Marketing Defined, Explained, Applied, 2e (Levens)

Chapter 14 Supply Chain and Distribution Strategies

1) Which of the following is defined as the process of delivering products and

services to customers?
A) logistics
B) channel management
C) distribution
D) supply chain management
E) transportation management
Answer: C

2) Producers benefit from using intermediaries because they ________.

A) offer greater efficiency in making goods available to target markets
B) bring a fresh point of view to strategy development
C) eliminate risk
D) are generally backlogged with orders
E) refuse to store products for longer than a few days
Answer: A

3) Which of the following is the term for resellers, brokers, and facilitators that
improve the effectiveness of a marketing channel?
A) third-party logistics providers
B) channel leaders
C) channel intermediaries
D) logistics managers
E) consignees
Answer: C

4) Offering credit to buyers and gathering information are both examples of ________
functions provided by channel intermediaries.
A) communication
B) marketing
C) exchange
D) facilitating
E) physical
Answer: D

5) Breaking bulk and creating assortments are both examples of ________ functions
provided by channel intermediaries.
A) communication
B) marketing
C) exchange
D) facilitating
E) physical
Answer: E

6) Which of the following is NOT a typical marketing channel intermediary?

A) wholesaler
B) retailer
C) facilitator
D) government agency
E) agent
Answer: D

7) ________ are intermediaries that facilitate the exchange of products but do not take
title to anything they sell.
A) Wholesalers
B) Retailers
C) Independent intermediaries
D) Merchants
E) Agents
Answer: E

8) An intermediary who ________ has purchased the goods being handled.

A) breaks bulk
B) takes title
C) creates assortments
D) takes consignments
E) selectively distributes
Answer: B

9) Which of the following should be the first step in designing a channel strategy?
A) identifying channel objectives
B) understanding the desires of the target customer
C) analyzing channel alternatives
D) evaluating intermediaries
E) exploring international opportunities
Answer: B

10) In a(n) ________ channel, the same member both produces and distributes a
product or service.
A) tiered
B) direct
C) horizontal
D) vertical
E) exclusive
Answer: B

11) To a producer of goods, a greater number of channel levels means ________ and
greater channel complexity.
A) less distance between producer and end consumer
B) less control over the distribution process
C) fewer potential channel conflicts
D) higher taxes
E) fewer channel partners
Answer: B

12) At minimum, a channel of distribution consists of a producer and a(n) ________.

A) wholesaler
B) agent
C) broker
D) intermediary
E) customer
Answer: E

13) Which of the following is an example of a complete business-to-business

channel?
A) producer to retailer to consumer
B) producer to wholesaler to retailer to consumer
C) producer to agent
D) producer to facilitator
E) producer to dealer to customer
Answer: E

14) Which of the following is in place when a manufacturer makes use of more than
one type of channel?
A) multichannel distribution system
B) intermediation
C) third-party logistics
D) supply chain management
E) vertical marketing system
Answer: A

15) When marketers determine the distribution intensity for a product, they are
determining the ________ of a channel level.
A) width
B) length
C) logistics
D) assortment
E) mode
Answer: A

16) When determining the distribution intensity, three strategies are available to
marketers: intensive, exclusive, and ________ distribution.
A) multichannel
B) selective
C) international
D) direct
E) extensive
Answer: B

17) Sometimes a producer of luxury products chooses only one or a few dealers in a
territory to distribute its products in order to maintain a sense of prestige for the
products. Generally these dealers are given a right to ________ distribution.
A) exclusive
B) selective
C) intensive
D) administered
E) corporate
Answer: A

18) Which type of distribution is used when the producer wants more than one, but
fewer than all, of the intermediaries who are willing to carry its products?
A) exclusive
B) selective
C) intensive
D) administered
E) corporate
Answer: B

19) A selective distribution strategy is most suitable for which consumer product
category?
A) convenience products
B) unsought goods
C) shopping products
D) luxury products
E) materials and supplies
Answer: C

20) An intensive distribution strategy is most suitable for which consumer product
category?
A) convenience products
B) unsought goods
C) shopping products
D) luxury products
E) materials and supplies
Answer: A

21) A conventional channel consists of one or more ________ producers, wholesalers,

and retailers.
A) product-related
B) independent
C) contract
D) estranged
E) merchant
Answer: B

22) An advantage of a vertical marketing system (VMS) in comparison to a

conventional channel organization is that it acts as a(n) ________ system.
A) unified
B) more creative
C) profit-driven
D) customer-driven
E) independent
Answer: A

23) In a ________ channel organization, two or more companies at one level join
together to form an alliance.
A) franchise
B) horizontal
C) VMS
D) multichannel
E) conventional
Answer: B

24) ________ conflict occurs between different levels of the same channel, while
________ conflict occurs among firms at the same level of the channel.
A) Horizontal; vertical
B) Vertical; horizontal
C) Contractual; corporate
D) Corporate; franchise
E) Wholesaler; retailer
Answer: B

25) Multichannel conflict refers to conflicts between ________.

A) multiple channel types
B) channel members at different levels
C) independent channel members at the same level
D) consumer and business channels
E) outbound and inbound channels
Answer: A

26) Which of the following is another name for the channel leader?
A) materials expert
B) logistics manager
C) consigner
D) channel captain
E) logistics leader
Answer: D

27) ________ is the coordination of all activities related to the transportation or

delivery of products and services that occur within the boundaries of a single business
or organization.
A) Third-party logistics
B) Logistics
C) Channel management
D) Supply chain management
E) Transportation management
Answer: B

28) Marketing logistics involves getting the right product to the right customer in the
right place at the right time at the right price. Which of the following is NOT included
in this process?
A) planning the physical flow of goods and services
B) implementing the plan for the flow of goods and services
C) controlling the physical flow of goods, services, and information
D) gathering customer's ideas for new products
E) A and C
Answer: D
29) ________ is the coordination of all internal and external activities that affect a
company's distribution process.
A) Third-party logistics
B) Logistics
C) Channel management
D) Supply chain management
E) Transportation management
Answer: D

30) ________ broadens the logistics concept to include all organizations, both inside
and outside of a firm, that affect the distribution process.
A) Reverse logistics
B) Supply chain management
C) A vertical marketing system (VMS)
D) Just-in-time management
E) Physical distribution
Answer: B

31) Marketing logistics involves which of the following flows of products and
information?
A) outbound and inbound only
B) outbound, inbound, and reverse
C) inbound and reverse only
D) outbound and reverse only
E) outbound only
Answer: B

32) ________ logistics controls the movement of products from points of production
to consumers.
A) Inbound
B) Reverse
C) Outbound
D) Vertical
E) Horizontal
Answer: C

33) ________ logistics concerns the methods consumers use to send products to a
producer for return or repair.
A) Inbound
B) Reverse
C) Outbound
D) Vertical
E) Horizontal
Answer: B

34) Which of the following is NOT an area of responsibility for a logistics manager?
A) information
B) storage location
C) marketing
D) inventory
E) production
Answer: C

35) Instead of handling its logistics systems internally, a firm could hire a(n)
________ company to manage all or part of its distribution network.
A) just-in-time
B) RFID
C) SKU
D) TMS
E) 3PL
Answer: E

36) To reduce inventory management costs, many companies use a system called
________, which involves having goods delivered exactly when they are needed.
A) reduction-inventory management
B) just-in-time inventory management
C) limited inventory logistics
D) supply chain management
E) economic order quantity
Answer: B

37) A producer that minimizes possession time would be most likely to expect which
of the following benefits?
A) better information flows among channel members
B) more easily accessible storage locations
C) greater production capability
D) reduced horizontal conflict
E) reduced vertical conflict
Answer: C

38) Physical distribution focuses on ________ logistics.

A) inbound
B) horizontal
C) vertical
D) outbound
E) reverse
Answer: D

39) ________ refers to the storage of goods awaiting transport or shipping.

A) Produce
B) Inventory
C) Distribution
D) Bulk
E) Supply
Answer: B

40) Of the three parties involved in the distribution process, ________ are responsible
for receiving the distributed goods.
A) shippers
B) brokers
C) agents
D) carriers
E) consignees
Answer: E

41) Of the three parties involved in the distribution process, ________ own the goods
that are being distributed.
A) shippers
B) brokers
C) agents
D) carriers
E) consignees
Answer: A

42) Of the three parties involved in the distribution process, ________ are responsible
for physically transporting the goods.
A) shippers
B) brokers
C) agents
D) carriers
E) consignees
Answer: D

43) The most widely used form of transport is ________.

A) water
B) air
C) truck
D) pipeline
E) rail
Answer: C

44) Which of the following transportation modes has the highest cost?
A) water
B) truck
C) air
D) pipeline
E) rail
Answer: C

45) A ________ is a physical facility used primarily for the storage of goods held in
anticipation of sale or transfer within the marketing channel.
A) stock-keeping unit
B) wholesaler
C) retail outlet
D) warehouse
E) showroom
Answer: D

46) Warehouses reduce large product shipments into smaller ones more suitable for
individual retailers. This process is called ________.
A) creating assortments
B) breaking bulk
C) third-party logistics
D) order processing
E) inventory control
Answer: B

47) A warehouse serves the function of ________ when it provides a variety of

products in one location.
A) creating assortments
B) just in time processing
C) third-party logistics
D) order processing
E) inventory control
Answer: A

48) Another name for a large warehouse is a ________.

A) third-party logistics company
B) cross-dock
C) transportation management system
D) distribution center
E) stock-keeping unit
Answer: D

49) SKU numbers and bar codes are both used to ________.
A) identify retail price
B) identify materials and components
C) monitor inventory
D) break bulk
E) identify end retailers
Answer: C

50) Through the use of ________ tags, a company can use a computer that receives
information from an electronic chip to locate exactly where a product is from
production to shipment.
A) RFID
B) UPC
C) VMS
D) IT
E) 3PL
Answer: A

51) Steve's Physco Skates sells its products to Walmart, which then sells them to the
consumer. This is an example of a(n) ________.
A) direct marketing channel
B) zero-level channel
C) indirect marketing channel
D) horizontal channel
E) vertical marketing system
Answer: C

52) Which of the following is the best example of a direct channel?

A) J&L Manufacturing Company sells drapery hardware to The Home Depot's Design
Center, and the Design Center then sells it to consumers.
B) Family Dollar Store sells modeling clay to school-age children.
C) A wholesaler sells candy to convenience stores that then sell it to store patrons.
D) Farmer Mintz sells corn to the Hughes household, who will eat it for supper.
E) A farmer in Colombia sells flowers to an international broker, who makes sure the
flowers reach consumers in the United States.
Answer: D

53) Chewing gum is stocked in many outlets in the same market or community; in
fact, it is placed in as many outlets as possible. This is an example of ________
distribution.
A) exclusive
B) selective
C) multichannel
D) intensive
E) vertical
Answer: D

54) Which product will most likely be exclusively distributed?

A) BMW cars
B) Levi's blue jeans
C) Bazooka bubble gum
D) Prairie Farms yogurt
E) Coca-Cola
Answer: A

55) Which of the following is an example of a multichannel distribution system?

A) Walmart locating to several countries
B) JC Penney's catalog and retail store sales
C) Avon's door-to-door distribution
D) Starbuck's location inside of book stores
E) a hotel providing guest privileges at a health spa across the street
Answer: B

56) When two Taco Bell restaurants have a disagreement over who should be able to
sell in quantity at a discount to the local high school band, they are in a ________
conflict.
A) vertical
B) multichannel
C) no-win
D) horizontal
E) functional
Answer: D

57) Staples Office Supply opened an online store that created competition with many
of its dealers. The corporate office created a ________ conflict.
A) multichannel
B) conventional
C) logistics
D) horizontal
E) intermediation
Answer: A

58) Which of the following is an example of horizontal channel conflict?

A) managers of two separate Holiday Inns disagreeing over what constitutes poor
service
B) United Airlines competing with Northwest Airlines for customers
C) disgruntled factory workers complaining about a small pay raise
D) the BMW dealership in Fort Wayne complaining that the BMW dealership in
Indianapolis is situated too close
E) A and D
Answer: E

59) Grayville Rock and Gravel, located in a seaport town, sells rock, gravel, and sand
to local markets. It has just been awarded a contract with a company 500 miles down
the coast. Management should consider switching from truck to ________ transport.
A) water
B) rail
C) pipeline
D) air
E) reverse
Answer: A

60) Jewels for the Rich and Famous sells very exclusive jewelry with a minimum
price of $25,000 to customers around the world. Speed of delivery to distant markets
is a must. Management should consider using ________ as its main carrier.
A) rail
B) air
C) trucks
D) pipelines
E) water
Answer: B

61) Burt can visit his local hardware store and buy one 4-inch paint brush and not the
case of 24 brushes that the retailer had to buy. This is an example of how the channel
of distribution facilitates ________.
A) assortment creation
B) risk taking
C) breaking bulk
D) relationship management
E) logistics
Answer: C

62) Nita can visit her local supermarket and buy a dozen roses, a gallon of milk, two
birthday cards, a bag of cat litter, and a pan for roasting a turkey. This illustrates how
channels of distribution benefit consumers by ________.
A) creating atmospherics
B) creating assortments
C) directing logistics
D) managing knowledge
E) managing relationships

Refer to the scenario below to answer the following questions.

Miller Meat Company contracts with several Midwestern farmers to raise beef
and pork for its meat processing center. To guarantee freshness, Miller Meat
Company relies on a vast distribution network. For delivery to local grocers in
Indiana, Miller Meat uses its own fleet of refrigerated trucks; delivery to these Indiana
grocers constitutes 65 percent of Miller Meat's business. For deliveries in Illinois,
Wisconsin, and points directly west of the Mississippi River, Miller Meat Company
contracts with a refrigerated fleet that specializes in expediting smaller shipments. For
faster delivery during peak times, Miller Meat Company often uses its own trucks to
deliver to the expedited fleet's consolidation point from its distribution warehouse in
Indiana. During the holiday season, however, several specialty distributors contract
with Miller Meat Company to package specialty meats in gift boxes, then ship them
directly to the recipients. For these specialty shipments within Indiana, Illinois, and
Wisconsin, Miller uses its normal delivery mode. For all other specialty shipments,
Miller ships from its distribution warehouse via air, then contracts with expedited
carriers in various cities to deliver to the recipients.

63) Which of the following would be involved in Miller Meat Company's inbound
logistics management?
A) local grocers in Indiana who sell the company's products
B) Midwestern farmers who raise beef and pork for the meat processing center
C) the refrigerated fleet that expedites small shipments
D) air carriers that take Miller's specialty shipments
E) recipients of Miller's gift boxes
Answer: B

64) Management at a chain of Indiana grocery stores with a long history of purchasing
products from Miller Meat is unhappy with the timing of deliveries. In fact, the
grocery store's management is considering switching to another meat supplier who
will delivery more frequently. This is an example of a(n) ________ conflict.
A) independent channel
B) vertical
C) horizontal
D) intermodal
E) conventional
Answer: B

65) In using air transportation and then expedited truck carriers to deliver specialty
items to customers outside of a designated delivery range, Miller Meats is using
________.
A) all of its supply chain
B) a direct channel
C) indirect marketing
D) intermodal distribution
E) a vertical marketing system
Answer: D

66) A marketing channel can also be referred to as a channel of distribution.

Answer: TRUE

67) Unlike facilitators, agents do not take title to products.

Answer: FALSE

68) In general, approximately 30% to 50% of the final selling price of a product can
be attributed to distribution costs.
Answer: TRUE

69) Intensive distribution seeks many outlets in a market, while selective distribution
seeks only one outlet in a given market area.
Answer: FALSE

70) When customers prefer a wide assortment of products, it makes sense to select a
longer channel structure.
Answer: TRUE

71) Conventional and horizontal channels do not have channel leaders.

Answer: FALSE

72) A channel captain can motivate channel members through financial incentives.
Answer: TRUE

73) Logistics involves the coordination of all organizations that affect a producer's
distribution process, while supply chain management involves only the coordination
of inbound flow of products and services to a producer.
Answer: FALSE

74) Despite storage and maintenance costs, most companies find it profitable to hold
inventory for long periods of time.
Answer: FALSE

75) Freight distribution is also known as intermodal distribution.

Answer: FALSE

76) Liquids such as oil and natural gas can be transported through pipelines.
Answer: TRUE

77) A transportation management system can be used to automate the shipping

process and to make recommendations on carrier selection.
Answer: TRUE

78) A major role played by intermediaries is to buy large quantities of products from
many producers and break them down into the smaller quantities and broader
assortments wanted by consumers.
Answer: TRUE

79) A Universal Product Code (UPC) is a retail bar code that can be used to monitor
inventory.
Answer: TRUE

80) Goods that are cross-docked are warehoused, but the warehouse does not take title
to the goods.
Answer: FALSE

81) Liz owns and operates a small business making special occasion candies and
chocolates. She sells the candies and chocolates through a Web site and contracts with
UPS to deliver her products. Liz's business is an example of a direct marketing
channel.
Answer: FALSE

82) When Sherwin Williams Paint Company has single ownership of integrated,
successive stages of production and distribution, it has created a horizontal channel.
Answer: FALSE

83) Always Fresh Produce Company has a route selling to more than 100 groceries,
schools, and restaurants at wholesale prices. Last week, the owners opened up a walk-
in discounted consumer produce outlet. Always is now using a multichannel
distribution system.
Answer: TRUE