Marketing Channels Delivering Customer Value (Part 2)

33) The number of products supplied indicates the length of a channel. Answer: FALSE 34) In a direct marketing channel, the producer sells directly to the intermediaries, who in turn sell directly to the customers. Answer: FALSE 35) Provide an example of a company that has used an imaginative distribution system to gain a competitive advantage. Answer: Enterprise Rent-A-Car revolutionized the car-rental business by setting up off-airport rental offices. Apple turned the retail music business on its head by selling music for the iPod via the Internet on iTunes. And Amazon.com forever changed the face of retailing and became the Walmart of the Internet by selling anything and everything without using physical stores. Student answers will vary. 36) Why is the term value delivery network a more relevant expression to use than the terms supply chain or demand chain? Answer: The term supply chain may be too limited, because it takes a make-and-sell view of the business. It suggests that raw materials, productive inputs, and factory capacity should serve as the starting point for market planning. The term demand chain is better because it suggests a sense-and-respond view of the market. Under this view, planning starts by identifying the needs of target customers, to which the company responds by organizing a chain of resources and activities with the goal of creating customer value. However, even a demand chain view of a business may be too limited because it takes a step-by-step, linear view of purchase-productionconsumption activities. Most large companies today are engaged in building and managing a complex, continuously evolving value delivery network. A value delivery network is made up of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system. 37) How do intermediaries add value to a marketing system? Answer: Intermediaries reduce the amount of work that must be done by both producers and consumers. They transform the assortment of products made by producers into the assortment wanted by consumers. They buy large quantities from many producers and break them down into the smaller quantities and broader assortments wanted by consumers. Intermediaries help to match supply and demand. Intermediaries add value by bridging the major time, place, and possession gaps that separate goods and services from those who would use them. 38) What are the key functions that members of the marketing channel perform? Answer: Members of the marketing channel help to complete transactions by gathering and distributing information, developing and spreading promotions, contacting prospective buyers, matching and shaping the offer to the buyer's needs, and negotiating price and other terms. Others help to fulfill the completed transactions through physical distribution, financing, and risk taking. 39) ________ are complex behavioral systems in which people and companies interact to accomplish individual, company, and channel goals. A) Customer relationship management systems B) Distribution channels C) Partner relationship systems D) Consumer bases E) Buying centers Answer: B 40) Which of the following does NOT apply to channel systems? A) Some channel systems consist of only informal interactions among loosely organized firms. B) Channel systems do not stand still; they evolve. C) Some channel systems are formal interactions guided by strong organizational structures. D) Intermediaries play interchangeable roles in the system. E) Different types of intermediaries develop and emerge. Answer: D 41) Which of the following is true of channel members? A) They act independent of each other. B) They play specialized roles in the channel. C) They are not accountable to other channel members. D) They play generalized and interchangeable roles in the distribution process. E) Their competence and cooperation don't affect the company's image or profits. Answer: B 42) Conflict that occurs among firms at the same level of the marketing channel is known as ________ conflict. A) multitiered B) horizontal C) vertical D) prolonged E) financial Answer: B 43) Conflict that occurs between different levels of the same marketing channel is known as ________ conflict. A) horizontal B) vertical C) multitiered D) equilateral E) communal Answer: B 44) Managers at the Imperial Hotel-Chicago complained that the chain's overall image was hurt because Imperial Hotel-Dallas was overcharging guests and providing poor service. The Imperial Hotel was experiencing ________ conflict. A) equilateral B) vertical C) multitiered D) communal E) horizontal Answer: E 45) The management of two Panizza restaurants has an ongoing disagreement over the discount rate given to students from the local high school. This is an example of ________ conflict. A) intensive B) selective C) exclusive D) horizontal E) vertical Answer: D 46) When KFC came into conflict with its franchisees over the brand's Unthink KFC repositioning, which emphasized grilled chicken over its traditional Kentucky fried chicken, KFC experienced ________ conflict. A) equilateral B) horizontal C) multitiered D) communal E) vertical Answer: E 47) Conflict in the channel can be healthy because ________. A) it can disrupt channel effectiveness B) normal give-and-take simply is normal C) the channel could become passive and non-innovative D) it can cause harm to channel relationships E) the respective rights of the channel partners take priority Answer: C 48) A(n) ________ consists of one or more independent producers, wholesalers, and retailers, each seeking to maximize its own profits, sometimes even at the expense of the system as a whole. A) multitiered supply chain B) conventional distribution channel C) intrinsic market matrix D) resource bank E) product platform Answer: B 49) Which of the following is true of conventional distribution channels? A) Channel members have complete control over each other. B) Channel members seek to maximize their own profits. C) Channel conflict is governed by formal mechanisms. D) Channel members are assigned roles according to a clearly defined framework. E) Channel members work exclusively for the good of the organization. Answer: B 50) A(n) ________ marketing system consists of producers, wholesalers, and retailers acting as a unified system. A) horizontal B) communal C) multitiered D) vertical E) equilateral Answer: D 51) Which of the following is true of vertical marketing systems? A) Producers, wholesalers, and retailers act as a unified system. B) Channel members have no control over each other. C) Channel conflict is governed by informal mechanisms. D) The system is dominated by the consumer. E) Channel members work independently with no cooperation from other members. Answer: A 52) Which of the following is a major type of vertical marketing system? A) corporate B) conventional C) multilevel D) intrinsic E) extrinsic Answer: A 53) A ________ VMS integrates successive stages of production and distribution under single ownership. A) contractual B) contingency C) corporate D) conventional E) communal Answer: C 54) A ________ VMS consists of independent firms at different levels of production and distribution who join together through formal agreements to obtain more economies or sales impact than each could achieve alone. A) corporate B) contingency C) contractual D) communal E) conventional Answer: C 55) The ________ organization is the most common type of contractual relationship. A) franchise B) horizontal C) conventional D) multi-national E) entrepreneurial Answer: A 56) Ford and its network of independent franchised dealers is an example of a ________. A) manufacturer-sponsored retailer franchise system B) manufacturer-sponsored wholesaler franchise system C) service-firm-sponsored retailer franchise system D) service-firm-sponsored equity strategic alliance E) manufacturer-and-service-sponsored joint venture Answer: A 57) Fire Up makes fireproof clothing material and it licenses select stores around the world to use its material to make finished products with the Fire Up logo. Which of the following types of franchising is evident here? A) manufacturer-sponsored retailer franchise system B) manufacturer-sponsored wholesaler franchise system C) service-firm-sponsored retailer franchise system D) service-firm-sponsored equity strategic alliance E) manufacturer-and-service-sponsored joint venture Answer: B 58) In a(n) ________, leadership is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members. A) horizontal marketing system B) administered VMS C) corporate VMS D) contractual VMS E) conventional VMS Answer: B 59) ________ VMS is a vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties. A) Contingent B) Aligned C) Corporate D) Contractual E) Administered Answer: E 60) In a(n) ________, two or more companies at one level join together to follow a new marketing opportunity. A) administered vertical marketing system B) horizontal marketing system C) corporate vertical marketing system D) hybrid distribution system E) conventional marketing system Answer: B 61) Which of the following is most likely a manufacturer-sponsored retailer franchise system? A) international fast food chains like McDonald's and Pizza Hut B) Starbucks outlets operating within Target stores C) Toyota and its network of independent franchised dealers D) licensed bottlers that bottle and sell soft drinks to retailers E) hotel chains like the Ritz Carlton and Shangri-La Answer: C 62) When McDonald's offers its products inside of a Walmart store, it is using a(n) ________. A) conventional marketing system B) corporate VMS C) contractual VMS D) administered VMS E) horizontal marketing system Answer: E