Unit 10: Distribution Planning - Practice Quiz

1 What is a channel of distribution?

2 What is the main purpose of a distribution channel?

3 Which activity is commonly performed by a distribution channel?

4 A direct distribution channel sells products:

5 Why are distribution channels important to producers?

6 Who purchases goods in large quantities and sells them to retailers?

7 What is the main function of a retailer?

8 Which middleman usually brings buyers and sellers together without owning the goods?

9 Which middleman generally takes ownership of the products it purchases?

10 Which function involves keeping products until they are needed by customers?

11 Which factor should a producer consider when selecting a distribution middleman?

12 Why is the financial strength of a middleman important?

13 A producer may examine a middleman's past sales record to assess its:

14 What does the reputation of a distribution middleman indicate?

15 Why do producers motivate distribution middlemen?

16 Which of the following is a financial method of motivating middlemen?

17 What is a trade discount?

18 Which support can motivate a middleman through improved selling ability?

19 What is the purpose of appraising distribution middlemen?

20 Which measure can be used to evaluate a middleman's performance?

21 A manufacturer of organic snacks wants its products to reach customers in small towns without opening company-owned stores. Which channel decision would best support this objective?

22 A company sells expensive industrial machinery that requires installation and technical support. Which distribution channel is most appropriate?

23 A producer adds an intermediary to its channel but notices that the final price has increased while delivery has become more reliable. Which channel function most likely explains the benefit?

24 A beverage producer wants intensive availability for a frequently purchased soft drink. Which distribution approach is most suitable?

25 A wholesaler purchases large quantities from several manufacturers, stores the products, and resells them to retailers. Which function is being performed most directly?

26 A broker introduces a textile manufacturer to several clothing retailers and receives payment only when a transaction occurs. What distinguishes the broker from a merchant wholesaler?

27 A manufacturer appoints an agent to negotiate sales with retailers, but the agent never owns the products. Which role does the agent primarily perform?

28 A retailer buys products from a producer, displays them, and sells them in small quantities to household customers. Which channel function is most evident?

29 A firm is choosing between two distributors. Distributor A has wider market coverage, while Distributor B has stronger technical service capabilities. For a complex medical device, which factor should receive greater weight?

30 Before appointing a distributor, a manufacturer reviews audited accounts, credit history, and payment records. Which selection criterion is being assessed?

31 A manufacturer wants to enter a new region quickly but lacks knowledge of local retailers and customer practices. Which middleman attribute is most valuable?

32 A company wants its premium cosmetics to be sold only in stores that provide expert advice and maintain an upscale image. Which criterion is most important when selecting intermediaries?

33 A producer expects sales to grow significantly but finds that a distributor already represents several competing brands. What should the producer examine most carefully?

34 A manufacturer offers retailers an additional discount when they exceed quarterly sales targets. What type of motivation is this?

35 Retailers are not actively promoting a new product because they do not understand its benefits. Which motivational action is most appropriate?

36 A manufacturer invites high-performing distributors to an annual recognition event and publishes their achievements. Which motivational need is primarily addressed?

37 A supplier and retailer jointly plan local advertising, store displays, and sales targets for a product launch. Why is this approach likely to motivate the retailer?

38 A distributor complains that the manufacturer's sales representatives promise delivery dates without consulting the distributor. Which response would best improve channel motivation?

39 A manufacturer compares each distributor's actual sales with its assigned sales target. Which performance measure is being used?

40 A distributor has strong sales but frequently delivers late and carries insufficient inventory. Which appraisal approach gives the fairest assessment?

41 A manufacturer can sell directly to 600 retailers, requiring 600 transaction relationships. Alternatively, it can use 12 wholesalers, each serving 50 retailers. If every manufacturer-wholesaler and wholesaler-retailer link is counted, how many relationships does the intermediary structure require, and what channel principle does this illustrate?

42 Customers want to buy industrial fasteners in small quantities, immediately, and from a single supplier offering many brands. The manufacturers produce large lots, operate periodically, and offer narrow product lines. Which channel contribution most directly resolves all three mismatches?

43 A premium appliance producer replaces specialist dealers with an online-only channel. Distribution cost per unit falls, but returns rise and customers delay purchases because installation advice and demonstrations are unavailable. Which conclusion best explains the outcome?

44 A direct channel has annual fixed distribution cost of $900,000 and variable cost of $6 per order. A distributor channel has annual fixed cost of $120,000 and variable cost of $24 per order. Ignoring qualitative differences, above approximately what annual order volume is the direct channel less costly?

45 An intermediary negotiates orders for several noncompeting manufacturers, receives commission, carries no inventory, and does not take title to the goods. How should it be classified?

46 A wholesaler purchases coal from producers and sells it to industrial users, but the coal is shipped directly from the mine to each buyer. The wholesaler takes title and bears commercial risk without physically handling the product. Which middleman is this?

47 Independent retailers jointly establish and own a wholesale organization that centralizes purchasing and promotion while the stores retain their individual ownership. Which channel arrangement is present?

48 A grocery supplier retains ownership of packaged goods until they are sold, regularly replenishes store displays, removes stale items, and bills the retailer only for units sold. Which intermediary function is most characteristic of this arrangement?

49 A producer weights intermediary criteria as follows: market reach , technical capability , control compatibility , and financial strength . Candidate A scores and Candidate B scores on these criteria. Both have the same weighted score, but control compatibility must be at least 7. Which decision is valid?

50 Three distributors would handle 40,000 units annually. Their fixed fees, per-unit charges, and expected return rates are: A: $60,000, $2.00, 4%; B: $90,000, $1.50, 2%; C: $40,000, $2.40, 1%. Each returned unit costs the manufacturer $20. Which distributor has the lowest expected annual cost?

51 A medical-device manufacturer needs nationwide access quickly, but the product requires certification, installation, and continuing technical support. One candidate has maximum outlet coverage but weak technical staff; another has moderate coverage and certified service teams. Which selection principle is strongest?

52 A producer considers appointing a powerful distributor that carries the market-leading rival, owns scarce retail access, and refuses brand-specific sales targets. Which factor creates the greatest long-term selection risk?

53 A manufacturer repeatedly threatens to withdraw supply unless dealers accept unwanted inventory. Dealers comply initially, but later conceal market information and prioritize competing brands. Which explanation best fits this result?

54 A producer offers every distributor a higher margin regardless of effort. Sales do not improve because distributors use the extra margin to discount existing orders. Which redesign most directly links motivation to incremental performance?

55 Dealers believe that additional selling effort will raise sales, and that higher sales will earn a bonus. However, they value the bonus less than the training time they must sacrifice. Under expectancy theory, which component is primarily weak?

56 A manufacturer wants distributors to invest in showrooms, but distributors fear that the manufacturer will later add competing outlets nearby and appropriate the resulting demand. Which policy would best motivate the investment?

57 Distributor A sells $1.2 million in a territory with $1.5 million potential, while Distributor B sells $1.0 million in a territory with $1.1 million potential. If sales performance is judged solely by territory-potential attainment, which conclusion is correct?

58 A distributor reports 98% order fill, but achieves it by holding excessive inventory that causes high obsolescence and working-capital costs. Which appraisal design best prevents this metric from being gamed?

59 A manufacturer compares dealer sales before and after a promotion. Participating dealers grew 15%, nonparticipating comparable dealers grew 9%, and the total market grew 10%. Which estimate best isolates the promotion's incremental effect using a difference-in-differences approach?

60 A distributor misses its sales quota after a major customer in its territory closes, yet it gains share among the remaining customers, improves service levels, and follows all agreed programs. What is the most defensible appraisal?