Florida International University

MAR 3023

Chapter 17-Distribution Decisions

True/False Questions

1)Transfer of title is the function of distribution that refers to the legal ownership of goods shifting from the producer to some other entity.

 

 

2. When different members of the distribution system contribute sales, advertising, public relations, and publicity efforts to enhance product movement through the channel, this is referred to as information provision.

 

 

3. In direct channels, intermediaries like distributors, wholesalers, and retailers play a major role in transferring products to consumers and end users.

 

 

4. Intensive distribution is used when end-user customers are unwilling to engage in search; the supplier attempts to have its products as widely distributed as possible and stresses the goal of maximizing the number of outlets.

 

 

5. Examples of goods for which exclusive distribution is sought include fine china and crystal, for which only high-class department stores such as Saks Fifth Avenue and specialty stores such as Tiffany’s may be deemed appropriate.

 

 

6. Exploring forward integration is mentioned in the text as an action used to improve distributor power in the distribution system.

 

 

7. Distribution channel breadth is the number of channel members the firm uses at a particular level.

 

 

8. According to the text, distribution channel breadth concerns the number of distribution entities at a particular level in the distribution system.

 

 

9. Major advantages of telecommuting as a form of direct distribution are lower costs and, when managed from a central location, greater corporate control.

 

 

10. Value-added resellers are a new type of intermediary, building additional software modules on other firms’ platforms and modifying computer hardware for niche markets.

 

 

11. Operational conflicts occur daily due to late shipments, invoice errors, unfulfilled promises, unacceptable product quality, and price and margin disagreements.

 

12. Examples of products for which selective distribution is sought include convenience goods such as soft drinks and chewing gum.

 

 

13. Exclusive distribution is used when the supplier is exceptionally careful in its selection of outlets, believing that the brand equity of the retailer transfers to its products; as a result, relatively few outlets are chosen.

 

 

14. Examples of goods for which intensive distribution is sought include fine china and crystal, for which only high-class department stores such as Saks Fifth Avenue and specialty stores such as Tiffany’s may be deemed appropriate.

 

 

15. The Robinson-Patman Act prohibits suppliers from setting different prices for different buyers, where this would reduce competition.

 Multiple Choice Questions

16. Which of the following represents an old way in the changing view of distribution decisions?

a.) Manufacturer as channel captain

b.) Cooperative models ascendant c.) Delivery speed highly valued d.) Customers impatient

 

17. A(n)                                            comprises a subset of intermediaries that facilitate a supplier firm’s goods and services reaching consumers and/or other end-user customers.

a.) information provision

b.) distribution channel

c.) transfer of title d.) divestment

 

18. All of the following are mentioned in the text as functions of distribution EXCEPT: a.) Promotion

b.) Information provision

c.) Horizontal integration

d.) Physical movement

 

19. Which of the following functions of distribution refers to the legal ownership of the goods shifting from the producer to some other entity?

a.) Transfer of title

b.) Promotion

c.) Information provision d.) Physical movement

 

20. To develop its distribution strategy, the firm must make several critical decisions that include all of the following EXCEPT:

a.) Determining distribution function

b.) Determining the promotion function

c.) Determining distribution channel breadth

d.) Determining the criteria for selecting and evaluating intermediaries

 

21. In                                          , supplier firms manage most of the contact with consumers and end users.

a.) indirect channels b.) horizontal channels

c.) direct channels

d.) parallel channels

 

22. In                                          , intermediaries like the distributors, wholesalers, and retailers play a major role in transferring products to consumers and end users.

a.) indirect channels

b.) direct channels

c.) horizontal channels d.) parallel channels

 

23. Which of the following is NOT a form of direct distribution in business to consumer markets?

a.) Face-to-face direct sales b.) The Internet

c.) Direct marketing

d.) Advertising

 

24. All of the following are characteristic of direct distribution EXCEPT: a.) Small potential customer base

b.) Large quantity sales

c.) Simple end-user purchasing decision

d.) Custom-tailored products

 

25. Which of the following is NOT a characteristic of indirect distribution? a.) Large potential customer base

b.) Stockable items, manufactured in large quantities but sold in small quantities c.) Rapid delivery and service is important

d.) Complex end-user customer purchasing decisions

 

26.                                          is used when end-user customers are unwilling to engage in search; the supplier attempts to have its products as widely distributed as possible and stresses the goal of maximizing the number of outlets.

a.) Intensive distribution

b.) Selective distribution c.) Exclusive distribution d.) Horizontal distribution

 

27. Examples of products for which                                                  is sought include convenience goods such as soft drinks and chewing gum.

a.) selective distribution

b.) intensive distribution

c.) exclusive distribution d.) horizontal distribution

28.                                          is used when the supplier is exceptionally careful in its selection of outlets, believing that the brand equity of the retailer transfers to its products; as a result, relatively few outlets are chosen.

a.) Intensive distribution b.) Selective distribution

c.) Exclusive distribution

d.) Horizontal distribution

 

29. Examples of goods for which                                                  is sought include fine china and crystal, for which only high-class department stores such as Saks Fifth Avenue and specialty stores such as Tiffany’s may be deemed appropriate.

a.) intensive distribution b.) selective distribution c.) horizontal distribution

d.) exclusive distribution

 

30.     is the number of channel members the firm uses at a particular level.

a.) Distribution channel breadth

b.) Distribution channel depth c.) Distribution channel length d.) Distribution channel intensity

 

31. Which of the following is NOT a broad channel breadth option? a.) Intensive distribution

b.) Geographic distribution

c.) Selective distribution d.) Exclusive distribution

 

32. Which of the following is NOT a distribution breadth-related exclusivity issue? a.) Geographic exclusivity for distributors

b.) Product exclusivity for distributors

c.) Exclusivity for the customer

d.) Exclusivity for the supplier

 

33. All of the following are conditions in which upstream power in distribution systems would be prevalent EXCEPT:

a.) Supply is greater than demand.

b.) Supplier offers product important to the distributor’s success. c.) Supplier poses a credible threat of forward integration.

d.) Distributor has high switching costs.

 

34. Which of the following does NOT describe a situation in which the supplier enjoys a monopoly-like position in the distribution system?

a.) Technology is proprietary.

b.) Few substitute products are available. c.) Few substitute suppliers are available.

d.) Many substitute products are available.

 

35. All of the following are mentioned in the text as conditions in which downstream power among distributors would be prevalent EXCEPT:

a.) Distributor has few switching costs.

b.) Distributor purchases a large percentage of the supplier’s output.

c.) Demand is greater than supply.

d.) Distributor has considerable end-user customer information relative to the supplier.

 

36. Which of the following is NOT mentioned in the text as a question the supplier should ask of potential distributors to improve the chances of success?

a.) What is the distributor’s credit and financial condition? b.) Does the distributor have adequate market coverage?

c.) All of the selections represent questions that are important.

d.) How competent is the distributor’s management?

 

37.                                             are a new type of intermediary, building additional software modules on other firms’ platforms and modifying computer hardware for niche markets.

a.) RFID systems b.) EDI systems

c.) Systems integrators

d.) Value-added resellers

 

38.                                          like Accenture and EDS add value by installing and servicing software and hardware from many vendors and making them work together.

a.) RFID systems b.) EDI systems

c.) Systems integrators

d.) Value-added resellers

 

39. According to the text, strategic conflict is often initiated by downstream customers for all of the following reasons EXCEPT:

a.) Distributors vertically integrate forward.

b.) End-user customers grow and desire direct-to-supplier relationships. c.) Distributors become large and change the power balance.

d.) New buying influences are introduced into the distribution system.

 

40.                                             occur daily due to late shipments, invoice errors, unfulfilled promises, unacceptable product quality, and price and margin disagreements.

a.) Integrated conflicts

b.) Organizational conflicts

c.) Operational conflicts

d.) Strategic conflicts

 

41. In which of the following approaches to distribution channel management does significant cooperation and trust among various distribution channel entities allow all parties to benefit?

a.) The Competitive Model

b.) The Partnership Model

c.) The Composition Model d.) The Distribution Model

 

42.                                             are used by retailers to require suppliers to pay direct payments to secure shelf space.

a.) Rebates b.) Coupons

c.) Slotting fees

d.) Commissions

 

43. All of the following are mentioned in the text as actions that suppliers can take to raise the distributor’s switching costs EXCEPT:

a.) Decrease the number of contact points within the distributor.

b.) Develop customized products needing customized equipment and specialized training. c.) Develop dedicated on-line access for simplified order placing and information

provision.

d.) Work to improve the firm’s reputation by enhancing the quality of its relationships.

 

44. Which of the following examples is NOT mentioned in the text as an action taken by a supplier broaden the scope of the supplier’s options?

a.) Develop an information base of, and demand preferences from, end users. b.) Broaden the distribution base.

c.) Explore limited forward integration.

d.) Demonstrate the benefits of backward integration for the distributor.

 

45. All of the following are mentioned in the text as actions taken by the distributor to improve its power position versus the supplier EXCEPT:

a.) Add value to end-user customers.

b.) Build loyalty with end-user customers. c.) Introduce fewer services.  d.) Consider branding service packages.

 

46. All of the following are mentioned in the text as actions taken by the distributor to increase supplier switching costs EXCEPT?

a.) Persuade the supplier to outsource activities to the distributor.

b.) Encourage supplier to implement forward integration.

c.) Increase the number of contact points with the supplier. d.) Work to minimize supplier's cost.

 

47. According to the text,                                             concerns the number of distribution entities at a particular level in the distribution system.

a.) distributor type

b.) distribution channel depth

c.) distributor operating expenses

d.) distribution channel breadth

 

48. Which of the following is NOT mentioned in the text as a form of direct distribution? a.) Direct sales: face-to-face

b.) Direct marketing

c.) Generalized retail distribution

d.) The Internet

 

49. The variant of direct sales that occurs when selling activity is conducted by telephone rather than by face-to-face salespeople is referred to as                                                                           .

a.) telecommuting

b.) telemarketing

c.) flextime

d.) videoconferencing

50. Major advantages of                                            as a form of direct distribution are lower costs and, when managed from a central location, greater corporate control.

a.) telecommuting b.) flextime

c.) videoconferencing

d.) telemarketing

 

51. All of the following are mentioned in the text as factors that favor direct supplier to end- user customer relationships EXCEPT:

a.) Large potential customer base

b.) Custom-tailored products c.) Large quantity sales

d.) Delivery speed not critical

 

52.                                             prohibits suppliers from setting different prices for different buyers, where this would reduce competition.

a.) The Sherman Antitrust Act

b.) The Robinson-Patman Act

c.) The Civil Rights Act of 1964

d.) The Resale Price Maintenance Act

 

53.                                             allows suppliers to set retail prices for their products. a.) Channel stuffing

b.) Tying agreements

c.) Retail price maintenance

d.) The Partnership Model

 

54. Which of the following occurs when strong suppliers try to force resellers to sell their entire product line?

a.) Retail price maintenance b.) The Partnership Model

c.) Tying agreements

d.) Channel stuffing

 

55.                                             occurs when a firm overloads distributors and hence overstates its revenues.

a.) Retail price maintenance b.) The Partnership Model c.) Tying agreements

d.) Channel stuffing  

Essay Questions

56. In a short essay, list and discuss eight functions of distribution.

 

 

 

57. In a short essay, list and discuss the four strategic conflicts in distribution systems that are typically initiated by downstream customers.

 

 

 

58. In a short essay, discuss the key issues of distributor type, distribution channel depth and breadth, and exclusivity.