Unit 10: Distribution Planning - Practice Quiz

DEMKT503 — Marketing Management 60 Questions
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1 What is a channel of distribution?

Concept and importance of channels of distribution Easy
A. A plan used to train sales employees
B. A system used to calculate product costs
C. A path used to move products to customers
D. A method used to design products

2 What is the main purpose of a distribution channel?

Concept and importance of channels of distribution Easy
A. To replace the production department
B. To create new product designs
C. To determine employee salaries
D. To connect producers with customers

3 Which activity is commonly performed by a distribution channel?

Concept and importance of channels of distribution Easy
A. Preparing employee attendance records
B. Moving goods from sellers to buyers
C. Writing company employment policies
D. Developing the firm's logo

4 A direct distribution channel sells products:

Concept and importance of channels of distribution Easy
A. From consumer directly to producer
B. From retailer directly to wholesaler
C. From producer directly to consumer
D. From wholesaler directly to retailer

5 Why are distribution channels important to producers?

Concept and importance of channels of distribution Easy
A. They remove the need for customer service
B. They eliminate the need for product quality
C. They guarantee that every product will sell
D. They help products reach target markets

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

Different types of distribution middlemen and their functions Easy
A. Consumer
B. Wholesaler
C. Producer
D. Sales trainee

7 What is the main function of a retailer?

Different types of distribution middlemen and their functions Easy
A. To approve company investment plans
B. To transport raw materials to factories
C. To sell products to final consumers
D. To manufacture products for producers

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

Different types of distribution middlemen and their functions Easy
A. Retailer
B. Final consumer
C. Wholesaler
D. Agent

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

Different types of distribution middlemen and their functions Easy
A. Sales representative
B. Merchant middleman
C. Transport broker
D. Commission agent

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

Different types of distribution middlemen and their functions Easy
A. Storage
B. Promotion
C. Negotiation
D. Financing

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

Selection of distribution middlemen Easy
A. The middleman's personal hobby
B. The middleman's favorite color
C. The middleman's office decoration
D. The middleman's market coverage

12 Why is the financial strength of a middleman important?

Selection of distribution middlemen Easy
A. It decides the product's basic design
B. It replaces the producer's quality controls
C. It indicates the ability to support distribution activities
D. It determines the product's brand name

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

Selection of distribution middlemen Easy
A. Packaging preference
B. Office location style
C. Employee dress code
D. Business performance

14 What does the reputation of a distribution middleman indicate?

Selection of distribution middlemen Easy
A. How much tax a customer must pay
B. How the middleman is viewed in the market
C. How quickly a factory can make goods
D. How many products the producer can design

15 Why do producers motivate distribution middlemen?

Motivation of distribution middlemen Easy
A. To eliminate market information
B. To stop all product promotion
C. To encourage better distribution performance
D. To reduce the number of customers

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

Motivation of distribution middlemen Easy
A. Giving product information
B. Offering a sales bonus
C. Sharing a market report
D. Providing a product manual

17 What is a trade discount?

Motivation of distribution middlemen Easy
A. A fee paid for product transportation
B. A price reduction offered to channel members
C. A salary paid to factory workers
D. A tax charged to final consumers

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

Motivation of distribution middlemen Easy
A. Reduced product information
B. Longer delivery delays
C. Fewer customer contacts
D. Sales training

19 What is the purpose of appraising distribution middlemen?

Performance appraisal of distribution middlemen Easy
A. To select the product's package color
B. To determine the factory's working hours
C. To write the firm's advertising slogan
D. To measure their distribution performance

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

Performance appraisal of distribution middlemen Easy
A. Employee birthplace
B. Manager's clothing style
C. Office wall color
D. Sales volume

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?

Concept and importance of channels of distribution Medium
A. Limit distribution to urban supermarkets
B. Sell only through the company website
C. Use wholesalers serving regional retailers
D. Replace retailers with direct sales agents

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

Concept and importance of channels of distribution Medium
A. Manufacturer to wholesaler to household buyer
B. Manufacturer to supermarket to consumer
C. Manufacturer to industrial user directly
D. Manufacturer to broker to convenience store

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?

Concept and importance of channels of distribution Medium
A. Reducing product quality inspections
B. Transferring production decisions to retailers
C. Eliminating all promotional activities
D. Breaking bulk and holding inventory

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

Concept and importance of channels of distribution Medium
A. Direct distribution through one sales team
B. Exclusive distribution through one outlet
C. Intensive distribution through many outlets
D. Selective distribution through luxury stores

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

Different types of distribution middlemen and their functions Medium
A. Manufacturing goods for final consumers
B. Assorting products for retailer needs
C. Setting government standards for products
D. Providing personal income to retail customers

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?

Different types of distribution middlemen and their functions Medium
A. The broker always stores the products
B. The broker purchases goods for resale
C. The broker determines the final retail price
D. The broker usually does not take title

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?

Different types of distribution middlemen and their functions Medium
A. Providing storage to competing retailers
B. Financing consumers through retail credit
C. Facilitating exchange between channel members
D. Producing finished goods for the market

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?

Different types of distribution middlemen and their functions Medium
A. Aggregating raw materials for manufacturers
B. Designing production equipment for suppliers
C. Providing product availability to final users
D. Negotiating international trade regulations

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?

Selection of distribution middlemen Medium
A. Distributor's preference for mass advertising
B. Number of unrelated products handled
C. Technical service and product expertise
D. Distance from the manufacturer's office

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

Selection of distribution middlemen Medium
A. Financial strength and reliability
B. Retail packaging and product color
C. Geographic climate and seasonality
D. Promotional creativity and design

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?

Selection of distribution middlemen Medium
A. A policy of avoiding retailer contact
B. A large warehouse in another region
C. A low-cost product unrelated to the line
D. Established local market relationships

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?

Selection of distribution middlemen Medium
A. Ability to offer the lowest possible discount
B. Willingness to avoid service-related activities
C. Compatibility with the desired brand image
D. Preference for selling every product category

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?

Selection of distribution middlemen Medium
A. The distributor's selling effort and competing commitments
B. The distributor's preference for local holidays
C. The distributor's office decoration and signage
D. The distributor's ownership of consumer appliances

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

Motivation of distribution middlemen Medium
A. A mandatory channel restriction
B. An incentive-based financial reward
C. A consumer complaint procedure
D. A product-quality certification

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

Motivation of distribution middlemen Medium
A. Provide product training and selling support
B. Increase delivery time for every order
C. Reduce all retailer communication immediately
D. Remove the product from promotional materials

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

Motivation of distribution middlemen Medium
A. Production capacity and automation
B. Inventory ownership and legal title
C. Recognition and channel status
D. Customer returns and warranty claims

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?

Motivation of distribution middlemen Medium
A. It transfers all market risk to customers
B. It removes the retailer's need to stock products
C. It creates participation and shared objectives
D. It prevents the retailer from setting sales goals

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

Motivation of distribution middlemen Medium
A. Increase targets without changing support
B. Stop sharing information about inventory
C. Allow each department to set conflicting policies
D. Improve communication and coordinate commitments

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

Performance appraisal of distribution middlemen Medium
A. Customer demographic profile
B. Sales quota achievement
C. Average product life cycle
D. Production defect percentage

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

Performance appraisal of distribution middlemen Medium
A. Measure only the distributor's advertising spending
B. Ignore service problems during peak seasons
C. Evaluate sales, delivery, and inventory together
D. Judge performance only by total sales

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?

Concept and importance of channels of distribution Hard
A. 612 relationships; transfer of product ownership
B. 612 relationships; reduction in contact complexity
C. 600 relationships; elimination of demand uncertainty
D. 50 relationships; creation of assortment utility

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?

Concept and importance of channels of distribution Hard
A. Market promotion, title transfer, and price maintenance
B. Exclusive dealing, order processing, and reverse logistics
C. Product standardization, financing, and risk elimination
D. Bulk breaking, inventory holding, and assortment creation

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?

Concept and importance of channels of distribution Hard
A. Lower transaction cost guarantees superior customer value
B. Direct channels invariably reduce overall distribution efficiency
C. Product availability matters more than presale assistance
D. Channel efficiency must include demanded service outputs

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?

Concept and importance of channels of distribution Hard
A. 33,333 orders
B. 43,333 orders
C. 50,000 orders
D. 56,667 orders

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?

Different types of distribution middlemen and their functions Hard
A. Manufacturers' agent
B. Merchant wholesaler
C. Industrial distributor
D. Limited-service retailer

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?

Different types of distribution middlemen and their functions Hard
A. Drop shipper
B. Rack jobber
C. Commission merchant
D. Cash-and-carry wholesaler

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?

Different types of distribution middlemen and their functions Hard
A. Retailer cooperative
B. Administered vertical system
C. Wholesaler-sponsored voluntary chain
D. Manufacturer-sponsored franchise

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?

Different types of distribution middlemen and their functions Hard
A. Cash-and-carry wholesaling with retailer transportation
B. Rack-jobbing with inventory and merchandising responsibility
C. Drop shipping with direct producer-to-buyer delivery
D. Brokerage with negotiation and no physical distribution

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?

Selection of distribution middlemen Hard
A. Select both because their weighted totals are equal
B. Select B because technical capability has priority
C. Select A because B fails the control threshold
D. Reject both because neither dominates every criterion

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?

Selection of distribution middlemen Hard
A. Distributor A at $172,000
B. Distributor B at $166,000
C. Distributor C at $144,000
D. Distributors B and C at $160,000

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?

Selection of distribution middlemen Hard
A. Choose the lowest-margin candidate to preserve producer profit
B. Choose both candidates without defining territorial responsibility
C. Choose maximum coverage because reach dominates service
D. Choose certified support because service is a critical constraint

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?

Selection of distribution middlemen Hard
A. The distributor's high current market coverage
B. The distributor's established logistics infrastructure
C. The distributor's bargaining power with retailers
D. The distributor's potential conflict of interest

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?

Motivation of distribution middlemen Hard
A. Referent power improved identification but reduced incentives
B. Reward power raised satisfaction but encouraged free riding
C. Coercive power created compliance but damaged commitment
D. Expert power increased trust but weakened dealer autonomy

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?

Motivation of distribution middlemen Hard
A. Expand territories without measuring distributor selling activity
B. Increase base margins equally across all sales territories
C. Pay bonuses for verified growth above territory-adjusted baselines
D. Shorten contracts while preserving unconditional discount levels

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?

Motivation of distribution middlemen Hard
A. Valence
B. Instrumentality
C. Role clarity
D. Expectancy

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?

Motivation of distribution middlemen Hard
A. Uniform wholesale prices without territorial commitments
B. Frequent territory changes based on quarterly shipment volume
C. Unconditional exclusivity with no performance requirements
D. Protected territories tied to measurable service obligations

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?

Performance appraisal of distribution middlemen Hard
A. B performs better because its attainment ratio is higher
B. Both perform equally because each exceeds $1 million
C. A performs better because its absolute sales are higher
D. A performs better because its unserved potential is lower

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?

Performance appraisal of distribution middlemen Hard
A. Replace fill rate with total inventory value alone
B. Evaluate fill rate together with turnover and obsolescence
C. Measure shipment volume instead of customer service quality
D. Reward fill rate without considering inventory investment

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?

Performance appraisal of distribution middlemen Hard
A. Approximately 6 percentage points
B. Approximately 5 percentage points
C. Approximately 15 percentage points
D. Approximately 9 percentage points

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?

Performance appraisal of distribution middlemen Hard
A. Terminate the distributor because the absolute quota was missed
B. Rate performance using adjusted potential and controllable measures
C. Lower every distributor's quota by the same percentage
D. Ignore sales outcomes and evaluate relationship quality alone