Marketing Management - 12th Edition - Kotler/Keller€¦ · Web viewE-marketing describes company efforts to inform buyers, communicate, promote, and sell its products and services

Chapter 15: Designing and Managing Value Networks and Channels

GENERAL CONCEPT QUESTIONS

Multiple Choice

1. Intermediaries who buy, take title to, and resell the merchandise are called ________. a. retailers b. facilitators c. marketersd. agents e. merchants

Answer: e Page: 468 Level of difficulty: Easy

2. Companies that search for customers and may negotiate on the producer’s behalf but do not take title to the goods are called ________. a. marketers b. merchantsc. facilitators d. agentse. none of the above

Answer: d Page: 468 Level of difficulty: Easy

3. Transportation companies, independent warehouses, banks, and advertising agencies assisting in the distribution process but neither take title to goods nor negotiate purchases or sales are called ________. a. marketersb. facilitatorsc. agentsd. merchantse. none of the store

Answer: b Page: 468 Level of difficulty: Easy

4. One of the chief roles of marketing channels is to convert potential buyers into profitable ________. a. sales b. marketers c. customersd. orderse. consumers

Answer: d Page: 468 Level of difficulty: Medium

415

Part 6: Delivering Value

5. A marketing channel system is the particular set of ________ employed by a firm. Decisions about the marketing channel system are among the most critical facing a firm.a. marketing channelsb. distribution/warehouse channelsc. finance channels

d. management channelse. advertising channels

Answer: a Page 468 Level of difficulty: Easy

6. A ________ strategy involves the manufacturer using its sales force and trade promotion money to induce intermediaries to carry, promote, and sell the product to end users. a. push b. pullc. promoted. provide e. none of the above

Answer: a Page 468 Level of difficulty: Hard

7. A ________ strategy involves the manufacturer using advertising and promotion to persuade consumers to ask intermediaries for the product, thus inducing the intermediaries to order it. a. pushb. pullc. promoted. providee. none of the above

Answer: b Page: 468 Level of difficulty: Hard

8. Today customers expect channel integration to work smoothly. Which of the following is NOT one of the characteristics of channel integration?a. The ability to order the product online and pick it up at a retail location b. The ability to return an online purchase at the retail location c. The right to receive discounts based on total online and offline purchases d. Offer gift certificates that can be redeemed online and offlinee. Offer specific specials to online and separate ones to offline consumers

Answer: e Page: 469 Level of difficulty: Medium

416


9. Generally speaking, buyers fall into four categories. Which of the following is NOT one of these categories?a. Habitual shoppersb. High value deal seekersc. Low-involvement shoppersd. Variety-loving shopperse. High-involvement shoppers

Answer: c Page: 470 Level of difficulty: Hard

10. A supply chain view of a firm sees markets as destination points and amounts to a linear view of the flow. The company should first think of the target market, however, and then design the supply chain backward from that point. This view is called ________. a. value network b. demand chain planning c. demand retail planning d. customer planninge. none of the above


11. A value network includes a firm’s suppliers and its suppliers’ suppliers, and its immediate customers and their end ________. a. retailers b. marketersc. shoppers d. customers e. procedures


12. Intermediaries normally achieve ________ in making goods widely available and accessible to target markets. Through their contact, experience, specialization, and scale of operation, intermediaries usually offer the firm more than it can achieve on its own. a. superior products b. superior use of technology c. superior efficiencyd. superior contactse. superior distribution channels

Answer: c Page: 472 Level of difficulty: Easy

417


13. A marketing channel performs the work of moving goods from producers to consumers. It overcomes the time, place, and ________ gaps that separate goods and services from those who need or want them. a. possessionb. retailc. consumersd. policies e. buyers

Answer: a Page: 472 Level of difficulty: Easy

14. Physical functions, title functions, and promotional functions are example of ________ flow of activity from the company to the customer. a. lateral b. forwardc. backwardd. sidewisee. none of the above


15. The question regarding the various channel functions is not whether or not they need to be performed but who is to perform them. All channel functions have three things in common. Which of the following is NOT one of these channel functions? a. They use up scare resources. b. They can often be performed better through specialization. c. They can be shifted among channel members. d. They require substantial investments by the producer. e. None of the above.

Answer: d Page: 473 Level of difficulty: Hard

16. A ________ channel consists of a manufacturer selling directly to the final customer. a. three-level b. two-levelc. zero-level d. multiple levele. one-level


17. Designing a marketing channel system involves analyzing customer needs, ________, identifying major channel alternatives, and evaluating major channel alternatives. a. establishing channel partners b. establishing channel costsc. establishing channel membersd. establishing channel budgetse. establishing channel objectives


418


18. In designing the marketing channel, the marketer must understand the service output levels desired by the target customers. Channels produce five service outputs. Which of the following is NOT one of these outputs?a. Product variety b. “Entertainment shopping experience” c. Spatial convenience d. Waiting and delivery timee. Lot size

Answer: b Pages: 476 –477 Level of difficulty: Medium

19. Channel objectives should be stated in terms of ________ service output levels. a. efficient

b. budgetedc. targetedd. affordablee. none of the above


20. A channel alternative is described by three elements: the types of available business intermediaries, the number of intermediaries needed, and the ________.a. area of expertise of each channel member b. terms and responsibilities of each channel member c. quality of the channel member organization d. size of each channel membere. depth of commitment of each channel member


21. Companies deciding on the number of intermediaries to use at each channel level have three strategies available to them. They can use exclusive distribution, ________ distribution, and intensive distribution.

a. selective b. extensivec. self-selectingd. competitive e. collective

Answer: a Page: 480 Level of difficulty: Medium

22. When the producer wants to maintain control over the service level and outputs offered by the resellers it most likely will use ________ distribution. a. competitive b. extensivec. intensived. exclusive e. selective


419


23. Manufacturers are constantly tempted to move from exclusive or selective distribution to more intensive distribution in order to ________ coverage and sales. a. increaseb. decrease c. enter the marketd. leave the market e. none of the above


24. ________ distribution consists of the manufacturer placing his goods and services in as many outlets as possible. a. Selective b. Exclusive c. Intensived. “Shotgun”e. Scattered


25. The main elements in the “trade-relations mix” are price policies, conditions of sale, ________, and specific services to be performed by each party. a. competitive policiesb. distribution policies c. service policiesd. credit policiese. territorial rights

Answer: e Page: 481 Level of difficulty: Hard

26. Each channel alternative needs to be evaluated against ________, control, and adaptive criteria. a. economic b. manufacturing c. delivery d. financiale. timing issues


27. One of the control issues of using a sales agency as a channel partner is that the sales agency is an independent firm seeking to ________ its profits. a. find new customers b. increase sales c. lower its costs and d. maximize e. none of the above


420


28. Companies that are successful in switching their customers to lower-cost channels, assuming no loss of sales or deterioration in service quality, will gain a ________. a. channel relationships b. channel advantagec. channel premium d. selective channel memberse. channel partners


29. After a company has chosen a channel alternative, individual intermediaries must be ________, trained, motivated, and evaluated. a. selectedb. researchedc. compensatedd. induced e. none of the above


30. It is important for the company to select their channel members carefully because to the customers, the channels _________ the company. a. are independent entrepreneurs b. distance themselves fromc. are not d. are e. look like


31. ________ can be defined as the ability to alter channel members’ behavior so that they take actions they would not have taken otherwise. a. Marketingb. Superior products c. Channel powerd. Channel relationshipse. Channel concerns


32. The five types of power available to the producer to elicit cooperation from channel members includes all of the following EXCEPT ________ power.a. expert b. positionc. coercived. referente. reward

Answer: b Page: 484 Level of difficulty: Medium

421


33. In competitive markets with low entry barriers, the optimal channel structure will inevitably ________ over time. a. become cumbersome b. hardenc. stay the samed. increasee. change


34. Regarding distribution systems, one of the most difficult decision that a firm must make at some time involves ________ the channel strategy. a. discontinuing b. revising c. decreasing membersd. increasing memberse. scraping


35. A conventional marketing channel comprises an ________, wholesaler(s), and retailer(s) each acting in his own self-interest.a. brokersb. manufacturing agents c. manufacturing representatives d. merchant wholesalerse. independent producer


36. A ________ comprises the producer, wholesaler(s), and retailers(s) acting as a unified system. a. corporate VMS b. distributor relationshipc. vertical marketing systemd. distribution systeme. administered system

Answer: c Page: 487 Level of difficulty: Medium

37. A ________ consists of independent firms at different levels of production and distribution integrating their programs on a contractual basis to obtain more economies or sales impact than they could achieve alone. a. contractual VMSb. distributor VMSc. administered VMSd. vertical marketing system e. none of the above


422


38. Two or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity it is called a ________. a. coop marketing systemb. horizontal marketing systemc. financial marketing systemd. vertical marketing systeme. cross-marketing system


39. Contractual VMSs now constitute one of the most significant developments in the economy and come in three types. Which of the following is a type of contractual VMS? a. Specialty storesb. Franchise organizationsc. Kiosks storesd. Catalog storese. None of the above

Answer: b Page: 488 Level of difficulty: Hard 40. ________ occurs when a single firm uses two or more marketing channels to reach

one or more customer segments. a. Multichannel marketing b. Multimarket marketingc. Diversified marketing d. Integrated marketing e. None of the above


41. By adding more channels, companies can gain three important benefits. First, they can increase their market coverage, second, they can lower channel costs by moving to a lower cost channel, and third they can provide ________. a. effective dollar costs/sale b. increased exposure c. increased volume of potential customersd. increased volume of salese. more customized selling

Answer: e Pages: 489–490 Level of difficulty: Medium

42. ________ is generated when one channel member’s actions prevent the channel from achieving its goal. a. Channel power b. Channel conflictc. Channel coordination d. Channel advertisemente. None of the above


423


43. ________ involves conflict between members at the same level within the channel. a. Vertical channel conflictb. Circular channel conflict c. Multichannel conflictd. Horizontal channel conflicte. None of the above


44. ________ means conflict between different levels within the same channel. a. Vertical channel conflictb. Circular channel conflict c. Multichannel conflictd. Horizontal channel conflicte. None of the above

Answer: a Page: 491 Level of difficulty: Hard

45. ________ exists when the manufacturer has established two or more channels that sell to the same market. a. Vertical channel conflictb. Circular channel conflict c. Multichannel conflictd. Horizontal channel conflicte. None of the above


46. ________ occurs when channel members are brought together to advance the goals of the channel, as opposed to their own potentially incompatible goals. a. Channel coordinationb. Channel cooperation c. Channel conflictd. Channel advertisement e. None of the above


47. Causes of channel conflict include the following, EXCEPT________.a. goal incompatibility b. differences in perception c. dependency d. unclear goals and rights e. channel power usage

Answer: e Pages: 491–492 Level of difficulty: Hard

424


48. There are several mechanisms for effective conflict management. These include the following EXCEPT ________. a. litigation b. superordinate goalsc. co-optationd. diplomacye. mediation


49. ________ is an effort by one organization to win the support of the leaders of another organization by including them in advisory councils, board of directors, and the like. a. Co-optationb. Diplomacyc. Superordinate goalsd. Mediatione. Arbitration


50. ________ means resorting to a neutral third party who is skilled in conciliating the two parties’ interests.

a. Co-optation b. Negotiation c. Mediation d. Arbitration e. Diplomacy


51. Producers of strong brands sometimes sell it to dealers only if they will take some or all of the rest of the line. This practice is called full-line forcing or ________. a. EDLPsb. laddering c. tying agreements d. reciprocal agreements e. trade-offs

Answer: c Page: 493 Level of difficulty: Hard

52. ________ describes the use of electronic means and platforms to conduct a company’s business. a. E-business b. E-commercec. E-purchasing d. E-marketing e. None of the above


425


53. ________ means that the company or site offers to transact or facilitate the selling of products or services online. a. E-business b. E-commercec. E-purchasing d. E-marketing e. None of the above


54. ________ means companies decide to purchase goods, services, and information from various online suppliers. a. E-business b. E-commercec. E-purchasing d. E-marketing e. None of the above


55. ________ describes company efforts to inform buyers, communicate, promote, and sell its products and services over the Internet. a. E-business b. E-commercec. E-purchasing d. E-marketing e. None of the above


56. ________ are companies that have launched a Web site without any previous existence as a firm. a. Dot.com’s b. Internet firms c. Pure-click d. Brick-clicke. None of the above


57. ________ are existing companies that have added an online site for information and/or e-commerce. a. Store locations b. Brick-and-clickc. Brick-and-mortard. Pure-clicke. None of the above


426


58. The Internet is most useful for products and services when the shopper seeks greater ________ or lower costs. a. product assortment b. time crunch c. ordering convenience d. ordering time framese. ordering ease


59. For the brick-and-click companies, adding e-commerce channel creates the threat of a ________ from retailers, brokers, agents, and other intermediaries. a. competitionb. backlashc. cooperationd. refusale. support


60. For established firms, a strategy for selling both through established intermediaries and the Internet includes which of the following? a. Increase prices for Internet purchases. b. Offer different brands over the Internet. c. Offer different promotional allowances over the Internet. d. Do not do anything different. e. None of the above.


True/False

61. Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption.

Answer: True Page: 468 Level of difficulty: Easy

62. Wholesalers and retailers who take title to and possession of goods and are called merchants.


63. Agents are those intermediaries that negotiate contracts or prices on the producer’s behalf.

Answer: True Page: 468 Level of difficulty: Medium

64. Facilitators neither negotiate contracts or prices nor take title or possession of the goods but facilitate the orderly transfer of product from producer to consumer.


427


65. A push strategy involves the manufacturer using advertising and promotion to persuade consumers to ask intermediaries for the product, thus inducing the intermediaries to order it.

Answer: False Page: 468 Level of difficulty: Medium

66. A pull strategy involves the manufacturer using its sales force and trade promotion money to induce intermediaries to carry, promote, and sell the product to the end users.


67. A hybrid channel is one in which the manufacturer uses two or more different channels of distribution to reach the target markets.


68. The ability to order a product online and pick it up at a convenient retail location is an example of the consumers’ expectations for channel integration.

Answer: True Page: 469 Level of difficulty: Hard

69. Habitual shoppers are shoppers that purchase from the same places in the same manner over time.


70. High-involvement shoppers gather information in all channels, make their purchase in a low-cost channel, but take advantage of customer support from a high-touch channel.


71. Thinking of the target market first, then designing the supply chain backward from that point is called demand chain planning.


72. A system of partnerships and alliances that a firm creates to source, augment, and deliver its offering is called a demand chain.


73. Delegating some of the selling functions to intermediaries’ means loss of control over how and to whom the products are sold.


74. Intermediaries normally achieve superior efficiency in making goods widely available and accessible to target markets.


75. A manufacturer selling a physical product and related services might require three channels: a sales channel, a delivery channel, and a service channel.

Answer: True Pages: 472–473 Level of difficulty: Medium

428


76. All channel functions need not be performed for the channel to operate efficiently. Answer: False Page: 473 Level of difficulty: Hard

77. A zero-level channel consists of a manufacturer selling directly to one retailer. Answer: False Page: 474 Level of difficulty: Medium

78. The reverse-flow channels are not important except in the cases of recycling, refurbishing, and disposal.


79. Designing a marketing channel involves analyzing customer needs, establishing channel objectives, and identifying cost saving channels, identifying key channel partners, and evaluating all alternatives.


80. Channel objectives should never be stated in terms of targeted service outputs and levels but instead stated in terms of dollar costs.

Answer: False Page: 477 Level of difficulty: Hard

81. Companies can choose from a wide variety of channels for reaching customers—from sales forces to agents, distributors, dealers, direct mail, telemarketing, and the Internet.


82. Exclusive distribution involves the use of more than a few but less than all of the intermediaries that are willing to carry your product.


83. Selective distribution means severely limiting the number of intermediaries. Answer: False Page: 480 Level of difficulty: Medium

84. Intensive distribution consists of the manufacturer placing the goods or services in as many outlets as possible.

Answer: True Page: 480 Level of difficulty: Medium 85. The producer must determine the rights and responsibilities of participating channel

members. Answer: True Page: 481 Level of difficulty: Medium

86. Each channel alternative needs to be evaluated against economic, control, and power criteria.


429


87. Companies that are successful in switching their customers to lower-cost channels, assuming no loss of sales or deterioration in service quality, will gain a channel advantage.


88. Channel arrangements once constructed need not be modified over time. Answer: False Page: 483 Level of difficulty: Hard

89. Companies need not plan and implement careful training programs for their intermediaries.


90. Coercive power is objectively observable, while legitimate, expert, and referent power are more subjective.


91. More sophisticated companies try to forge a long-term partnership with distributors. Answer: True Page: 484 Level of difficulty: Medium

92. A vertical marketing system comprises the producer, wholesaler(s), and retailer(s) acting in their own interests.

Answer: False Page: 487 Level of difficulty: Easy

93. A horizontal marketing system brings two related firms together to marshal the resources or programs necessary to provide an emerging marketing opportunity.


94. One of the major causes of channel conflict is goal incompatibility between the manufacturer and the channel members.


95. Channel coordination occurs when channel members are brought together to advance the goals of the channel.


96. Channel conflict is generated when one channel member’s actions prevent the channel from achieving its goal.


97. E-business means that the company or site offers to transact or facilitate the selling of products and services online.


98. The Internet is less useful for products that must be touched or examined in advance. Answer: True Page: 494 Level of difficulty: Medium

430


99. In adding e-commerce, a brick-and-click company need not worry about backlash from retailers, brokers, agents, or other intermediaries.


100. E-marketing describes company efforts to inform buyers, communicate, promote, and sell its products and services over the Internet.


Essay

101. Explain why the marketing channel system is so important to a firm.

Suggested Answer: Decisions about the marketing channel system are among the most critical facing management. In the United States, channel members collectively earn margins that account for 30–50 percent of the final retail price. Marketing channels represent a substantial opportunity cost. One of the chief roles of marketing channels is to covert potential buyers into profitable orders. Marketing channels must not just serve markets, they must also make markets.

The channels chosen affect all other marketing decisions. The companies’ price strategies, promotion strategies, and place strategies are determined by the channel the firm pursues.

Page: 468 Level of difficulty: Hard

102. Explain the concept of a hybrid channel distribution system.

Suggested Answer: A hybrid channel distribution system is when firm use a combination of different channels to reach differing target markets. For example, IBM uses its sales force to sell to large accounts, outbound telemarketing to sell to medium-sized accounts, direct mail with an inbound number for small accounts, retailers to sell to even smaller accounts, and the Internet to sell specialty items. Page: 469 Level of difficulty: Hard

103. Different consumers have different needs during the purchase process. Researchers Nunes and Cespedes argue that in many markets, buyers fall into four categories. List these four categories and briefly define.

Suggested Answer: The four categories are: (1) habitual shoppers—purchase from the same places in the same manner over time; (2) high value deal seekers —know their needs and “channel surf” a great deal before buying at the lowest possible price; (3) variety-loving shoppers—gather information in many channels, take advantage of high-touch services, and then buy in their favorite channel, regardless of price; and (4) high-involvement shoppers—gather information in all

431


channels, make their purchases in a low-cost channel, but take advantage of customer support from a high-touch channel.

Page: 470 Level of difficulty: Hard

104. Demand chain planning yields several insights for manufacturers who follow this view of the supply chain. Explain what these insights are and how companies can use them to their best advantage.

Suggested Answer: First, the company can estimate whether more money is made upstream or downstream, in case it might want to integrate backward or forward. Second, the company is more aware of disturbances anywhere in the supply chain that might cause costs, prices, or suppliers to change suddenly. Third, companies can go online with their business partners to carry on faster and more accurate communications, transactions, and payments to reduce costs, speed up information, and increase accuracy. Page: 471 Level of difficulty: Hard

105. What are some of the advantages available to producers for using intermediaries?

Suggested Answer: Producers gain several advantages by using intermediaries including: (1) many producers lack the financial resources to carry out direct marketing; (2) producers who do establish their own channels can often earn a greater return by increasing investment in their main business; and (3) in some cases, direct marketing simply is not feasible. Page: 472 Level of difficulty: Hard

106. In designing a marketing channel system, the marketer must understand the service output levels desired by target customers. Channels provide five service outputs. List and briefly describe each of these outputs.

Suggested Answer: The five service outlets are: (1) lot size—the number of units the channel permits a typical customer to purchase on one occasion; (2) waiting and delivery time—the average time customers of that channel wait for receipt of the goods; (3) spatial convenience—the degree to which the marketing channel makes it easy for customers to purchase the product; (4) product variety—the assortment breadth provided by the marketing channel; and (5) service backup—the add-on services (credit, delivery, etc.) provided by the channel . Pages: 476–477 Level of difficulty: Hard

107. Manufacturers’ are constantly tempted to move from exclusive distribution or selective distribution to more intensive distribution. Give a reason why this might not be a good long-term strategy for a manufacturer?

Suggested Answer: They might be tempted to move to increase coverage and sales and it may help in the short term, but often hurts long-term performance. Intensive distribution increases product and service availability but may result in

432


retailers competing aggressively. If price wars ensue, retailer profitability may also decline, potentially dampening retailer interest in the product. Page: 480 Level of difficulty: Hard

108. Explain the differences between a vertical marketing system (VMS) and a conventional marketing system?

Suggested Answer: A vertical marketing system comprises the producer, wholesaler(s), and retailer(s) acting as a unified system. One channel member, the channel captain, owns the others, franchises them, or has so much power that they all cooperate. A conventional marketing channel comprises an independent producer, wholesaler(s), and retailer(s). Each is a separate business seeking to maximize its own profits, and no channel member has complete or even substantial control over the other members. Pages: 486–487 Level of difficulty: Medium

109. The most advanced supply-distributor arrangements for administering VMSs involve distribution programming. Explain the components of distribution programming.

Suggested Answer: Distribution programming can be defined as building a planned, professionally managed, vertical marketing system that meets the needs of both manufacturer and distributors. The manufacturer establishes a department within the company called distributor-relations planning. The department’s job is to identify distributor needs and build up merchandising programs to help each distributor operate as efficiently as possible. This department and the distributors jointly plan merchandising goals, inventory levels, space and visual merchandising plan, sales-training requirements, and advertising and promotion plans. Pages: 487–488 Level of difficulty: Hard

110. For a brick-and-click company to add e-commerce to its marketing mix, the firm must be aware that it creates the threat of a backlash from its channel partners. The question remains: How to sell both through intermediaries and online? Three strategies for successfully answering this question were postulated in the chapter. List and briefly define these three strategies.

Suggested Answer: First, offer different brands or products on the Internet. Two, offer the offline partners higher commissions to cushion the negative impact on sales by the Internet. Third, take orders on the Web site but have retailers deliver and collect payments. Page: 495 Level of difficulty: Medium

433


APPLICATION QUESTIONS

Multiple Choice

111. Your product enjoys high brand loyalty and high involvement in the category. Your product has perceived differences that consumers recognize between brands. Your product is one of the few that its consumers choose before selecting the retail store/Web site to purchase the product. Which promotion strategy would hold the greatest opportunity for incremental sales for your product based upon the consumer criteria above? a. Branding b. Pullc. Pushd. Hybride. None of the above


112. Your product has low brand loyalty in its category; brand choice is often made by the consumer in the store, often at the very moment of purchase. Which promotion strategy would hold the greatest opportunity for incremental sales for your product based upon the consumer criteria above? a. Branding b. Pullc. Pushd. Hybride. None of the above


113. When managing a hybrid channel, the channel manager must ensure that these different channels work seamlessly in the consumer’s opinion. When the consumer can order a product online and pick it up at the nearby retail store or be able to return the Internet ordered product to the retail store, we state that the channel has ________. a. channel strong core operationsb. channel integration c. channel synergy d. channel cooperation e. channel committing to TQM


434


114. As a recent college graduate, you pride yourself on your “shopping ability.” You gather information from a variety of channels conducting extensive research on the advantages/disadvantages of the products available. You visit a number of high-priced retailers, ask numerous questions, and “try” many of the products. However, when the time comes for you to purchase, you “always” purchase in the “lowest-cost” channel. You would be described as a ________. a. high-involvement shopperb. variety-loving shopperc. high-value deal seekerd. habitual shoppere. none of the above


115. A company selling exercise equipment may need to establish three channels of distribution—one channel to sell the product to retailers and distributors (a sales channel); a second channel to deliver the product (a delivery channel), and a ________ channel to ensure that the products are used correctly after the sale. a. customer’s channel b. dealer channel c. service channel d. speed channel e. direct channel

Answer: c Pages: 472–473 Level of difficulty: Easy

116. ________ deals between suppliers and retailers such as Disney’s Consumer Products deal with Wal-Mart are becoming a mainstay for specialists looking for an edge in a business world that is increasingly driven by price. a. Exclusive b. Selective c. Intensive d. Blanket e. None of the above


117. When a company makes the statement “wherever there is a cash transaction” as its distribution policy, they are emphasizing a ________. a. intensive distribution b. selective distribution c. exclusive distribution d. maximum distribution e. blanket distribution


435


118. Your firm sells industrial cleaning products and services costing between $200 and $500. The cost per transaction has been estimated as $50.00 (using field sales people), $20.00 (using distributors), $5.00 (using rebates), and $1.00 (using the Internet). Clearly, any attempt to have the customers order via the Internet saves the company $49.00 per transaction. What would be one of the considerations that must be examined before you begin rewarding customers for ordering via the Internet? a. Buyers who buy industrial cleaning supplies need convenience rather than

price. b. Buyers who are shopping for more complex products may prefer high-touch

channels. c. Customers will always want “low-touch” for low-cost. d. “Low-touch” is not a replacement for “high-touch.” e. None of the above.

Answer: b Pages: 481–482 Level of difficulty: Medium

119. The sales of your product are low compared to your competition. The decision facing you is whether to use a sales agency (brokers, manufacturers’ representatives) or hire a field sales force. The fixed costs of engaging a sales agency are lower than those of establishing a company sales force, but costs rise faster through an agency. When figuring out sales and costs, the intersection of the costs between sales agencies and sales force (Sb) means that ________. a. above Sb means that the company’s costs escalate b. the sales agency is the better choice for any sales below this point c. the sales force is the better choice for any sales below this point d. the sales agency is the better choice for any sales above this point e. both choices are equally good—choose the one that you are most comfortable

with Answer: b Page: 482 Level of difficulty: Hard

120. In rolling out your company’s newest product, you decided to use manufacturers’ representatives as your sales agents. Part of your ________ was to establish territories based upon counties per state. a. “trade-relations mix” b. franchise agreementsc. pricing policiesd. product specse. conditions of sale


436


121. Rolex is very selective when choosing the retailers that will sell its watches. The company needs to view its retailer in the same way as it views its end users. The firm needs to determine intermediaries’ needs and construct a channel positioning such that its channel offering is tailored to provide ________ to these retailers. a. customer responsiveness b. superior value c. integrated marketing communications d. market logistics e. supply chain management


122. Avon’s venture into selling its cosmetics in JCPenney and Tupperware’s venture in selling its products in Target stores are examples of changes to their traditional distribution systems. Both of these companies revised their overall channel strategy due to the ________. a. presence of a “gap” between the ideal/traditional distribution system and

costs/profit constraints forcing new distribution methodsb. presence of a “gap” between ideal/traditional and the target markets needs

and desires c. desire to open new markets d. desire to lower costs e. desire to increase profits


123. When Kodak coordinates successive stages of production and distribution and receives cooperation from major retailers in connection with displays, shelf space, promotions, and pricing policies due exclusively to Kodak’s “market power” we call this ________. a. conventional marketing channel b. administered VMS c. corporate VMSd. contractual VMS e. none of the above


124. The emergence of rental car counters, hair salons, banks, and dry cleaners found in such stores as Wal-Mart, Target, grocery retailers, and others is an example of ________ marketing systems. a. horizontalb. verticalc. multichannel d. integratede. none of the above


437


125. As a recent college graduate, you dream of opening up your own business. You have explored franchising. In fact, one of the company’s that you are strongly interested in is a service organization (fast food) that has a whole system designed to bring its service efficiently to consumers. This is an example of ________. a. manufacturer-sponsored retailer franchise b. wholesaler-sponsored voluntary chainsc. retailer cooperatives d. national retailer e. service-firms-sponsored retailer franchise


126. In deciding to take your product to market, one of the first considerations has to be your channel or channels of distribution. If you decide to sell your product a) in exclusive franchisee operations and b) to mass distributors/retailers concurrently, to the same target market, this may lead to a ________. a.. rapid market penetration b. good business marketing c. vertical channel conflict d. horizontal channel conflicte. multichannel conflict


127. A soft drink concentrate producer makes 20 percent margin on its regular soda and 25 percent on its diet version of the same drink. The soft drink bottler’s, however, are required to sell both the regular and diet versions to the retailers at the same price. This is a classic example of ________.a. unclear roles and rights b. goal incompatibilityc. channel coordinationd. channel conflict e. direct conflict

Answer: d Page: 491 Level of difficulty: Hard

128. As a marketing manager, for a national company that uses brokers as your field sales agents, you suggest to your senior management the creation of an “advisory team” composed of retailers, food brokers, sales managers, and inside marketing and management personnel. Your objective is to win support of the leaders of another organization by including them in planning discussions. You are advocating what type of conflict management resolution? a. Arbitration b. Mediation c. Co-optationd. Diplomacye. None of the above


438


129. Harley-Davidson’s entry into the Web for their parts and accessory business, called for them to “protect” their retailers by referring customers to the local Harley-Davidson dealer. One additional strategy available to firms wishing to protect their channels of distribution yet capitalize on Internet sales is ________. a. offer fewer services to Web customers than retail customers b. offer online partners higher commission ratesc. offer offline partners higher commission ratesd. sell identical brands/products e. do not allow customers to order through/off of the Web site

Answer: c Pages: 495–496 Level of difficulty: Hard

130. The text defines eBay, who is a third party that creates markets by linking buyers and sellers a ________.a. market makerb. infomediariesc. customer communitiesd. supplier e. none of the above


Short Answer

131. Define the term “marketing channels.”

Suggested Answer: Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption. Page: 468 Level of difficulty: Easy

132. Why is a marketing channel system so important to the manufacturer?

Suggested Answer: Channel members collectively earn margins that account for 30–50 percent of the ultimate selling price. Marketing channels also represent a substantial opportunity cost. One of the chief role of marketing channels is to convert potential buyers into profitable orders. Page: 468 Level of difficulty: Hard

133. The ability by the consumer to access information via the Internet, conduct business transactions either by phone, Internet, or in person is an example of a company using what type of marketing channels?

Suggested Answer: This is an example of a firm using a hybrid channel to get its products to the “go-to-market.” Page: 469 Level of difficulty: Medium

439


134. When you deliver the products to the customer, exchange title of the goods, or even conduct a sales promotion, you are conducting a forward flow of activity through the channel. Explain the elements for a backward flow from customers to the company.

Suggested Answer: A backward flow consists of ordering and payments. Page: 472 Level of difficulty: Medium

135. In setting up your distribution channel, you note that you must account for the physical transfer of the product from your location to the consumer and must receive payment for the goods sold. These are part of the channel functions. All channel functions must be performed and have three things in common. Please list the three things that all functions have in common.

Suggested Answer: All channel functions have three things in common: (1) they use up scarce resources, (2) they can often be performed better through specialization, and (3) they can be shifted among channel members. Page: 473 Level of difficulty: Easy

136. Your company has decided to use a distribution channel that consists of a wholesaler, a jobber, and a retailer to reach your final consumer or user of your product. How many channel levels are involved in the distribution of your product to the final user?

Suggested Answer: This is a three-level distribution channel. Page: 474 Level of difficulty: Easy

137. When we talk about manufacturers’ redemption centers, community groups, trash-collection specialists, recycling centers, and central-processing warehouses, we are talking about what kind of distribution channels?

Suggested Answer: In these cases, we are talking about a reverse-flow channel where the product or waste products move backwards and are important in recycling products for reuse. Page: 475 Level of difficulty: Medium

138. The ability of a shopper of laundry detergents to visit a grocery retailer and see a wide variety of brands, sizes, and units for purchase is an example of what elements of the channel service output?

Suggested Answer: This is an example of the product variety and lot sizes channel service outputs.

Page: 476 Level of difficulty: Medium

440


139. As the “channel manager” for your firm, you have been asked by senior managers to identify new distribution channels for the launch of a new product. Your presentation describes a channel alternative as having three sets of elements. What are the three elements that would be contained in your presentation?

Suggested Answer: The three elements that a channel alternative possesses are: (1) the types of available business intermediaries; (2) the number of intermediaries needed; and (3) the terms and responsibilities of each channel member. Page: 477 Level of difficulty: Hard

140. A leading manufacturer of watches maintains a set of very exclusive networks of retailers (exclusive distribution) that are authorized to sell its watches. This exclusivity ensures that the company can control the service level, distribution, and outputs offered by the retail stores doing business with them. Recently, however, there has been pressure on the company (by Wall Street investors) to expand its products to more and more retailers (intensive distribution) in order to increase sales. What are some of the dangers that the company might encounter when moving from one form of distribution to another?

Suggested Answer: The danger of moving from exclusive distribution to either selective or intensive distribution may help in the short term, but often hurts long-term performance. Intensive distribution increases product and service availability but may also result in retailers competing aggressively. If price wars ensue, retailer profitability may also decline, potentially dampening retailer interest in supporting the product and it may also harm brand equity. Page: 480 Level of difficulty: Hard

141. List the main elements in the “trade-relations mix” between producers andchannel members.

Suggested Answer: These are: price policies, conditions of sale, distributors’ territorial rights, and manual services and responsibilities to be performed by each party. Page: 481 Level of difficulty: Easy

142. You own a franchise (one location) of a national chain of quick luncheon meals. The corporate office (the franchisor) is conducting a nation-wide marketing campaign introducing a $5.00 value meal option. This $5.00 value meal option severely cuts into you operating margins. Numerous complaints to the corporate office have resulted in the corporate office taking the position that “the franchisees need to be competitive and this $5.00 meal is competitive.” You disagree noting that even with an increase in store traffic, the reduction in revenue and margin produced by this value menu, will result in a net loss for your firm. What type of channel conflict is evident here?

441


Suggested Answer: This can be seen as a conflict or a difference in perception. The corporate office (franchisor) sees the $5.00 meal as a

competitive response, while the franchisee sees it as a “loss leader.”Page: 482 Level of difficulty: Medium

143. As the channel manager at a consumer products firm, you develop a channel incentive program in which channel members receive an extra 2 percent discount on all purchases when the channel members agree to pass half of this discount along to their customers in terms of a price decline. This is an example of what type of channel power.

Suggested Answer: This is an example of reward power. Pages: 484 Level of difficulty: Medium

144. “Stand alone” fax machines are now entering the later stages of their life cycle. As a result, the number of channels used by your firm, and the number of channel intermediaries’ needs to be re-evaluated. What other considerations would require a re-evaluation of channel arrangements?

Suggested Answer: Other considerations would include the distribution channel is not working as planned; consumer buying patterns change, the market expands, new competition arises, and innovative distribution channels emerge. Page: 485 Level of difficulty: Hard

145. When you purchase a Subway franchise, the corporate office delivers to you an entire system designed to bring the services efficiently to the consumer. This is an example of what type of contractual VMS?

Suggested Answer: This is the new system called service-firm-sponsored retailer franchise. An alternative acceptable answer is franchising. Page: 488 Level of difficulty: Medium

146. When independent operators such as optometrists or nail and hair salons locate in the front part of selected retail superstores, this is an example of what type of marketing system?

Suggested Answer: This is an example of a horizontal marketing systemPage: 488 Level of difficulty: Medium

147. A textbook manufacturer uses a direct sales force to reach the college market, a telemarketing division to reach small independent bookstore owners, and rack jobbers to reach retail outlets from drugstores, supermarkets, hotels and motels, and convenience stores. This is an example of what type of marketing systems?

442


Suggested Answer: This is an example of a multichannel marketing system. Page: 489 Level of difficulty: Medium

148. When one Pizza Hut franchisee noticed that, his counterpart in the south part of town was using “non-approved” Pizza Hut ingredients in its pizzas he complained to the franchise office. This is an example of what type of channel conflict?

Suggested Answer: This is an example of horizontal channel conflict. Page: 491 Level of difficulty: Hard

149. In setting up your company’s channel of distribution, you arranged for the company’s products to be carried by a select set of outlets, and required that these outlets not carry competitive products. What are the benefits to the company and to the distributor in entering into such an exclusive distribution and exclusive dealing arrangement?

Suggested Answer: The seller obtains more loyal and dependable outlets and the dealers obtain a steady source of supply of special products and stronger seller support. Page: 493 Level of difficulty: Medium

150. When surfing a particular manufacturer’s Web site you are able to find out costs, colors, styles, sizes, and availability. When deciding to purchase the product, the Web site directs you to the manufacturer’s retail store location closest to your home. In fact, there is no option for you to order your selection online—the site continues to direct you to the nearest retail store location. You can only order the product once you have visited the retailer’s Web site. This is an example of one type of strategy for a manufacturer using both the Web and in continuing to support its channel partners. What are the other two strategies available to manufacturers, who want to use the power of the Internet but at the same time, continue to support its channels?

Suggested Answer: A manufacturer can offer different brands or products either at retail or available only through the Internet; a manufacturer can offer the offline partners higher commissions to cushion the negative impact of online sales.Page: 495 Level of difficulty: Medium

443

Documents

Marketing Management - 12th Edition - Kotler/Keller€¦ · Web viewE-marketing describes company efforts to inform buyers, communicate, promote, and sell its products and services