Marketing Channel Strategy 8th Edition Palmatier Test Bank 1

Marketing Channel Strategy 8th Edition
Palmatier Test Bank
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Marketing Channels, 8e (Palmatier)

Chapter 05 Designing Channel Structures and Strategies
1) Which term means that a brand can be purchased from many possible outlets in a trading
area?
A) intra-brand competition
B) exclusive distribution
C) intensive distribution
D) dual distribution
E) local monopoly
Answer: C
Difficulty: Easy
Objective: LO1
2) Sierra Water, a bottled water brand, is available in every possible outlet in the trading area.
What channel intensity strategy is most likely being used for Sierra Water?
A) saturation
B) monopolistic
C) mass marketing
D) intensive distribution
E) exclusive distribution
Copyright © 2015 Pearson Education, Inc.

Answer: A
Difficulty: Moderate
Objective: LO1
AACSB: Analytical thinking
3) Phoebe’s Purses, a line of designer handbags, can only be purchased at Macy’s. What channel
intensity strategy is most likely being used to sell Phoebe’s Purses?
A) saturation
B) monopolistic
C) niche marketing
D) intensive distribution
E) exclusive distribution
Answer: E
Objective: LO1
4) Sunshine Market is the only vendor in the trading area that sells Sarita’s Salsa brand of hot
sauces and dips. Which term most likely describes the arrangement that Sunshine Market has
with Sarita’s Salsa?
A) saturation
B) local monopoly
C) channel oligopoly
D) selective partnership
E) intensive distributorship
Answer: B
Objective: LO1
5) Which of the following statements about channel intensity is most likely true?
A) The more intensively a manufacturer distributes its brand in a market, the more the
manufacture can influence how channel members perform marketing channel functions.
B) To control channel functions and their performance, the manufacturer needs to refrain from
blanketing or saturating distribution outlets.
C) A channel intensity strategy primarily addresses whether to outsource channel functions or to
engage in vertical integration.
D) Saturation is an extreme version of dual distribution that is rarely employed by manufacturers
due to monopoly concerns.

E) Total saturation of a trading area is a common channel intensity strategy used by
manufacturers.
Answer: B
Difficulty: Difficult
Objective: LO1
6) Which channel intensity strategy is most likely preferred by downstream channel members?
A) exclusive distribution
B) intensive distribution
C) dual distribution
D) zero-based
E) saturation
Answer: A
Objective: LO3
7) In Dallas, Canon printers are sold at both Best Buy and Staples. Newspaper flyers from each
store advertise a current sale price of $149 for the same Canon printer. Customers who purchase
the printer at Best Buy will receive a free printer cartridge, while those who buy the printer from
Staples will receive a free case of paper. Best Buy and Staples are most likely engaged in
________.
A) vertical integration
C) dual distribution competition
D) intra-brand price competition
E) inter-brand price competition
Answer: D
Objective: LO3
8) In the San Francisco market, Kellogg’s Raisin Bran sells for $3.49 per box, and Post Raisin
Bran sells for $3.39 per box. Both Kellogg’s and Post promote their cereals with weekly coupons
in the local newspaper. Kellogg’s and Post are most likely engaged in ________.
A) vertical integration
C) dual distribution competition
D) intra-brand price competition
E) inter-brand price competition
Answer: E

Objective: LO3
9) A downstream channel member appears to carry a weak brand by offering a nominal amount
of stock but encourages prospective customers to purchase another brand. The downstream
channel member is most likely attempting to drop the weak brand through ________.
A) overt substitution
B) discontinuation
C) bait-and-switch
D) covert conversion
E) free riding
Answer: D
Objective: LO3
10) Big Box, an electronics retailer, runs advertisements promoting a Dell laptop but encourages
its salespeople to sell consumers a lesser known computer brand so that Big Box will earn higher
margins. Which term best describes the actions of Big Box?
A) intra-brand pricing
B) overt discontinuation
C) bait-and-switch
D) covert conversion
E) free riding
Answer: C
Objective: LO3
11) What distribution method has been most successful for Royal Canin?
A) distributing products through hypermarkets
B) limiting distribution to pet and garden stores
C) limiting distribution to professional breeders
D) distributing products as convenience goods
E) limiting distribution to pet product e-retailers
Answer: B
Objective: LO4
12) What is the most likely result of channel stuffing?

A) diluted brand equity
B) improved brand image
C) increased channel power
D) closed service gaps
E) unlimited free riding
Answer: A
Objective: LO2
13) A resale price maintenance policy most likely allows a manufacturer to ________.
A) regulate financing options
B) monitor price negotiations
C) utilize price promotions
D) seek category exclusivity
E) set a price floor
Answer: E
Difficulty: Easy
Objective: LO2
14) Which factor is LEAST relevant to a manufacturer when making a channel

intensity/selectivity decision?
A) product category
B) brand strategy
C) product benefits
D) transaction costs
E) opportunity cost
Answer: C
Objective: LO1
15) Which of the following products should most likely be distributed as intensively as
possible?
A) milk
B) blender
C) printer
D) television
E) refrigerator
Answer: A
Objective: LO2

16) Soundz Manufacturing makes and sells home cinema systems. Soundz managers carefully
choose, cultivate, and support specific outlets in each trading area to ensure that Soundz products
are sold through the right retailers rather than through all retailers. Which term best describes the
policy used by Soundz?
A) saturation
B) monopolistic
C) dual distribution
D) selective distribution
E) premium positioning
Answer: D
Objective: LO4
17) What is the most likely reason that a premium positioning approach is difficult for a
manufacturer to accomplish?
A) Consumer demand for luxury products fluctuates.
B) Channel members must match the brand’s ideal image.
C) Buyers of expensive goods require easy product access.
D) Intra-brand competition levels are typically very high.
E) Channel function performance levels are difficult to assess.
Answer: B
Objective: LO4
18) All of the following are factors that harmed the brand equity of Donna Karan EXCEPT
________.
A) using low-end retailers
B) stuffing the channel
C) offering discounts
D) expanding distribution
E) selling specialty items
Answer: E
Objective: LO4
19) A manufacturer that deliberately creates product shortages and uses selective distribution is
most likely relying on a strategy of ________.

A) scarcity
B) complacency
C) free riding
D) bait-and-switch
E) channel stuffing
Answer: A
Difficulty: Easy
Objective: LO
20) What distribution strategy is most likely best for a niche brand?
A) intensive
B) saturated
C) selective
D) pull
E) dual
Answer: C
Difficulty: Easy
Objective: LO4
21) Which of the following most likely occurs when a channel member is the exclusive
distributor for a manufacturer?
A) The channel member gains reward power over the manufacturer.
B) The manufacturer attempts to influence the channel member’s behavior.
C) The manufacturer gains idiosyncratic knowledge about the channel member.
D) The manufacturer allows the channel member to make all marketing decisions.
E) The channel member and the manufacturer form a joint partnership to share profits.
Answer: B
Objective: LO5
22) Carmen’s Department Store is a downstream channel member that has a selective
distribution arrangement with Winston Leather, a manufacturer of shoes and accessories. Which
of the following would Carmen’s LEAST likely receive from Winston Leather?
A) better credit terms
B) more reward power
C) lower wholesale prices
D) more marketing support
E) more promotional materials
Answer: B

Objective: LO5
23) How does a manufacturer encourage a downstream channel member to acquire brand-
specific assets?
A) using intensive distribution
B) increasing service outputs
C) forming a new franchise
D) offering selective distribution
E) obtaining idiosyncratic knowledge
Answer: D
Objective: LO5
24) ________establishes relationship stability between a manufacturer and a downstream

channel member by making it unprofitable for either side to exploit the other.
A) Opportunism
B) Niche branding
C) Reward power
D) Product assortment
E) Mutual dependence
Answer: E
Difficulty: Easy
Objective: LO6
25) Which action by a distributor would most likely increase the distributor’s leverage over a
manufacturer?
A) increasing direct selling efforts
B) selling more than one brand
C) limiting brand assortment
D) increasing display space
E) using pull strategies
Answer: C
Objective: LO6
26) A manufacturer would most likely be reluctant to limit the number of downstream trading
partners in a highly competitive market because of ________.
A) industrial requirements
B) service output needs

C) economies of scale
D) channel strategies
E) opportunity costs
Answer: E
Objective: LO7
27) By limiting the number of trading partners, a manufacturer is most likely able to reduce
transaction costs for all of the following reasons EXCEPT having________.
A) lower travel expenses
B) fewer but larger transactions
C) lower reseller turnover rates
D) fewer but larger sales promotions
E) lower inventory holding costs
Answer: D
Objective: LO8
28) A manufacturer that uses a branded variants strategy is most likely trying to ________.
A) minimize the transaction costs associated with branded service outputs
B) offer downstream channel members near exclusivity of the brand
C) encourage downstream channel members to carry new brands
D) reduce turnover among downstream channel members
E) alter brand equity among key end users
Answer: B
Objective: LO8
29) Which of the following is NOT a method used by manufacturers to distribute more
intensively while retaining some benefits of selective distribution?
A) expanding channels
B) building brand equity
C) introducing branded variants
D) setting up separate service-only facilities
E) providing information in conjunction with new products
Answer: A
Objective: LO8
30) Which statement is most likely true about the arrangement between Tupperware and Target?

A) Tupperware parties hosted in Target stores were as successful as private parties.
B) The social atmosphere of Tupperware parties held in private homes helped boost sales.
C) Tupperware increased its dealer network and customer base by hosting parties in Target.
D) The joint partnership between Target and Tupperware failed due to high distribution costs.
E) Tupperware’s party format is rarely successful in societies where women work outside of the
home.
Answer: B
Objective: LO9
31) Gomez Ford maintains a Web site that provides car shoppers with the prices and
specifications of all the cars the dealership has in stock. Car shoppers can also negotiate with
Gomez salespeople via e-mail to get the best deals on cars. By offering customers the ability to
gather information and negotiate online, Gomez Ford has most likely ________.
A) reassured channel partners
B) offered branded variants
C) modified the channel format
D) increased transaction costs
E) engaged in niche marketing
Answer: C
Objective: LO9
32) Which term refers to going to market through both third parties and one’s own distribution
divisions?
A) free riding
B) channel stuffing
C) multi-distribution
D) broadbanding
E) dual distribution
Answer: E
Difficulty: Easy
Objective: LO9
33) Dual channels most likely enable a manufacturer to ________.

A) offer more coverage to downstream channel members
B) shift business from one channel to the other
C) sell more fast moving consumer goods
D) forecast upstream supply needs

E) monitor promotional activities
Answer: B
Objective: LO9
34) Which of the following is most likely exemplified by Sony setting up “boutiques” in upscale
malls for the purpose of attracting female shoppers?
A) demonstration argument
B) piggybacking channels
C) upstream forecasting
D) cherry-picking
E) selectivity
Answer: A
Objective: LO9
35) Company X and Company Y have partnered together so that each firm sells its own
products and those of the partner. Which term best describes the arrangement between Company
X and Company Y?
A) piggybacking
B) mutual franchising
C) intensive distribution
D) exclusive distribution
E) reciprocal piggybacking
Answer: E
Objective: LO9
36) Which of the following is NOT a method for closing a service gap?
A) expanding the level of service outputs provided
B) offering multiple, tiered service output levels
C) retracting the level of service outputs provided
D) outsourcing all service and sales activities
E) altering the list of segments targeted
Answer: D
Objective: LO10
37) Which of the following is a method for closing cost gaps?

A) increasing the intensity of channel coverage
B) forming a piggybacking channel system
C) investing in new distribution technologies
D) engaging in horizontal integration
E) setting managerial boundaries
Answer: C
Objective: LO10
38) In a piggybacking channel, the firm making the product that requires distribution is known
as the ________.
A) partner
B) rider
C) vendor
D) carrier
E) supplier
Answer: B
Difficulty: Easy
Objective: LO9
39) The instability of carrier-rider relationships can most likely be corrected by ________.
A) piggybacking
B) better coverage
C) more reward power
D) premium positioning
E) reciprocal piggybacking
Answer: E
Difficulty: Easy
Objective: LO9
40) Which of the following is most likely a true statement about closing cost and service gaps?
A) Service gaps are a significant concern when the competition has the same service gaps.
B) Cost gaps usually occur when multiple channel functions are performed too inexpensively.
C) Closing gaps caused by managerial and environmental bounds is typically quick and
inexpensive.
D) Cost gaps can be closed by changing the roles of current channel members to improve
efficiency.
E) An oversupply of customer service does not lead to service gaps because no costs are
involved.
Answer: D

Objective: LO10
41) Total saturation is a commonly used strategy because intensive distribution enables a
manufacturer to have significant influence on how channel members perform marketing channel
functions.
Answer: FALSE
Objective: LO1
42) In most cases, downstream channel members prefer exclusive distribution arrangements,
while manufacturers benefit more from intensive distribution.
Answer: TRUE
Difficulty: Easy
Objective: LO3
43) A pull strategy is both common and effective in fast moving consumer goods channels.
Answer: TRUE
Difficulty: Easy
Objective: LO2
44) A service gap can be closed by altering the list of segments targeted or by expanding the
level of service outputs provided.
Answer: TRUE
Difficulty: Easy
Objective: LO10
45) In a carrier-rider relationship, which is typically very stable, each firm sells its own products
and those of the partner.
Answer: FALSE
Difficulty: Easy
Objective: LO9
46) What is a pull strategy and what is its effect on brand equity? What are the advantages and
disadvantages of using a pull strategy?
Answer: A pull strategy increases brand equity. With greater brand equity, consumers demand
that downstream channel members carry the brand, even if they must pay a high wholesale price,
charge a low retail price, and suffer low gross margins. In general, channel members have little
choice but to carry intensively distributed brands with high brand equity. Of course, this strategy
also is extremely costly, in that the manufacturer must invest continually and substantially in

advertising and promotion. It also suffers several limitations. Manufacturers with sought-after
brands often experience an unavoidable temptation to overproduce, and then send downstream
channel members more product than they can sell (“channel stuffing”). As these downstream
members slash prices to move stock, the product disperses into too many places (including grey,
or illegal, channels), making the brand’s positioning unclear.
Objective: LO2
47) Company X, which uses a strategy of intensive distribution, is experiencing lackluster sales
support from downstream channel partners as well as bait-and-switch tactics. Discuss three
options for Company X and describe the advantages and disadvantages of each.
Answer: One option is contractual. The contract between the manufacturer and downstream
channel member might demand certain standards of conduct (e.g., barring bait and switch) and
threaten legal action against offenders. This route is expensive though, and it may alienate other
channel members or generate unfavorable publicity for the brand. Another solution is to invest in
a pull strategy that increases brand equity. Of course, this strategy also is extremely costly, in
that the manufacturer must invest continually and substantially in advertising and promotion and
may also encourage overproduction. In some countries, a third solution is possible: resale price
maintenance (RPM). This policy allows the manufacturer to set a price floor, below which no
channel members may sell the product. Finally, a fourth, widely generally applicable solution for
a manufacturer with low sales support is simply to limit its market coverage by carefully
establishing some degree of distribution selectivity. With this approach, the manufacturer has an
opportunity to target desired channel members, rather than merely settling for those that do not
eliminate themselves through intra-brand competition.
Objective: LO2
48) What is selective distribution? Discuss the conflicts that exist between manufacturers and
downstream channel members regarding channel intensity decisions.
Answer: Selective distribution, or selectivity, is the negotiated and often reciprocal limitations
on the number of trading partners in a market area. It is a purposeful, strategic choice, not to be
confused with an inability to attract channel members to carry the brand. Manufacturers tend to
assume that more coverage is always better. Conflict is therefore inherent, because channel
members prefer the manufacturer to offer less coverage. Downstream channel members prefer to
have multiple brands to offer in a category, but manufacturers prefer the reverse. Manufacturers
prefer downstream channel members to support their brands vigorously and take low margins,
whereas channel members prefer lower costs and higher margins.

Objective: LO1, LO2, LO3
49) What distribution strategies are best for convenience goods, shopping goods, and luxury
goods? Briefly explain the reasons for each strategy.
Answer: For convenience goods, intensive distribution is usually better, because buyers
purchase impulsively or refuse to expend much effort to find a particular brand. For shopping
goods or experience goods, selective distribution is feasible and even desirable. Higher priced
products are usually limited in their distribution availability, and broadening coverage to other
outlets often dilutes the brand’s superior quality positioning.
Objective: LO2, LO4
50) What methods are used to close service gaps and cost gaps?
Answer: There are three main methods to close service gaps: (1) expand or retract the level of
service outputs provided; (2) offer multiple, tiered service output levels to appeal to different
segments; or (3) alter the list of segments targeted. Cost gaps similarly can be managed through
multiple means, including (1) changing the roles of current channel members, (2) investing in
new distribution technologies, or (3) introducing new distribution function specialists to improve
channel functioning.
Objective: LO10

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Marketing Channel Strategy 8th Edition

Palmatier Test Bank

Full download at link:

Solution Manual: https://testbankpack.com/p/solution-manual-for-

Marketing Channels, 8e (Palmatier)

Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education, Inc.

12) What is the most likely result of channel stuffing?

Copyright © 2015 Pearson Education, Inc.

14) Which factor is LEAST relevant to a manufacturer when making a channel

Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education, Inc.

24) ________establishes relationship stability between a manufacturer and a downstream

Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education, Inc.

33) Dual channels most likely enable a manufacturer to ________.

Copyright © 2015 Pearson Education, Inc.

37) Which of the following is a method for closing cost gaps?

Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education, Inc.

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