Designing and Managing Integrated Marketing Channels GENERAL CONCEPT QUESTIONS Multiple Choice 1. Intermediaries who buy, take title to, and resell the merchandise are called ________. 2. Companies that search for customers and may negotiate on the producerâ€™s behalf but do not take title to the goods are called ________. 3. Transportation companies, independent warehouses, banks, and advertising agencies that assist in the distribution process but neither take title to goods nor negotiate purchases or sales are called ________. 4. One of the chief roles of marketing channels is to convert potential buyers into profitable ________. 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. 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. 7. A ________ strategy creates consumer demand through promotions and advertising as a way to induce intermediaries to carry the product. 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 off-line purchases d. Offering gift certificates that can be redeemed online and off-line e. None of the above are characteristics of channel integration 9. Generally speaking, buyers fall into four categories. Which of the following is NOT one of these categories? a. Habitual shoppers b. High-value deal seekers c. Low-involvement shoppers d. Variety-loving shoppers e. High-involvement shoppers 10. Shoppers who primarily seek stores that suit people like themselves or members of groups they aspire to join are known as ________. 11. 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 and then design the supply chain backward from that point. This view is called ________. 12. A value network includes a firmâ€™s suppliers and its suppliersâ€™ suppliers, and its immediate customers and their end ________. 13. Through their contacts, experience, specialization, and scale of operation, intermediaries help firms _______ in making goods widely available. 14. A marketing channel overcomes the time, place, and ________ gaps that separate goods and services from those who need or want them. 15. Physical functions, title functions, and promotional functions are example of ________ flow of activity from the company to the customer. 16. 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 scarce 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 17. A ________ channel consists of a manufacturer selling directly to the final customer. 18. Designing a marketing channel system involves analyzing customer needs, ________, identifying major channel alternatives, and evaluating major channel alternatives. 19. 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. â€œEntertainment shopping experienceâ€ c. Spatial convenience d. Waiting and delivery time e. Lot size 20. Channel objectives should be stated in terms of ________ service output levels. 21. A channel alternative is described by three elements: the types of available business intermediaries, the number of intermediaries needed, and the ________. 22. 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. 23. When the producer wants to maintain control over the service level and outputs offered by the resellers, it most likely will use ________ distribution. 24. By granting ________, the producer hopes to obtain more dedicated and knowledgeable selling. 25. With ________, the company does not need to worry about too many outlets; it can gain adequate market coverage with more control and less cost that intensive distribution. 26. Manufacturers are constantly tempted to move from exclusive or selective distribution to more intensive distribution in order to ________. 27. ________ distribution consists of the manufacturer placing his goods and services in as many outlets as possible. 28. The main elements in the â€œtrade-relations mixâ€ are price policies, conditions of sale, ________, and specific services to be performed by each party. 29. Each channel alternative needs to be evaluated against ________, control, and adaptive criteria. 30. 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 ________. 31. After a company has chosen a channel alternative, individual intermediaries must be ________, trained, motivated, and evaluated. 32. It is important for the company to select its channel members carefully because to the customers, the channels _________ the company. 33. ________ can be defined as the ability to alter channel membersâ€™ behavior so that they take actions they would not have taken otherwise. 34. The five types of power available to the producer to elicit cooperation from channel members includes all of the following EXCEPT ________ power. 35. In competitive markets with low entry barriers, the optimal channel structure will inevitably ________ over time. 36. Regarding distribution systems, one of the most difficult decision that a firm must make at some time involves ________ the channel strategy. 37. A conventional marketing channel comprises a(n) ________, wholesaler(s), and retailer(s), each acting in his own self-interest. 38. A(n) ________ comprises the producer, wholesaler(s), and retailers(s) acting as a unified system. 39. A(n) ________ 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. 40. Which of the following is a type of contractual VMS? a. Specialty stores b. Franchise organizations c. Kiosks stores d. Catalog stores e. None of the above 41. When two or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity, it is called a ________. 42. ________ occurs when a single firm uses two or more marketing channels to reach one or more customer segments. 43. By adding more channels, companies can gain three important benefits. First, they can increase their market coverage; second, they can lower channel costs; and third, they can provide ________. 44. ________ is generated when one channel memberâ€™s actions prevent another channel from achieving its goal. 45. ________ involves conflict between members at the same level within the channel. 46. ________ means conflict between different levels within the same channel. 47. ________ exists when the manufacturer has established two or more channels that sell to the same market. 48. ________ occurs when channel members are brought together to advance the goals of the channel, as opposed to their own potentially incompatible goals. 49. Causes of channel conflict include all of the following, EXCEPT________. a. goal incompatibility b. differences in perception c. dependency d. unclear goals and rights e. channel power usage 50. There are several mechanisms for effective channel conflict management. These include the following, EXCEPT ________. a. frequent vendor switching b. superordinate goals c. co-optation d. diplomacy e. mediation 51. ________ 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. 52. ________ means resorting to a neutral third party who is skilled in conciliating the two partiesâ€™ interests. 53. Producers of strong brands sometimes sell them to dealers only if the dealers will take some or all of the rest of the line. This practice is called full-line forcing or ________. 54. ________ describes the use of electronic means and platforms to conduct a companyâ€™s business. 55. ________ means that the company or site offers to transact or facilitate the selling of products or services online. 56. ________ means companies decide to purchase goods, services, and information from various online suppliers. 57. ________ describes company efforts to inform buyers, communicate, promote, and sell its products and services over the Internet. 58. ________ are companies that have launched a Web site without any previous existence as a firm. 59. ________ are existing companies that have added an online site for information and/or e-commerce. 60. For the brick-and-click companies, adding an e-commerce channel creates the threat of ________ from retailers, brokers, agents, and other intermediaries. Essay 101. Explain why the marketing channel system is so important to a firm. 102. Explain the concept of a hybrid channel distribution system. 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 and briefly define these four categories. 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. 105. What are some of the advantages available to producers using intermediaries? 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. 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. 108. Explain the differences between a vertical marketing system (VMS) and a conventional marketing system? 109. The most advanced supply-distributor arrangements for administering VMSs involve distribution programming. Explain the components of distribution programming. 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. APPLICATION QUESTIONS Multiple Choice 111. Your product enjoys high brand loyalty and high involvement in the category. It has perceived differences that consumers recognize between brands and 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? 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? 113. When managing a hybrid channel, the channel manager must ensure that these different channels work seamlessly in the consumerâ€™s opinion. When the consumer can order a productÂ 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 ________. 114. Jenny gathers information from a variety of channels, conducting extensive research on the advantages/disadvantages of the products available. She visits a number of high-priced retailers, asks numerous questions, and tries many of the products. When the time comes to purchase, she always purchases through the lowest-cost channel. Jenny is best described as a ________. 115. Palm, the leading manufacturer of handheld devices, consists of a whole community of suppliers and assemblers of semiconductor components, plastic cases, LCD displays, and accessories; of off-line and online resellers; of 275,000 developers in the Palm Developer Network who have created over 21,000 software programs and 100 hardware add-ons for the Palm operating system for handheld computers and smartphones. Combined, these make up Palmâ€™s ________. 116. A company selling exercise equipment may need to establish three channels of distributionâ€”a sales channel, a delivery channel, and a ________. 117. Tupperware manufactures kitchen goods and has its representatives sell them through home parties. This is an example of a ________. 118. ________ deals between suppliers and retailers, such as Disneyâ€™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. 119. In rolling out your companyâ€™s newest product, you decided to use manufacturersâ€™ representatives as your sales agents. Part of your ________ was to establish territories based upon counties per state. 120. The sales of your product are low compared to your competition. The decision facing you is whether to use a sales agency (brokers, manufacturersâ€™ 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 ________. 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 intermediariesâ€™ needs and construct a channel positioning such that its channel offering is tailored to provide ________ to these retailers. 122. As more women entered the workforce and were unavailable to Avonâ€™s traditional door-to-door system for selling cosmetics, Avon ventured into selling its cosmetics in JCPenney. Avon revised its channel strategy due to ________. 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 Kodakâ€™s size and power , we call this a(n) ________. 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. 125. As a recent college graduate, you dream of opening up your own business. You have explored franchising. In fact, one of the companies 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 ________. 126. A soft-drink concentrate producer makes a 20% margin on its regular soda and 25% on its diet version of the same drink. The soft-drink bottlers, however, are required to sell both the regular and diet versions to the retailers at the same price. This is a classic example of ________. 127. In deciding to take your product to market, one of the first considerations must 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 ________. 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 â€œadvisory teamâ€ 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? 129. The text would define eBay, a third party that creates markets by linking buyers and sellers, as a ________. 130. Harley-Davidsonâ€™s entry into the Web for their parts and accessory business called for them to â€œprotectâ€ 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 ________. Short Answer 131. Define the term â€œmarketing channels.â€ 132. Why is a marketing channel system so important to the manufacturer? 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? 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. 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. List the three things that all functions have in common. 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? 137. When we talk about manufacturersâ€™ redemption centers, community groups, trash-collection specialists, recycling centers, and central processing warehouses, we are talking about what kind of distribution channels? 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? 139. As the â€œchannel managerâ€ 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? 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? 141. List the main elements in the â€œtrade-relations mixâ€ between producers and channel members. 142. As the channel manager at a consumer products firm, you develop a channel incentive program in which channel members receive an extra 2% 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? 143. 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? 144. 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? 145. 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. This is an example of what type of marketing systems? 146. What three important benefits can companies gain by adding more channels? 147. Identify four things that marketers can do to better integrate their online and off-line channels. 148. You own a franchise of a national chain of quick luncheon meals. The corporate office is conducting a nationwide 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 â€œthe franchisees need to be competitive and this $5.00 meal is competitive.â€ You disagree, noting thatÂ 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 store. What type of channel conflict is evident here? 149. When one Pizza Hut franchisee noticed that his counterpart in the south part of town was using â€œnonapprovedâ€ ingredients in its Pizza Hut pizzas, he complained to the franchise office. This is an example of what type of channel conflict? 150. In setting up your companyâ€™s channel of distribution, you arranged for the companyâ€™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?
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