is a wholesaler. Wholesalers are firms that buy products from manufacturers and resell them to retailers, and retailers sell products directly to consumers.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12. Costco purchase products from suppliers from all over the world in bulk and sell them to consumers. Costco is a:  A. Wholesaler B. Supplier C. Producer D. Retailer E. Warehouse Costco is a retailer as it buys product from suppliers and resell them to end consumers (as it's said in the question)   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-7
Chapter 12 - Distribution Channels 13. The integration of two or more activities to plan, implement, and control the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption is called:  A. marketing management. B. resource management. C. logistics management. D. total quality management. E. production management. Logistics management describes the integration of two or more activities to plan, implement, and control the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption. These activities may include, but are not limited to, customer service, demand forecasting, distribution communications, inventory control, materials handling, order processing, parts and service support, plant and warehouse site selection, procurement, packaging, return goods handling, salvage and scrap disposal, traffic and transportation, and warehousing and storage.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   14. Logistics was traditionally the responsibility of:  A. procurements B. suppliers C. operations D. marketing departments E. administrations Distribution channel management, supply chain management, and logistics management are related but have been handled differently in the past. Logistics was traditionally the responsibility of operations, under a vice-president of operations.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-8
Chapter 12 - Distribution Channels 15. A retail store that sells multiple brands helps brands obtain competitive intelligence about the customers. Which of the following intermediary functions does this relate to?  A. Physical distribution B. Financing C. Promotion D. Risk taking E. Gathering information Gathering information is a facilitating function performed by intermediaries by sharing competitive intelligence about customers or other channel members. Distribution channels perform a variety of transactional, logistical, and facilitating functions.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-03 Distribution Channels Add Value   16. Which of the following is NOT an example of a transactional function that intermediaries perform?  A. Promote products to attract consumers B. Purchasing goods for resale C. Transact with potential customers D. Own inventory that can become outdated E. Sharing competitive intelligence about customers Sharing competitive intelligence about customers is an example of facilitating function. (Exhibit 12.3)   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-03 Distribution Channels Add Value   12-9
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Chapter 12 - Distribution Channels 17. Which of the following is an example of a logistical function that intermediaries perform?  A. Promoting products to attract consumers B. Purchasing goods for resale C. Maintaining inventory D. Extending credit to customers E. Sharing competitive intelligence about customers The function of risk taking, which includes maintaining inventory and protecting goods, is a logistical function performed by intermediaries. Physical distribution is another logistical function performed by intermediaries.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-03 Distribution Channels Add Value   18. Which of the following is an example of a facilitating function that intermediaries perform?  A. Transporting goods to customers B. Purchasing goods for resale C. Maintaining inventory D. Extending credit to customers E. Transacting with potential customers Extending credit and other financial services to consumers, or financing, is a facilitating function performed by intermediaries. Gathering information is another facilitating function performed.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-03 Distribution Channels Add Value   12-10
Chapter 12 - Distribution Channels 19. A retailer displays a huge billboard of the products of a manufacturer to attract consumers. This is an example of the retailer's:  A. facilitating function. B. logistical function. C. transactional function. D. informational function. E. distributive function. A retailer displaying a huge billboard of the products of a manufacturer to attract consumers is performing a transactional function. Purchasing goods for resale to other intermediaries or consumers, promotion, and selling are the transactional functions performed by intermediaries.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-03 Distribution Channels Add Value   20. Value Inc. is a manufacturer of high-definition televisions. The firm sells its products through external resellers. The resellers transport the products to the buyers' location and take care of the installation. The functions performed by the reseller exemplify which function performed by intermediaries?  A. Facilitating B. Logistical C. Transactional D. Financing E. Promotional The functions performed by the reseller exemplify the logistical function performed by intermediaries. Maintaining inventory, protecting goods, and physical distribution are the logistical functions performed by intermediaries. Distribution channels perform a variety of transactional, logistical, and facilitating functions.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-03 Distribution Channels Add Value   12-11
Chapter 12 - Distribution Channels 21. The logistical function performed by intermediaries that involves maintaining inventory and protecting goods of manufacturers is called:  A. promotion. B. financing. C. risk taking. D. physical distribution. E. selling. Maintaining inventory and protecting goods, or risk taking, is a logistical function performed by intermediaries. Distribution channels perform a variety of transactional, logistical, and facilitating functions.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-03 Distribution Channels Add Value   22. Fine Computers Inc. is a manufacturer of personal computers and computer parts. The company sells all its products by allowing customers to select specific products they want and place orders online. This distribution system is an example of which type of distribution?  A. Circular B. Direct C. Parallel D. Multiple E. Multichannel The distribution system used by Fine Computers is an example of direct distribution. Direct distribution channels allow manufacturers to deal directly with consumers. Many products and services are distributed this way.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   12-12
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Chapter 12 - Distribution Channels 23. Direct distribution channels allow manufacturers to:  A. create more inventory in distribution. B. deal directly with consumers. C. purchase goods for resale. D. transfer the risk of ownership. E. secure shelf space in retail outlets. Direct distribution channels allow manufacturers to deal directly with consumers. Many products and services are distributed this way.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   24. Which of the following will strengthen the chances of direct distribution?  A. Low listing fees in the industry B. Scattered target consumers C. Low value of the products D. Fewer consumers E. Reduced shelf space in outlets Some companies may be forced to distribute their goods directly because they are unable to secure shelf space in retail outlets or are unable to pay the high listing fees demanded by retailers for the shelf space.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   12-13
Chapter 12 - Distribution Channels 25. Which of the following entities is NOT a marketing intermediary?  A. Wholesaler B. Retailer C. Manufacturer D. Distributor E. Franchisee With indirect distribution channels, one or more intermediaries work with manufacturers to provide goods and services to consumers. Manufacturers are not intermediaries.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   26. With a push strategy, a manufacturer focuses its promotional efforts on:  A. channel members to convince them to carry its product. B. customers to create more demand for specific brands. C. reducing the number of its intermediaries. D. creating demand for the company's products as a whole. E. selling products by using new channels such as the Internet. With a push strategy, a manufacturer focuses its promotional efforts—for example, personal selling or sales promotion—on channel members to convince them to carry its product. This strategy literally pushes the product through distribution channels to end consumers.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-08 Push Versus Pull Distribution Strategies   12-14
Chapter 12 - Distribution Channels 27. With a pull strategy, a manufacturer focuses its promotional efforts on:  A. channel members to convince them to carry its product. B. forcing channel members to stock less inventory. C. reducing the number of its intermediaries. D. selling products by using new channels such as the Internet. E. building demand for products by focusing on consumers. Sometimes, if channel members are reluctant to stock new products, manufacturers may use a pull strategy. In this case, promotional efforts are directed at consumers to build demand for products that, in turn, may convince retailers to carry them.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-08 Push Versus Pull Distribution Strategies   28. Electrode is a manufacturer of commercial washing machines. The firm uses personal selling to sell its products to various channel members who then distribute the product to consumers. What type of strategy is the firm using?  A. Promotion-based B. Push distribution C. Indirect marketing D. Direct distribution E. Demand distribution Electrode is using a push distribution strategy. With a push strategy, a manufacturer focuses its promotional efforts—for example, personal selling or sales promotion—on channel members to convince them to carry its product.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-08 Push Versus Pull Distribution Strategies   12-15
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Chapter 12 - Distribution Channels 29. Which of the following tools is commonly used in a push strategy?  A. Social advertising B. Print advertising C. Personal selling D. TV commercials E. Direct mail campaigns With a push strategy, a manufacturer focuses its promotional efforts—for example, personal selling or sales promotion—on channel members to convince them to carry its product. This strategy literally pushes the product through distribution channels to end consumers.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-08 Push Versus Pull Distribution Strategies   30. Which of the following tools is commonly used in a pull strategy?  A. Product bundling B. Green marketing C. Vertical marketing D. Print advertising E. Personal selling In a pull distribution strategy, promotional efforts are directed at consumers to build demand for products that, in turn, may convince retailers to carry them. Consumers who see TV commercials or print advertisements or who receive direct mail information or coupons regarding new products may approach local retailers and request that they stock these products, thus pulling them through the distribution channels.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-08 Push Versus Pull Distribution Strategies   12-16
Chapter 12 - Distribution Channels 31. Which of the following is an example of using a pull strategy?  A. A company increases the number of intermediaries to sell its products. B. A retail shop announces a stock clearance sale. C. An insurer hires more agents to sell more. D. A firm appoints more salespeople to increase sales. E. A company uses mass media advertisements for its products. In a pull distribution strategy, promotional efforts are directed at consumers to build demand for products that, in turn, may convince retailers to carry them. Consumers who see TV commercials or print advertisements or who receive direct mail information or coupons regarding new products may approach local retailers and request that they stock these products, thus pulling them through the distribution channels.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-08 Push Versus Pull Distribution Strategies   32. Mystic Gifts is a manufacturer of gift articles. The company sells its products to businesses and individual consumers. The company sells directly to most of its industrial buyers by using company salespeople and sells to individual consumers through third-party retail outlets. The company also has an Internet shop to sell gifts. What type of distribution strategy has Mystic Gifts adapted?  A. Indirect distribution B. Circular distribution C. Direct distribution D. Personal distribution E. Multichannel distribution The distribution strategy adopted by Mystic Gifts is called multichannel distribution. Today, many companies are embracing a multichannel, or hybrid, approach to distribution. Companies such as Sony are better able to reach both consumers and business customers by using a combination of both direct and indirect distribution channels.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   12-17
Chapter 12 - Distribution Channels 33. The number of channel members to use at each level of the supply chain is called:  A. procurement intensity. B. channel structure. C. distribution intensity. D. distribution frequency. E. procurement frequency. When setting up distribution for the first time or introducing new products, firms decide the appropriate level of distribution intensity—the number of channel members to use at each level of the supply chain.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   34. Which of the following actions of a manufacturer is most likely to increase distribution intensity?  A. Storing lesser inventory in warehouses B. Introducing more products C. Increasing the number of outlets D. Introducing a new product line E. Reducing the number of intermediaries Increasing the number of outlets for the products means increasing the channel members of the supply chain. Distribution intensity is the number of channel members to use at each level of the supply chain.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   12-18
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Chapter 12 - Distribution Channels 35. Which of the following strategies is designed to get products into as many outlets as possible?  A. Territorial distribution B. Exclusive distribution C. Intensive distribution D. Expansive distribution E. Selective distribution An intensive distribution strategy is designed to get products into as many outlets as possible. The more exposure these products get, the more they sell.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   36. Sodo Cola is a leading manufacturer of soda. The firm believes in making the products visible and continually attempts to place its products in as many outlets as possible. In the context of distribution intensity, what type of distribution strategy is the firm using?  A. Exclusive B. Territorial C. Selective D. Intensive E. Expansive Sodo Cola is using an intensive distribution strategy. An intensive distribution strategy is designed to get products into as many outlets as possible. The more exposure these products get, the more they sell.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   12-19
Chapter 12 - Distribution Channels 37. Shopping product manufacturers are more likely to adopt which distribution intensity?  A. Exclusive B. Selective C. Intensive D. Geographical E. Direct Shopping products are those for which customers are willing to spend time comparing alternatives. Therefore, selective distribution channel would work the best for them.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   38. Delight Supermarkets is a retail company that sells the products of IFS Appliances in Canada. IFS Appliances do not have any other retail partners in Canada. What type of distribution strategy is this?  A. Extensive B. Selective C. Intensive D. Exclusive E. Geographical IFS Appliances uses exclusive distribution strategy to sell its products. Manufacturers might use an exclusive distribution policy by granting exclusive geographic territories to one or very few retail customers so no other customers in the territory can sell a particular brand. Exclusive distribution can benefit manufacturers by assuring them that the most appropriate customers represent their products.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   12-20
Chapter 12 - Distribution Channels 39. Which of the following distribution strategies grants rights to sell to one or very few retail customers so that no other store can sell a particular brand?  A. Intensive distribution B. Selective distribution C. Exclusive distribution D. Extensive distribution E. Geographical distribution Manufacturers might use an exclusive distribution policy by granting exclusive geographic territories to one or very few retail customers so no other customers in the territory can sell a particular brand. Exclusive distribution can benefit manufacturers by assuring them that the most appropriate customers represent their products.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   40. Bentley is a luxury automobile car. The price range is between $200,000 and $400,00 CAN. What distribution intensity Bentley is likely to use?  A. Intensive distribution B. Selective distribution C. Exclusive distribution D. Extensive distribution E. Geographical distribution Exclusive distribution works the best for luxury and specialty products. Customers are willing to make extra effort to find the location.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   12-21
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Chapter 12 - Distribution Channels 41. Conflicts in a distribution channel are generally more pronounced when:  A. the industry in which the channel exists is a monopoly. B. a company relies on other channel members. C. the channel members are independent entities. D. a company is using a direct distribution strategy. E. the channel members share common goals. Although conflict is likely to occur in any distribution channel, it is generally more pronounced when the channel members are independent entities. Distribution channels that are more closely aligned, whether by contract or ownership, share common goals and therefore are less prone to conflict.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   42. A supply chain system in which there is no common ownership and no contractual relationships, but the dominant channel member controls the channel relationship is referred to as a(n) _____ vertical marketing system.  A. administered B. independent C. franchised D. corporate E. contractual In an administered vertical marketing system, there is no common ownership and no contractual relationships, but the dominant channel member controls the channel relationship.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   12-22
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Chapter 12 - Distribution Channels 43. Green Constructions is a leading name in the construction business and is the major client for a new steel manufacturing unit, Mansion Steels. However, Green Constructions, being the dominant channel member, has total control over the relationship. This is an example of a(n) _____ vertical marketing system.  A. independent B. corporate C. franchised D. contractual E. administered Green Constructions' channel relationship offers an example of an administered vertical marketing system. In an administered vertical marketing system, there is no common ownership and no contractual relationships, but the dominant channel member controls the channel relationship.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   44. RFX Cycles is a manufacturer of bicycles. The firm is the only manufacturer of cycles in the country and controls and imposes terms on all its supply chain partners although it has no legal obligations. This is an example of a(n) _____ vertical marketing system.  A. independent B. contractual C. franchised D. corporate E. administered RFX Cycles' channel relationship offers an example of an administered vertical marketing system. In an administered vertical marketing system, there is no common ownership and no contractual relationships, but the dominant channel member controls the channel relationship.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   12-23
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Chapter 12 - Distribution Channels 45. A system in which independent firms at different levels of the supply chain join together through agreements to obtain economies of scale and co-ordination and to reduce conflict is referred to as a(n) _____ vertical marketing system.  A. administered B. corporate C. parental D. contractual E. member control In contractual vertical marketing systems, independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and co-ordination and to reduce conflict. Franchising is the most common type of contractual vertical marketing system.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   46. DX Motors has established legal relationships with its suppliers and distributors in such a way as to establish overall economies of scale and to reduce conflict. This is an example of a(n) _____ vertical marketing system.  A. administered B. corporate C. parental D. contractual E. member control In contractual vertical marketing systems, independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and co-ordination and to reduce conflict. DX Motors establishes legal relationships with its suppliers and distributors by entering into contracts.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   12-24
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Chapter 12 - Distribution Channels 47. A contractual agreement between two firms that allows one of the firms to operate a retail outlet, using a name and format developed and supported by the other firm, is called:  A. outsourcing. B. franchising. C. patenting. D. consulting. E. cross-licensing. Franchising is the most common type of contractual vertical marketing system. Franchising is a contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet, using a name and format developed and supported by the franchisor.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   48. Which of the following combines the entrepreneurial advantages of owning a business with the efficiencies of vertical marketing systems that function under single ownership?  A. A franchise system B. A partnership C. A strategic alliance D. A joint venture E. A proprietorship A franchise system combines the entrepreneurial advantages of owning a business with the efficiencies of vertical marketing systems that function under single ownership. Franchisees are motivated to make their stores successful because they receive the profits, after they pay the royalty to the franchisor.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   12-25
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Chapter 12 - Distribution Channels 49. A system in which the parent company has complete control and can dictate the priorities and objectives of the supply chain is referred to as a(n) _____ vertical marketing system.  A. administered B. corporate C. co-ordinative D. contractual E. member control A corporate vertical marketing system is a system in which the parent company has complete control and can dictate the priorities and objectives of the supply chain; it may own facilities such as manufacturing plants, warehouse facilities, retail outlets, and design studios.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   50. A company with a corporate vertical marketing system is most likely to:  A. join with other firms through contracts to obtain economies of scale and co-ordination. B. satisfy its own objectives and maximize its own profits, often at the expense of the others. C. have less control and cannot dictate the priorities and objectives of the supply chain. D. own facilities such as manufacturing plants, warehouse facilities, and retail outlets. E. allow another firm to operate a retail outlet, using the format developed by the company. A corporate vertical marketing system is a system in which the parent company has complete control and can dictate the priorities and objectives of the supply chain; it may own facilities such as manufacturing plants, warehouse facilities, retail outlets, and design studios.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   12-26
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Chapter 12 - Distribution Channels 51. Canmart is the largest retailer in Canada. The firm, because of its large scale of operation, has absolute control over the elements in its supply chain, including distributors and retailers. This is an example of a(n) _____ marketing system.  A. corporate vertical B. contractual vertical C. administered vertical D. contractual parallel E. administered parallel Corporate vertical marketing system is a system in which the parent company has complete control and can dictate the priorities and objectives of the supply chain; it may own facilities such as manufacturing plants, warehouse facilities, retail outlets, and design studios.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   52. A facility for the receipt, storage, and redistribution of goods to company stores or customers that may be operated by retailers, manufacturers, or distribution specialists is called a:  A. procurement centre. B. supply network. C. warehouse. D. processing centre. E. distribution centre. A distribution centre is a facility for the receipt, storage, and redistribution of goods to company stores or customers. It may be operated by retailers, manufacturers, or distribution specialists.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-14 Logistics Management: Making Merchandise Flow   12-27
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Chapter 12 - Distribution Channels 53. The black and white bar code found on most merchandise is called a(n):  A. universal product code. B. point-of-sale record. C. RFID tag. D. process card. E. proof of purchase. The black and white bar code found on most merchandise is called a universal product code (UPC). The UPC tag contains a 13-digit code that includes the manufacturer of an item and information about special packaging and special promotions.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-10 Logistics Management: Making Information Flow   54. The computer-to-computer transfer of business documents from a retailer to a vendor and back is called a(n):  A. quick-response system. B. electronic data interchange. C. data warehouse. D. just-in-time transfer. E. enterprise resource system. Electronic data interchange (EDI) is the computer-to-computer exchange of business documents from a retailer to a vendor and back. In addition to sales data, purchase orders, invoices, and data about returned merchandise can be transmitted back and forth.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-12 Electronic Data Interchange   12-28
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Chapter 12 - Distribution Channels 55. An electronic document that a supplier sends a retailer before a shipment to tell the retailer exactly what to expect in the shipment is called a(n):  A. supplier dispatch file. B. quick shipment response. C. advanced shipping notice. D. lead-time script. E. purchase document. An advanced shipping notice is an electronic document that a supplier sends a retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment. If the advanced shipping notice is accurate, the retailer can dispense with opening all the received cartons and checking in merchandise.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-12 Electronic Data Interchange   56. In a conventional distribution channel, relationships between members often are based on the argument over the:  A. operational orientation of products. B. needs of consumers. C. quality of products. D. split of the profit pie. E. service orientation of offerings. In a conventional distribution channel, relationships between members often are based on the argument over the split of the profit pie: if one party gets ahead, the other party falls behind.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   12-29
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Chapter 12 - Distribution Channels 57. A supply chain relationship in which members are committed to maintaining long-term interactions and investing in mutually beneficial opportunities is referred to as a(n) _____ relationship.  A. informational B. strategic C. logistical D. functional E. operational More often than not, firms seek a strategic relationship, also called a partnering relationship, in which the supply chain members are committed to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial. In a conventional or administered supply chain, there are significant incentives to establishing a strategic relationship, even without contracts or ownership relationships.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   58. Which of the following is one of the important factors for successful strategic relationships?  A. Mutual trust B. Closed communication C. Varied goals D. Intangible investments E. Exclusive distribution Successful strategic relationships require mutual trust, open communication, common goals, and credible commitments. Mutual trust holds a strategic relationship together.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   12-30
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Chapter 12 - Distribution Channels 59. Which of the following statements about strategic relationships is true?  A. Strategic relationships are also called entrepreneurial relationships. B. Supply chain members are committed to maintaining short-term relationships. C. In a conventional supply chain, there are no significant incentives to establishing a strategic relationship. D. Strategic relationships are created explicitly to uncover and exploit joint opportunities. E. Supply chain members need not have common goals for a successful relationship to develop. Strategic relationships are created explicitly to uncover and exploit joint opportunities, so members depend on and trust each other heavily; share goals and agree on how to accomplish those goals; and are willing to take risks, share confidential information, and make significant investments for the sake of the relationship.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   60. Successful strategic relationships require all the followings, EXCEPT:  A. Open communication B. Common goals C. Mutual trust D. Mutual contract E. Credible commitments Open communication, common goals, mutual trust and credible commitments are required for a successful strategic relationship.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   12-31
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Chapter 12 - Distribution Channels 61. The need for the supply chain members to constantly monitor and check up on each other's actions is reduced by:  A. sharing common goals. B. avoiding risk taking. C. maintaining confidentiality. D. developing mutual trust. E. using closed communication. Mutual trust holds a strategic relationship together. With trust, there's less need for the supply chain members to constantly monitor and check up on each other's actions, because each believes the other won't take advantage, even given the opportunity.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   62. Which of the following is key to developing successful strategic relationships?  A. Being unwilling to take risks B. Focusing on maintaining a short-term relationship C. Maintaining open and honest communication D. Making intangible investments in the relationship E. Concealing confidential information Open, honest communication is key to developing successful relationships because supply chain members need to understand what is driving each other's business, their roles in the relationship, each firm's strategies, and any problems that arise over the course of the relationship.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   12-32
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Chapter 12 - Distribution Channels 63. Which of the following gives both members of a strategic relationship an incentive to pool their strengths and abilities and exploit potential opportunities together?  A. Extrinsic rewards B. Intrinsic rewards C. Channel conflicts D. Intangible investments E. Shared goals Supply chain members must have common goals for a successful relationship to develop. Shared goals give both members of the relationship an incentive to pool their strengths and abilities and exploit potential opportunities together.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   64. Vendor-Managed Inventory is:  A. An approach in which the wholesale is responsible for replacing inventory to meet retailers' needs. B. An approach in which the manufacturer is responsible for replacing inventory to meet retailers' needs. C. An approach in which the manufacturer train retailers' salespeople to sell more. D. An approach in which the wholesalers train retailers' salespeople to sell more. E. An approach in which all marketing intermediaries share their inventory information. VMI is an approach for improving marketing channel efficiency in which the manufacturer is responsible for maintaining the retailer's inventory level in each of its store.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-13 Vendor-Managed Inventory (VMI)   12-33
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Chapter 12 - Distribution Channels 65. Successful strategic relationships develop because both parties:  A. only make intangible investments in the relationship. B. make credible commitments to the relationship. C. have dissimilar goals and varied interests. D. share only limited information with one another. E. focus on maintaining the relationship for a short period. Successful relationships develop because both parties make credible commitments to, or tangible investments in, the relationship. These commitments involve spending money to improve the products or services provided to the customer.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   66. Ryan, who works in a distribution centre, co-ordinates its activities. He assigns time slots for the shipments that arrive at the distribution centre. Ryan is working as a:  A. wholesaler. B. retailer. C. dispatcher. D. dealer. E. distributor. Because distribution centres typically are quite busy, a dispatcher—the person who co- ordinates deliveries to the distribution centres—assigns a time slot for each shipment's arrival. Since Ryan works in a distribution centre and co-ordinates its activities, he is a dispatcher.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-17 Inbound Transportation   12-34
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Chapter 12 - Distribution Channels 67. The person who co-ordinates deliveries to distribution centres is called a:  A. wholesaler. B. retailer. C. dealer. D. distributor. E. dispatcher. Because distribution centres typically are quite busy, a dispatcher—the person who co- ordinates deliveries to the distribution centres—assigns a time slot for each shipment's arrival.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-17 Inbound Transportation   68. The process of recording the receipt of merchandise as it arrives at a distribution centre or store is referred to as:  A. receiving. B. checking. C. dispatching. D. shipping. E. merchandising. Receiving refers to the process of recording the receipt of merchandise as it arrives at a distribution centre or store. Checking is the process of going through the goods upon receipt to ensure they arrived undamaged and that the merchandise ordered was the merchandise received.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-18 Receiving and Checking Using UPC or RFID   12-35
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Chapter 12 - Distribution Channels 69. The process of going through the goods upon receipt to ensure they arrived undamaged and that the merchandise ordered was the merchandise received is referred to as:  A. receiving. B. checking. C. dispatching. D. shipping. E. merchandising. Checking is the process of going through the goods upon receipt to ensure they arrived undamaged and that the merchandise ordered was the merchandise received. Receiving refers to the process of recording the receipt of merchandise as it arrives at a distribution centre or store.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-18 Receiving and Checking Using UPC or RFID   70. Radio frequency identification tags are:  A. networking systems. B. tiny computer chips. C. inventory systems. D. recognition systems. E. bar codes on merchandise. Radio frequency identification (RFID) tags are tiny computer chips that automatically transmit to a special scanner all the information about a container's contents or individual products.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-18 Receiving and Checking Using UPC or RFID   12-36
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Chapter 12 - Distribution Channels 71. A key advantage of a radio frequency identification tag is that it:  A. helps deliver less merchandise on a more frequent basis. B. co-ordinates deliveries to distribution centres. C. eliminates the need to handle items individually. D. prevents distribution centres from receiving whole truckloads of merchandise. E. enables manufacturers and distributors to increase overall inventory. A key advantage of a radio frequency identification (RFID) tag is that it eliminates the need to handle items individually by enabling distribution centres and stores to receive whole truckloads of merchandise without having to check in each carton.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-18 Receiving and Checking Using UPC or RFID   72. Which of the following is a type of distribution centre to which vendors ship merchandise prepackaged in the quantity required for each store?  A. Traditional B. Combinations C. Cross-docking D. Vertical E. Corporate There are three types of distribution centres: traditional, cross-docking, and combinations. A cross-docking distribution centre is one to which vendors ship merchandise prepackaged in the quantity required for each store.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-19 Storing and Cross-Docking   12-37
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Chapter 12 - Distribution Channels 73. _____ inventory management system is designed to deliver less merchandise on a more frequent basis.  A. Lead-time B. Radio C. Vertical D. Just-in-time E. Administered Just-in-time (JIT) inventory systems, also known as quick response (QR) systems in retailing, are inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems. The firm gets the merchandise "just-in-time" for it to be used in the manufacture of another product, in the case of parts or components, or for sale when the customer wants it, in the case of consumer goods.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-22 Inventory Management Through Just-in-Time Systems   74. Which of the following is an advantage of just-in-time systems?  A. Improved brand value B. Increased market share C. Restricted distribution intensity D. Intensified distribution E. Decreased inventory investment The benefits of a just-in-time (JIT) inventory system include reduced lead time (by eliminating the need for paper transactions by mail and overnight deliveries), increased product availability, and lower inventory investment. JIT systems lower inventory investments, but product availability actually increases.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-22 Inventory Management Through Just-in-Time Systems   12-38
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Chapter 12 - Distribution Channels 75. What is an inventory management system used in retailing in which merchandise is received just in time for sale when the customer wants?  A. Electronic data interchange system B. Universal product system C. Franchising system D. Quick response system E. Radio frequency identification system Just-in-time (JIT) inventory systems, also known as quick response (QR) systems in retailing, are inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems. The firm gets the merchandise "just-in-time" for it to be used in the manufacture of another product, in the case of parts or components, or for sale when the customer wants it, in the case of consumer goods.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-22 Inventory Management Through Just-in-Time Systems   76. Lead time is the amount of time between:  A. the recognition that an order needs to be placed and the arrival of the needed merchandise. B. manufacturing a product and taking the product to the warehouse. C. the conception of a product idea and the manufacture of a product. D. the conception of a product idea and the procurement of raw materials. E. procuring the necessary raw materials and assembling the raw materials to a finished product. Lead time is the amount of time between the recognition that an order needs to be placed and the arrival of the needed merchandise at the seller's store, ready for sale. The benefits of a just-in-time inventory system include reduced lead time.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-22 Inventory Management Through Just-in-Time Systems   12-39
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Chapter 12 - Distribution Channels 77. Zenith Stores is experiencing unexpectedly large sales of refrigerators for the month. The company plans to place orders for more refrigerators and places an order after three weeks. It receives the order after two weeks of placing the order. What is the lead time in this case?  A. One week B. Two weeks C. Three weeks D. Four weeks E. Five weeks The lead time in the case of the scenario is five weeks. Lead time is the amount of time between the recognition that an order needs to be placed and the arrival of the needed merchandise at the seller's store, ready for sale. The benefits of a just-in-time inventory system include reduced lead time.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-22 Inventory Management Through Just-in-Time Systems    Josfer Inc. is a beverage manufacturer. It sells beverages through a variety of intermediaries. The firm attempts to place its products in as many outlets as possible.   12-40
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Chapter 12 - Distribution Channels 78. Josfer requires its intermediaries to sell goods to other intermediaries, whenever possible. The intermediaries, in this case, are performing which function?  A. Transactional B. Supportive C. Logistical D. Facilitating E. Collaborating The intermediaries are performing the transactional function. Purchasing goods for resale to other intermediaries or consumers, or buying, is a transactional function performed by the intermediaries. Other transactional functions include risk taking, promotion, and selling.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   12-41
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Chapter 12 - Distribution Channels 79. Josfer stores finished goods at resellers' storehouses rather than at the company's warehouse. This is an example of which function that intermediaries perform?  A. Transactional B. Supportive C. Logistical D. Facilitating E. Collaborating Maintaining inventory and protecting goods, or risking taking, is a logistical function of intermediaries. Another logistical function performed by intermediaries includes physical distribution.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   80. Which of the following is an example of a facilitating function that Josfer's supply chain partners might perform?  A. They maintain inventory and protect goods. B. They purchase goods from Josfer. C. They own the finished goods of Josfer. D. They transact with potential customers. E. They extend credit to Josfer's customers. Extending credit and other financial services to consumers, or financing, is a facilitating function performed by intermediaries. Another facilitating function performed by them is to gather information.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   12-42
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Chapter 12 - Distribution Channels 81. The marketing intermediaries provide Josfer information about its customers. This is an example of which function that intermediaries perform?  A. Transactional B. Operational C. Logistical D. Facilitating E. Risk transferring Sharing competitive intelligence about customers or other channel members is a facilitating function performed by intermediaries. Another facilitating function performed by intermediaries is financing.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels    Fredox Inc. manufactures confectionaries, cakes, and other packaged foods. The firm tries to reach both consumers and business customers by using a combination of both direct and indirect distribution channels. The company uses these channels to maximize its sales.   12-43
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Chapter 12 - Distribution Channels 82. In which of the following instances is the company engaging in direct marketing?  A. Selling to a commercial firm through salespeople B. Selling to retail stores in Canada C. Selling to large shopping malls D. Selling through a third-party website E. Selling through a large exclusive dealer Fredox Inc. is engaging in direct marketing when selling to a commercial firm through salespeople. Companies such as Sony are better able to reach both consumers and business customers by using a combination of both direct and indirect distribution channels. In very large cities, Sony may sell directly via its own branded stores, while in other areas it may sell indirectly through retailers such as Best Buy and Future Shop.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   12-44
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Chapter 12 - Distribution Channels 83. Which of the following, if true, will strengthen the chances that Fredox will sell more through direct distribution?  A. Most of Fredox's target consumers make small-scale purchases. B. Most retailers in Canada have increased listing fees recently. C. The products that Fredox sells have relatively low value. D. Most of the firm's business comes from retail selling. E. Retail outlets in Canada have little shelf space for storing confectionaries. If retail outlets in Canada have little shelf space for storing confectionaries, it is more likely that Fredox will sell through direct distribution. Some companies may be forced to distribute their goods directly because they are unable to secure shelf space in retail outlets or are unable to pay the high listing fees demanded by retailers for the shelf space.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   84. Fredox stresses sales promotions and frequently gives volume discounts to retailers. Which strategy is the company using?  A. Personal selling B. Push distribution C. Direct marketing D. Pull distribution E. Demand generation Fredox is using a push distribution strategy. With a push strategy, a manufacturer focuses its promotional efforts—for example, personal selling or sales promotion—on channel members to convince them to carry its product. This strategy literally pushes the product through distribution channels to end consumers.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-08 Push Versus Pull Distribution Strategies   12-45
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Chapter 12 - Distribution Channels 85. Which of the following, if true, will weaken the chances that Fredox will sell more through direct distribution?  A. The company sells only to a few business customers. B. Listing fees for confectionaries are relatively high. C. The products that Fredox sells have relatively low-unit value. D. Most of the firm's business comes from bulk selling. E. The company's sales increased by 6 percent last year. If the products that Fredox sells have relatively low-unit value, then it is less likely that Fredox will sell through direct distribution. The use of wholesalers is quite common for low- cost or low-unit value items such as candy and chips.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   86. Floras's major revenue generators are Canada and Mexico. The company attempts to get products into as many outlets as possible in these countries. Which of the following distribution strategies is the company using in Canada and Mexico?  A. Intensive distribution strategy B. Restricted distribution strategy C. Selective distribution strategy D. Specialized distribution strategy E. Exclusive distribution strategy Floras Inc. is using an intensive distribution strategy in Canada and Mexico. An intensive distribution strategy is designed to get products into as many outlets as possible. The more exposure these products get, the more they sell.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   12-46
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Chapter 12 - Distribution Channels 87. Floras's flower distribution in the United States is carried out entirely through Frag Flower, a U.S. flower retailer. Which of the following distribution strategies is the company using in the United States?  A. Intensive distribution strategy B. Broad distribution strategy C. Selective distribution strategy D. Mass distribution strategy E. Exclusive distribution strategy Floras Inc. is using an exclusive distribution strategy in the United States. Manufacturers might use an exclusive distribution policy by granting exclusive geographic territories to one or very few retail customers so no other customers in the territory can sell a particular brand. Exclusive distribution can benefit manufacturers by assuring them that the most appropriate customers represent their products.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-08 Push Versus Pull Distribution Strategies   88. Floras Inc. has only eight distributors in China, which helps the firm control the flow of goods in the country. This is an example of a(n) _____ distribution strategy.  A. intensive B. broad C. selective D. mass E. exclusive Floras Inc. is using a selective distribution strategy in China. Between the intensive and exclusive distribution strategies lies selective distribution, which uses a few selected customers in a territory. Similar to exclusive distribution, selective distribution helps a seller maintain a particular image and control the flow of merchandise into an area, so many shopping goods manufacturers use it.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-09 Distribution Intensity   12-47
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Chapter 12 - Distribution Channels  A flow chart representing multichannel distribution       89. Jake walks into a store that has many cellphone brands and buys a phone for his personal use. Which of the following segments does Jake belong to?  A. Business segment 2 B. Consumer segment 1 C. Business segment 1 D. Consumer segment 2 E. Sales force Jake bought a cellphone from a retailer who sells cellphones from many manufacturers. Therefore, according to the Exhibit 12.3, he belongs to "Consumer Segment 2." Today, many companies are embracing a multichannel, or hybrid, approach to distribution.   Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   12-48
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Chapter 12 - Distribution Channels 90. Jacob visits Dell's website and places an online order for a personal computer. Jacob belongs to:  A. business segment 1. B. business segment 2. C. the sales force. D. consumer segment 1. E. consumer segment 2. Jacob is using the direct marketing approach by Dell for his personal computer. Hence, he belongs to "Consumer segment 1." Today, many companies are embracing a multichannel, or hybrid, approach to distribution.   Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   91. Fred owns a small retail showroom. He buys merchandise from a larger dealer that sells to most of the retailers in the area. Fred belongs to:  A. business segment 1. B. business segment 2. C. the sales force. D. consumer segment 1. E. consumer segment 2. Fred's is a business that procures its products from a dealer. Hence, he belongs to "Business Segment 1." Today, many companies are embracing a multichannel, or hybrid, approach to distribution.   Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   12-49
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Chapter 12 - Distribution Channels 92. RS Industries is a manufacturer of commercial kitchen equipment. The firm uses personal selling techniques to market its products to small-scale firms. Which of the following target markets is RS Industries pursuing?  A. Business segment 2 B. Consumer segment 1 C. Business segment 1 D. Consumer segment 2 E. Distributor segment RS Industries is using its sales force to sell its products to small businesses. Hence, the firm is targeting "Business Segment 2." Today, many companies are embracing a multichannel, or hybrid, approach to distribution.   Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   93. Which of the following companies follow direct distribution?  A. RSS Associates, a firm that sells through exclusive distribution B. BS Manufacturing, a firm that uses intense distribution C. Albex, which sells agricultural machinery through agencies D. Dell, which sells to customers through independent vendors E. DX Textiles, which sells apparel through company-owned showrooms As shown in Exhibit 12.2, direct distribution channels allow manufacturers to sell directly to consumers. DX Textiles, which sells apparel through company-owned showrooms follows direct distribution.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   12-50
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Chapter 12 - Distribution Channels 94. A soda manufacturing company sells its products to supermarkets and stores across Canada through its own distribution network. Which of the following is absent in this situation?  A. End consumer B. Consumer C. Retailer D. Wholesaler E. Manufacturer Since the company uses its own distribution network, it does not rely on wholesalers. Many automotive manufacturers, such as Ford and Coca-Cola, use indirect distribution with dealers acting as the retailer.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   95. Charles Associates is a retail outlet that sells smartphones. The store provides its customers with convenient installment payment options to facilitate the purchase of high-end phones. Which of the following functions is most closely associated with providing installment options?  A. Financing B. Risk taking C. Buying D. Promotion E. Physical distribution Extending credit and other financial services to consumers, like providing installment options, is a facilitating function of financing performed by intermediaries. Distribution channels perform a variety of transactional, logistical, and facilitating functions.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   12-51
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Chapter 12 - Distribution Channels 96. Drobex Manufacturing does not maintain stock in its warehouse and instead keeps stock in its retail outlets. Which of the following intermediary functions does Drobex Manufacturing expects its intermediaries to perform?  A. Financing B. Risk taking C. Buying D. Promotion E. Distribution Drobex Manufacturing expects its intermediaries to perform the logistical function of risk taking. Maintaining inventory and protecting goods of the manufacturers is a logistical function of risk taking that the intermediaries perform. Distribution channels perform a variety of transactional, logistical, and facilitating functions.   Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels     True / False Questions   97. A distribution channel is the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption.  TRUE A distribution channel is the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption; as such, it consists of all the institutions and marketing activities in the marketing process. The terms "distribution channel" and "supply chain" are virtually the same and are often used interchangeably.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-52
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Chapter 12 - Distribution Channels 98. Wholesalers do not take title to the products that they sell.  FALSE Wholesalers are those firms engaged in buying, taking title to, often storing, and physically handling goods in large quantities, and then reselling the goods (usually in smaller quantities) to retailers or industrial or business users.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   99. Intensive distribution is the best strategy for shopping products.  FALSE Selective distribution fits better for shopping products. Customers will search for the location and will make extra effort to find the outlet to buy the product.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-09 Distribution Intensity   100. Retailers sell products directly to consumers.  TRUE Retailers sell products directly to consumers. Manufacturers ship to a wholesaler, or, in the case of many multistore retailers, to the retailer's distribution centre or directly to stores.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-53
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Chapter 12 - Distribution Channels 101. Shell gas station is an example of a retailer.  TRUE Retailers sell products directly to consumers. Manufacturers ship to a wholesaler, or, in the case of many multistore retailers, to the retailer's distribution centre or directly to stores.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   102. Maintaining inventory on behalf of a manufacturer is an example of a facilitating function of intermediaries.  FALSE Maintaining inventory on behalf of a manufacturer is an example of a logistical function of intermediaries. Distribution channels perform a variety of transactional, logistical, and facilitating functions.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-03 Distribution Channels Add Value   103. One or more intermediaries work with manufacturers to provide goods and services to consumers with indirect distribution channels.  TRUE With indirect distribution channels, one or more intermediaries work with manufacturers to provide goods and services to consumers. In some cases, there may be only one intermediary involved.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   12-54
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Chapter 12 - Distribution Channels 104. Distribution intensity refers to the number of channel members used at each level of the supply chain.  TRUE Distribution intensity refers to the number of channel members used at each level of the supply chain. Distribution intensity commonly is divided into three levels: intensive, exclusive, and selective.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   105. An exclusive distribution strategy is designed to get products into as many outlets as possible.  FALSE An intensive distribution strategy is designed to get products into as many outlets as possible. The more exposure these products get, the more they sell.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   12-56
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Chapter 12 - Distribution Channels 106. Exclusive distribution strategy refers to granting special rights to sell to one or very few retail customers so no other customers can sell a particular brand.  TRUE Manufacturers might use an exclusive distribution policy by granting exclusive geographic territories to one or very few retail customers so no other customers in the territory can sell a particular brand. Exclusive distribution can benefit manufacturers by assuring them that the most appropriate customers represent their products.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   12-57
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Chapter 12 - Distribution Channels 107. A firm that adopts selective distribution will have only one retailer in a geographic area.  FALSE Between the intensive and exclusive distribution strategies lies selective distribution, which uses a few selected customers in a territory. Similar to exclusive distribution, selective distribution helps a seller maintain a particular image and control the flow of merchandise into an area, so many shopping goods manufacturers use it.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   108. Channel conflict results when supply chain members have similar goals, roles, or rewards.  FALSE When channel members are not in agreement about their goals, roles, or rewards, channel conflict results. Avoiding vertical channel conflicts demands open, honest communication.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   109. A contractual vertical marketing system is characterized by firms that are highly interdependent.  FALSE In contractual vertical marketing systems, independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and co-ordination and to reduce conflict.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   12-58
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Chapter 12 - Distribution Channels 110. A contractual agreement is formed between a franchisor and a franchisee in the franchising system.  TRUE Franchising is a contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet, using a name and format developed and supported by the franchisor.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   111. An advanced shipping notice is an electronic purchase order that retailers send to suppliers.  FALSE An advanced shipping notice is an electronic document that a supplier sends to a retailer in advance of a shipment to tell the retailer exactly what to expect in a shipment.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-12 Electronic Data Interchange   112. In a strategic relationship, members are committed to maintaining a long-term relationship.  TRUE More often than not, firms seek a strategic relationship, also called a partnering relationship, in which the supply chain members are committed to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-05 Managing Supply Chains Through Strategic Relationships   12-60
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Chapter 12 - Distribution Channels 113. A dispatcher is a person who procures raw materials for a manufacturer.  FALSE A dispatcher is the person who co-ordinates deliveries to distribution centres.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-17 Inbound Transportation     Short Answer Questions   114. Explain a distribution channel.  A distribution channel is the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption; as such, it consists of all the institutions and marketing activities in the marketing process. In some cases, companies use direct market channels to deliver their goods to consumers; in other instances, distribution is accomplished indirectly through the use of intermediaries   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-62
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Chapter 12 - Distribution Channels 115. Explain logistics management.  Logistics management describes the integration of two or more activities to plan, implement, and control the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption. These activities may include, but are not limited to, customer service, demand forecasting, distribution communications, inventory control, materials handling, order processing, parts and service support, plant and warehouse site selection, procurement, packaging, return goods handling, salvage and scrap disposal, traffic and transportation, and warehousing and storage.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   116. What are direct distribution channels? Give an example of a company that uses direct distribution.  Direct distribution channels allow manufacturers to deal directly with consumers. Many products and services are distributed this way. For example, Dell sells products to end consumers through its website.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   117. What are the main members of a distribution channel? Explain each member role and provide an example for each.  Manufacturer, wholesalers, and retailers are common members of a distribution channel.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-63
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Chapter 12 - Distribution Channels 118. Briefly explain indirect distribution and provide an example of a company that uses it.  With indirect distribution channels, one or more intermediaries work with manufacturers to provide goods and services to consumers. In some cases, there may be only one intermediary involved. Many automotive manufacturers, such as Ford, use indirect distribution with dealers acting as the retailer.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   119. Explain the three functions performed by intermediaries in a distribution channel. Provide examples to support your answer.  Transactional function (buying, risk taking, promotion, & selling) Logistical function (physical distribution & risk taking) Facilitating function (gathering information & financing)   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Difficult Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-03 Distribution Channels Add Value   120. Briefly explain an exclusive distribution strategy. Provide an example of a company that uses this strategy.  Manufacturers might use an exclusive distribution policy by granting exclusive geographic territories to one or very few retail customers so no other customers in the territory can sell a particular brand. Exclusive distribution can benefit manufacturers by assuring them that the most appropriate customers represent their products.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   12-65
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Chapter 12 - Distribution Channels 121. Describe the common logistical functions that intermediaries perform. Provide examples to support your answer.  The following are the common logistical functions that intermediaries perform: physical distribution, which involves transportation of goods to point of purchase; and storing, which includes maintaining inventory and protecting goods.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-03 Distribution Channels Add Value   122. Explain push and pull distribution strategies. Provide one example for each.  Push marketing strategy: designed to increase demand by focusing on wholesalers, distributors, or salespeople, who push the product to consumers via distribution channels.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-08 Push Versus Pull Distribution Strategies   123. Describe a contractual vertical marketing system.  A contractual vertical marketing system is a system in which independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and co- ordination and to reduce conflict.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   12-66
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Chapter 12 - Distribution Channels 124. What is franchising?  Franchising is a contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet, using a name and format developed and supported by the franchisor. In a franchise contract, the franchisee pays a lump sum plus a royalty on all sales in return for the right to operate a business in a specific location. The franchisee also agrees to operate the outlet in accordance with the procedures prescribed by the franchisor.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-04 Managing Distribution Channels   125. What is electronic data interchange?  Electronic data interchange (EDI) is the computer-to-computer exchange of business documents from a retailer to a vendor and back. Sales data, purchase orders, invoices, and data about returned merchandise can be transmitted back and forth.   Accessibility: Keyboard Navigation Blooms: Remember Difficulty: Easy Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-12 Electronic Data Interchange   126. Explain the three types of distribution centres.  There are three types of distribution centres: traditional, cross-docking, and combinations. A traditional distribution centre is a warehouse in which merchandise is unloaded from trucks and placed on racks or shelves for storage. The second type, called a cross-docking distribution centre, is one to which vendors ship merchandise prepackaged in the quantity required for each store. Most modern distribution centres combine the two previous approaches to form a third type of distribution centre.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-04 Explain how logistics management affects distribution strategy. Topic: 12-16 The Distribution (or Fulfillment) Centre   12-67
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Chapter 12 - Distribution Channels 127. Compare and contrast distribution channel, supply chain, and logistics management.  A distribution channel is the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption; as such, it consists of all the institutions and marketing activities in the marketing process. The terms "distribution channel" and "supply chain" are virtually the same and are often used interchangeably. In some cases, companies use direct market channels to deliver their goods to consumers; in other instances, distribution is accomplished indirectly through the use of intermediaries. Supply chain management refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize system-wide costs while satisfying the service levels their customers require. Logistics management describes the integration of two or more activities to plan, implement, and control the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption. These activities may include, but are not limited to, customer service, demand forecasting, distribution communications, inventory control, materials handling, order processing, parts and service support, plant and warehouse site selection, procurement, packaging, return goods handling, salvage and scrap disposal, traffic and transportation, and warehousing and storage.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-69
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Chapter 12 - Distribution Channels 128. Explain different channel structure options. Provide one example for each structure.  Direct distribution channels allow manufacturers to deal directly with consumers. Direct distribution plays a significant role in business-to-business dealings with companies that sell directly to their largest customers in the public and private sectors. Some companies may be forced to distribute their goods directly because they are unable to secure shelf space in retail outlets or are unable to pay the high listing fees demanded by retailers for the shelf space. With indirect distribution channels, one or more intermediaries work with manufacturers to provide goods and services to consumers. In some cases, there may be only one intermediary involved. Today, many companies are embracing a multichannel, or hybrid, approach to distribution. Such companies use direct and indirect marketing channels. When choosing which channels and retailers through which to sell, the manufacturer should consider where the end customer expects to find the product, as well as some important retailer characteristics.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-07 Channel Structure   12-70
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Chapter 12 - Distribution Channels 129. Explain how distribution styles are classified based on their intensity. Provide one example for each.  Distribution intensity commonly is divided into three levels: intensive, exclusive, and selective. An intensive distribution strategy is designed to get products into as many outlets as possible. Most consumer packaged goods companies, such as PepsiCo, P&G, Kraft, and most other nationally branded products found in grocery and discount stores, strive for and often achieve intensive distribution. Manufacturers also might use an exclusive distribution policy by granting exclusive geographic territories to one or very few retail customers so no other customers in the territory can sell a particular brand. Exclusive distribution can benefit manufacturers by assuring them that the most appropriate customers represent their products. Between the intensive and exclusive distribution strategies lies selective distribution, which uses a few selected customers in a territory. Similar to exclusive distribution, selective distribution helps a seller maintain a particular image and control the flow of merchandise into an area, so many shopping goods manufacturers use it.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-03 Identify how distribution channels add value to businesses and customers. Topic: 12-09 Distribution Intensity   130. Explain how supply chain management affects marketing.  Every marketing decision is affected by and has an effect on the supply chain. When products are designed and manufactured, how and when the critical components reach the factory must be co-ordinated with production. The sales department must co-ordinate its delivery promises with the factory or distribution centres. A distribution centre—a facility for the receipt, storage, and redistribution of goods to company stores or customers—may be operated by retailers, manufacturers, or distribution specialists. Furthermore, advertising and promotion must be co-ordinated with those departments that control inventory and transportation. There is no faster way to lose credibility with customers than to promise deliveries or run a promotion and then not have the merchandise when the customer expects it.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-01 Explain the importance of distribution and the interrelationships among distribution channels; supply chain management; and logistics management. Topic: 12-02 Distribution Channels, Supply Chain, and Logistics   12-71
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Chapter 12 - Distribution Channels 12-72
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Chapter 12 - Distribution Channels 131. Explain how distribution channels add value.  Distribution channels are composed of various entities that are buying, such as retailers or wholesalers; selling, such as manufacturers or wholesalers; or helping facilitate the exchange, such as transportation companies. Like interactions between people, these relationships can range from close working partnerships to one-time arrangements. In almost all cases though, they occur because the parties want something from one another. Distribution channels perform a variety of transactional, logistical, and facilitating functions. One important role played by intermediaries is to reduce the number of marketplace contacts, resulting in more efficient systems. Intermediaries also match the requirements of individual consumers to the goods that manufacturers produce; handle physical distribution and storage of goods, making them available for customers to purchase; facilitate searches by both buyers and sellers; and standardize exchange transactions. While channel functions may shift from one intermediary or channel member to another, it's important to recognize that they cannot be eliminated.   Accessibility: Keyboard Navigation Blooms: Understand Difficulty: Moderate Learning Objective: 12-02 Describe distribution channel design and management decisions and strategies. Topic: 12-03 Distribution Channels Add Value   12-73
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