Click on the box next to each answer. Keep track of your own score.

1. Sorting, breaking bulk, maintaining inventories, maintaining retail locations, and providing value added services to physical products are activities provided by:
   • A. retailers. INCORRECT Retailers might provide some or all of these activities,   but another answer is more all-inclusive. Take a peek at Answer B.
   • B. wholesalers. INCORRECT Wholesalers are more likely than retailers to be involved   in activities of sorting, breaking bulk, assorting,   and such.  HOWEVER, wholesalers, by definition.   are not associated with maintaining retail   locations.  Wholesaling has to do with   sales to other channel members; retailing has to   do with sales to final consumers (typically   meaning, as a generalization, household consumers).
   • C. brokers. INCORRECT Brokers facilitate exchanges, but don't take title to   goods.  As such, we generally don't expect   to see brokers involved in activities of   breaking bulk, sorting, and such.  Brokers   help buyers and sellers to find each other; it is   often the case that brokers don't even see goods   involved in exchanges that they facilitate.
   • D. channel members. CORRECT All of the above are channel members and all of the   activities listed in the question are performed   somewhere in the distribution channel.
2. For Wal*Mart, Office Depot, Best Buy, and Toys R Us:
   • A. are known as gray markets due to product line maturity. INCORRECT Gray markets have to do with the sale of goods through  unauthorized channels of distribution.  
   • B. are category killers. CORRECT Like Wal*Mart, these "big box" retailers buy  large quantities directly from manufacturers,  passing efficiencies through to consumers in low  prices.  The bad news for Wal*Mart is that these  competitors can be more efficient than Wal*Mart by  specializing in particular narrow but deep product  lines.
   • C. use a channel push strategy. INCORRECT Channel push has to do with how each channel member  promotes to the next, thereby pushing the product  through the channel until it reaches the retailer.  Since these large retailers tend to buy directly  from the manufacturer, there is no room for channel  pull excepting for the efforts of producers to  court retailers.  In these cases, producers need  to promote to consumers - a pull strategy - to  create consumer demand for particular brands,  thereby pulling the brand through the channel.
   • D. are independent distributors. INCORRECT
3. Rolex is very particular about who it allows to represent and sell its products.  It will not, for example, allow its watches to be sold through online channels (although a prospective customer may phone for price quotes and make a transaction over the phone).  A Rolex watch that is purchased as factory new through an online retailer of watches is likely not to be warranted by Rolex, even if it is genuine and factory new.  The online retailer in this case is operating:
   • A. illegally. INCORRECT Although not authorized by Rolex to sell in this manner,  the retailer might have legitimately purchased  the item from an authorized retailer and is  legitimately attempting to resell it.
   • B. in a gray market CORRECT This is a seller that is not authorized by Rolex to  represent its products.  Although the seller  might *personally* warrant the product, Rolex might  not.  The problem with a gray market seller in  this regard, however, is that Rolex also will not  sell authorized repair materials to unauthorized  repair places.
   • C. in a black market. INCORRECT
   • D. as a category killer. INCORRECT
4. Wholesalers, retailers, and brokers and agents are:
   • A. channel intermediaries. CORRECT Intermediary means the same thing as channel member   (also sometimes called a middleman - but don't   use the latter in this course).  An   intermediary facilitates exchanges between   sellers and buyers.
5. RACO Industries advertises on its website, "Anyone can sell data products and services.  At RACO we take that to the next level.  We not only sell and service the best software and hardware products available, we help you choose the right products and services to meet your unique needs." RACO is a:
   • A. category killer. INCORRECT Category killers are retailers that dominate a narrow   width of deep product lines. 
   • B. gray market reseller. INCORRECT Gray market goods" are trademarked products that   are sold through channels of distribution that   are not authorized by the holder of the trademark. 
   • C. VAR. CORRECT A VAR, or value-added reseller, adds value to a physical   product with desired or necessary services.    A large, complicated piece of equipment might need   delivery in a special truck, need further assembly   upon arrival, and need specialized adjustment and   set-up.  Without these services, it might be   worth substantially less, with most buyers   willing to pay more for a product that includes   these value-added services.
   • D. big box retailer. INCORRECT "Big box" is a newer term that tends to be used in   reference to larger branded chains of department  stores, discount stores, and category killers.
6. Uncle Joe's Wholesale Club advertises, "We sell direct to the public at low low wholesale prices!  We will not be undersold!  Shop here for all of your family needs!" Uncle Joe's would be classified as a:
   • A. specialty store. INCORRECT We don't know the product mix of Uncle Joe's, but the   mention of meeting all family needs would seem   to suggest something other than a narrow mix.
   • B. mass merchandiser. INCORRECT We don't know the product mix of Uncle Joe's; it could  be a mass merchandiser, but check another answer   that would be correct under any circumstance.
   • C. wholesaler. INCORRECT Absolutely not!  Uncle Joe's is clearly promoting   to final household consumers for personal,   non-business use.  An intermediary that is   classified as a wholesaler is a reseller who   sells to other intermediaries or to organizational   or business users.
   • D. retailer. CORRECT Uncle Joe's is clearly promoting to final household  consumers for personal non-business use.    Simply selling at low prices or in large   quantities are not intermediary functions that   we would classify as wholesaling.
7. Functional intermediaries include:
   • A. retailers. INCORRECT Retailers are resellers who take title to the goods.  
   • B. wholesalers. INCORRECT Wholesalers are resellers who take title to the goods.  
   • C. category killers. INCORRECT Category killers are retailers - see Answer A.  
   • D. agents and brokers. CORRECT Agents and brokers function to bring buyers and   sellers together, but don't take title   to the items being sold.  Agents   represent either the buyer or (most typically)   the seller but not both.  Brokers work   for both buyer and seller, helping sellers to   find buyers and buyers to find sellers.
8. At the time when Kmart was the world's largest retailer, it required all of its suppliers to use a proprietary EDI system (computer controlled inventory replenishment and such) and UPC bar code identification.  This was the start of the retailer, rather than the manufacturer, as the entity with power in the channel -- if you wanted to sell anything, you had to have it on Kmart shelves and had to comply with whatever Kmart asked in order to get your stuff on their shelves.  Wal*Mart is now the world's largest retailer, so it has a great deal of channel power.  Wal*Mart wants to force its suppliers to start using a radio-frequency tag that would replace the function of the UPC bar code; these tags would allow consumers to simply walk out of a store with a basket of goods without the need to stop at a check-out register.  The technology that makes these tags work is called:
   • A. EDLP INCORRECT Wal*Mart uses EDLP, but this has to do with a pricing   and promotion strategy.  (EDLP stands for   every day low pricing - meaning no sales   promotions such as couponing, cents-off sales, etc.)
   • B. RFID CORRECT RFID stands for radio frequency identification.  The   technology is basically an advancement on the   anti-theft devices that are already used on   DVD packages, expensive clothing, and such.    Those devices electrically resonate or return a   signal in the presence of a particular radio   frequency, causing an alarm to trigger.    RFID goes a step further to add some electronics   that can identify not only a particular product,   but also a serial number that is unique to that   individual item.  RFID is already being used in warehousing; its use in   retailing is probably only a matter of time,   with cost of individual tags being the most   important factor.
   • C. NAFTA INCORRECT North American Free Trade Agreement - nope.  
   • D. PLC INCORRECT PLC stands for Product Life Cycle.  Different   chapter.
9. Texas Retail Energy is an electricity company that supplies electricity to Wal*Mart stores -- and was created by Wal*Mart itself.  In the distribution channel for electricity, this is an example of:
   • A. a push strategy. INCORRECT This example has nothing to do with a push strategy.  
   • B. a pull strategy. INCORRECT This example has nothing to do with a push strategy.  
   • C. vertical integration. CORRECT Specifically, this is a form of vertical integration   called *backward integration*.  Wal*Mart   took ownership and took over the management   of a channel member above it. Note that in this case, this is not a channel that   leads to the resale of a consumer item, but a   channel that leads to the supply of a resource   that is used in operation of the business.
   • D. horizontal integration. INCORRECT Examples of horizontal integration are the launch of   Sam's Club and the small Wal*Mart Neighborhood   Market - separate, parallel channels of   retail distribution.
10. Which of the following is a mode of transportation?
    • A. telephone line. INCORRECT While we might think of a telephone line as a way to   transport information, we associate transportation   with the distribution of something physical.
    • B. pipeline. CORRECT Anything that can be made into or mixed with a liquid or   gas can be transported by pipeline.  E.g.,   wood chips and coal can be transported with   liquid through a pipeline.  If you want to   transport drinking water, which is fastest and   lowest cost mode - a pipline, or a motor truck   carrying gallon bottles?
    • C. bridge. INCORRECT A bridge might be part of a transportation system, but   it is not a transportation mode.
    • D. concrete. INCORRECT  
11. The Limited operates a facility near Columbus, Ohio through which goods pass on their way from an airplane to a retail store.  Articles of clothing are offloaded from an airplane onto a truck, taken to the facility, routed through a system of conveyor belts, loaded onto trucks in first-in, last-out manner, and delivered to stores to be hung on racks.  This facility would be called:
    • A. an order processing system. INCORRECT While information processing is an important component   of this facility, it does more than this.
    • B. a private warehouse. INCORRECT An important element of this facility is that nothing   is stored there.  Goods are simply routed   through on a system of conveyor belts. See Answer C.
    • C. a public warehouse. INCORRECT See Answer B for the reason that this is not a warehouse. A private warehouse means that organization owns the   building.  A public warehouse means that   warehouse space is rented.  The tactics of   using public vs. private warehousing are   important in setting marketing strategy, but in   the example of The Limited, the strategy uses   neither.
    • D. a distribution center. CORRECT  
12. Bob's Auto Mall advertises, "buy here, pay here."  Bob knows that some people aren't able to pay a few thousand dollars cash for a car, but can be trusted to make payments of $50 per week until the car is paid off.  Over time, the buyer ends up paying more for the car than if s/he had paid cash (the difference is called interest), but buyers might not otherwise be able to obtain transportation to work.  The willingness to pay this greater amount is caused by:
    • A. form utility. INCORRECT  
    • B. time utility. INCORRECT  
    • C. place utility. INCORRECT  
    • D. possession utility. CORRECT  
13. Big Lots started as a store called Corvair's on Corvair Blvd. in Columbus, Ohio.  It was used by Consolidated Freight to sell odd lots of merchandise that had been damaged in truck accidents, store fires, and such as well as manufacturer overruns, irregulars, and discontinued items.  A shopper never new what might be in stock at the store at any given time, but the prices were fifty- or even seventy-five percent lower than regular retail prices.  The original Corvair's would be classified as:
    • A. a factory outlet. INCORRECT Corvair's was not owned by a manufacturer.  
    • B. a warehouse club. INCORRECT Warehouse clubs sell merchandise that might be   packaged in larger quantities than would be   typical for other retailers, but would not   be in the business of selling damaged,   overstocked, and discontinued goods.  
    • C. a discount specialty store. INCORRECT  
    • D. an off-price retailer CORRECT  
14. A vending machine would be classified as:
    • A. non-store retailing. CORRECT  
    • B. direct marketing. INCORRECT  
    • C. a convenience store. INCORRECT  
    • D. a specialty store. INCORRECT  
15. Wal*Mart, Target, Sears, and Big Lots stores all look different inside.  When I was a kid, the aroma of roasting peanuts and cashews permeated Sears stores -- I miss the feel that Sears used to have in its better days.  Concern over the look and feel of the retail store space is called:
    • A. psychographics. INCORRECT  
    • B. demographics. INCORRECT  
    • C. atmospherics. CORRECT  
    • D. segmentation. INCORRECT  
16. JC Penny is an example of:
    • A. a big box retailer. CORRECT  
    • B. a category killer. INCORRECT  
    • C. a warehouse club. INCORRECT  
    • D. a convenience store. INCORRECT