Chapter 3—The Environment of Marketing Channels.QUESTIONS AND ANSWERS..

MULTIPLE CHOICE 1. For channel managers, which of the following is a variable in the external environment? a. C b. emerging competitors c. birth rates d. inflation rates e. annual sales revenues ANS: E 2. For the channel manager, the external environments can be ranked, from most important to least important, as: a. economic, competitive, sociocultural, technological, legal. b. legal, competitive, technological, economic, sociocultural. c. economic, legal, competitive, technological, sociocultural. d. there is no single sequence for all industries at all times. e. all are equally important. ANS: D 3. The channel manager must analyze the external environment in terms of its impact on: a. target markets. b. facilitating agencies. c. intermediaries. d. all channel participants. e. retailers and brokers. ANS: D 4. Adam Page, channel manager at Wood Products, Inc., read in this morning’s paper that two large Midwest furniture retailing chains had merged. Page needs to recognize the potential impact of this change in the external environment on all of the following except: a. Wood Products, Inc. b. public warehouses, trucking firms, and other Midwest facilitating agencies. c. all Midwest furniture retailers. d. consumers. e. the change in interest rates on business loans. ANS: E The Environment of Marketing Channels 5. According to the text, the most visible or obvious environmental force affecting managers in all kinds of business and nonbusiness organizations has been: a. economic environment. b. sociocultural environment. c. competitive environment. d. legal environment. e. technological environment. ANS: A 6. In the 1990s it was said about recessions that: a. there would be more recessions in the future and they would be more severe than past recessions. b. information technology could be used to warn businesses of potential economic slowdowns and companies could make adjustments. c. although there would no longer be any recessions, the new economy would experience more depressions. d. the business cycle of ‘boom’ and ‘bust’ would be more rapid. e. economic slowdowns could be diverted by increasing interest rates and decreasing inflation. ANS: B 7. To deal with inflation and recession, channel managers should do all of the following except: a. take responsibility for helping intermediaries weather the situation. b. have contingency plans prepared to implement when economic conditions warrant. c. increase spending on advertising. d. use special trade promotions. e. increase production and inventory. ANS: E 8. The “official” definition of a recession among professional economists is: a. one quarter of decline in GDP. b. two consecutive quarters of decline in GDP. c. three consecutive quarters of decline in GDP. d. four consecutive quarters of decline in GDP. e. Any three quarterly declines during a two-year period. ANS: B Marketing Channels 7e 9. As consumer spending slows down in recessionary periods, marketing channels for usually feel the impact earliest. a. consumer packaged goods b. consumer durable goods c. health services d. tobacco and alcohol products e. None of the above. ANS: B 10. Which of the following is a false statement about the 2001 recession? a. Business spending slowed to a greater extent than consumer spending. b. The Federal Reserve Bank lowered interest rates. c. The corporate sector increased its spending on information technology. d. Unemployment rates rose. e. The business sector found that it had excess technology capacity. ANS: C 11. In a recession, intermediaries are at greatest risk if: a. they cannot sell their heavy inventories. b. they do not reduce prices to final consumers. c. they do not increase promotional spending. d. they do not expand their product lines. e. they do not enhance information technology capabilities. ANS: A 12. During recessionary periods, channel members at the wholesale and retail levels are likely to: a. try to increase their inventory levels. b. lose sales volume. c. broaden their product line. d. increase financial borrowing. e. improve product quality. ANS: B 13. In inflationary times, channel members can expect consumer spending to: a. slow down. b. increase. c. be unpredictable. d. drop off for durable goods but remain fairly steady for non-durables. e. drop off for services but remain fairly steady for tangible products. ANS: C The Environment of Marketing Channels 14. In inflationary times, intermediaries generally can be expected to: a. stock up on inventory at today’s prices. b. be enthusiastic about manufacturer’s new product introductions. c. pressure manufacturers for special deals. d. increase the product line. e. increase the amount of money borrowed from banks. ANS: C 15. To help intermediaries through periods of high inflation, manufacturers can do all of the following except: a. increase pull promotion. b. emphasize lower-priced products in its product line. c. provide low cost financing for inventory purchases. d. decrease inventory turnover. e. provide faster order processing. ANS: D 16. Deflation on a wide scale resulting in a decline in prices across a broad spectrum of goods and services: a. has been a characteristic of the 1990s economy. b. occurs about once each decade. c. almost always results from inflation. d. has not occurred in the U.S. since the 1930s. e. always follows periods of inflation. ANS: D 17. Other economic issues of concern to channel members include all of the following except: a. the federal budget deficit. b. high interest rates. c. the trade deficit. d. national debt. e. new companies entering the marketplace. ANS: E 18. The real interest rate is: a. the same as the nominal rate. b. about twice the nominal rate. c. higher when inflation is higher. d. the nominal rate of interest minus the inflation rate. e. the nominal rate of interest plus the inflation rate. ANS: D Marketing Channels 7e 19. When the value of the U.S. dollar is high: a. the price of U.S. products decreases relative to foreign products. b. the price of U.S. products increases relative to foreign products. c. it takes fewer foreign dollars to buy U.S. products. d. U.S. products become more competitive in foreign markets. e. it takes more U.S. dollars to buy foreign products. ANS: B 20. During periods of low inflation: a. it is easier to pass price increases through the channel. b. manufacturers, wholesalers, and retailers rarely face built-in cost pressures. c. it becomes more difficult to pass price increases through the channel. d. increasing prices to offset cost pressures is more feasible. e. members of the channel are less sensitive to higher prices. ANS: C 21. During periods of low inflation, passing price increases through the channel: a. becomes more difficult. b. becomes less difficult. c. makes no difference. d. increases the length of the channel. e. None of the above. ANS: A 22. To cope with periods of slow economic growth, channel managers need to: a. increase productivity. b. expand product lines. c. increase sales personnel. d. decrease capital expenditures. e. decrease sales to foreign markets. ANS: A 23. Competition between Kmart and Wal-Mart is an example of: a. horizontal competition. b. intertype competition. c. vertical competition. d. channel system competition. e. horizontal-vertical competition. ANS: A The Environment of Marketing Channels 24. Competition between an independent hardware store and the hardware department of a Sears store is an example of: a. vertical competition. b. channel system competition. c. horizontal competition. d. intertype competition. e. vertical marketing competition. ANS: D 25. McDonald’s competition with Burger King is an example of: a. vertical competition. b. horizontal competition. c. intertype competition. d. vertical-intertype competition. e. vertical marketing system competition. ANS: B 26. A wholesaler attempts to secure retailer acceptance for its own brand of guitars. That wholesaler also carries similar guitars from a manufacturer of a nationally known brand. This is an illustration of: a. horizontal competition. b. vertical competition. c. channel system competition. d. intertype competition. e. multiple channel competition. ANS: B 27. Vertical marketing systems are typically divided into the following three basic categories: a. corporate, contractual, and horizontal. b. contractual, vertical, and franchise. c. administered, contractual, and corporate. d. corporate, voluntary associations, and administered. e. retailers’ cooperatives, contractual, and corporate. ANS: C Marketing Channels 7e 28. Pure Play e-tailers, such as Amazon and Etoys, competing with ‘bricks and mortar’ companies is an example of what type of competition? a. vertical b. channel system c. intertype d. vertical Marketing systems e. horizontal ANS: C 29. Gift wrapping paper on a grocer’s shelf is an example of: a. vertical integration. b. scrambled merchandise. c. retail assortment. d. horizontal integration. e. channel dysfunction. ANS: B 30. Retailers like to sell their own brands because of all of the following except: a. gross margins are higher. b. they control their own destiny. c. competitive comparisons are more difficult. d. they are exclusive to the retailer. e. consumers prefer private label products. ANS: E 31. Demographic data show that the U.S. population is becoming: a. younger. b. older. c. younger and older at the same time. d. middle aged. e. a nation of teenagers. ANS: C 32. The U.S. population is expected to become by the year 2050. a. less ethnically diverse b. more ethnically diverse c. mostly immigrants d. ethnically stable e. more homogeneous ANS: B