Marketing 5.01 Review Worksheet

Which of the following is a benefit of channels of distribution:

• We can more easily obtain products from all over the world.

• Producers must spend more money.

• Retailers must spend more money.

• We spend more time looking for products we want.

Answer explanation

Channels of distribution allow consumers, industrial users, producers, and other channel intermediaries to save time and money. They also allow us to more easily obtain products from all over the world since we do not have to travel and search for each individual item we wish to purchase.      

Where does a channel of distribution begin?

• With the industrial user

• With the ultimate consumer

• With the producer

• With the intermediary

Answer explanation

A producer is the grower, provider, or manufacturer of goods or
services. Products originate with producers. The channel ends with an industrial user or
ultimate consumer. An intermediary is a channel member operating between the producer and the consumer or industrial user to help in the movement of goods and services.

Which of the following is an example of an ultimate consumer:

• A teenager buying their first car

• A farmer buying seed for crops that will be sold at market

• A manager buying office supplies

• A restaurant owner buying a new oven for the restaurant’s kitchen

Answer explanation

An ultimate consumer is the person who will actually
be using the good or service. The other alternatives are examples of industrial users who will be using the goods in the operation of their businesses or to produce other goods.

Which of the following is an example of an industrial user:

• A parent buying a picture frame for their desk

• A hairstylist buying new scissors to perform haircuts

• A family buying a new home computer

• A teacher buying a book to read on vacation

Answer explanation

A hairstylist purchasing scissors is
an example of an industrial user. They are purchasing the product to use in the operation of their business—in this case, for providing a service. The other alternatives are examples of ultimate consumers, the people who will actually be using the good or service for
themselves.

Quality Distributors buys electrical equipment and supplies from ABC Electric and sells them to local electrical contractors. Quality Distributors is an example of a(n)

• retailer.

• intermediary.

• agent.

• producer.

Answer explanation

Intermediaries are channel members operating between the producer and the consumer or industrial user to help in the movement of goods and services. In this
situation, the intermediary is a wholesaler. Producers are the growers, providers, or
manufacturers of goods or services. Retailers are businesses that buy consumer goods or services and sell them to the ultimate consumer. Agents are intermediaries that assist in the sale and/or promotion of goods and services but do not take title to them.

Walmart, Domino’s, and Dollar General are examples of

• agents.

• industrial distributors.

• retailers.

• wholesalers.

Answer explanation

. Retailers are businesses that buy consumer goods or services and sell them to the ultimate consumer. Walmart, Domino’s, and Avis Rent-a-Car all sell directly to consumers. Wholesalers are businesses that buy goods from producers or agents and sell to retailers. Agents assist in the sale and/or promotion of goods and services but do not take title to them. Industrial distributors are intermediaries that buy industrial goods and services and sell them to industrial users.

What type of intermediary would purchase baseball bats from one producer, mitts from another, and balls from still another and then sell an assortment to sporting goods stores?

• Agent

• Wholesaler

• Producer

• Retailer

Answer explanation

A wholesaler is a business that buys goods from producers or agents and sells them to retailers. Agents do not buy goods from producers; rather, they assist in selling and promoting a producer’s goods. Producers are growers, providers, or manufacturers
of goods or services. Retailers are businesses that buy consumer goods or services and sell them to the ultimate consumer.

Which of the following intermediaries never actually owns the products they promote and sell:

• Retailers

• Wholesalers

• Agents

• Industrial users

Answer explanation

These are businesses or individuals that assist in the sale and/or promotion of goods and services but do not take title to them. Wholesalers are businesses that buy goods from producers or agents and sell to retailers. Retailers are businesses that buy
consumer goods and services and sell them to ultimate consumers. Industrial users are businesses that buy materials, services, or goods that will be used to make other goods
or used in the operation of the company.

Intermediaries buy large quantities of goods from producers and sell smaller quantities to other intermediaries or to consumers. The result is that intermediaries (a)   their per-unit cost for goods.

• reduce
• increase

• control

• stabilize

Answer explanation

. When intermediaries buy large quantities of goods from producers, large-scale production enables the producers to reduce their per-unit cost of the items and pass
some of the savings along. Intermediaries do not have the power to stabilize or control producer prices.

An intermediary function that makes goods available to consumers where they are wanted and needed is

• extending credit.

• transporting and storing.

• servicing sales.

• providing management services.

Answer explanation

Intermediaries transport and store goods so that they will be available to consumers or industrial users where and when they are wanted or needed.
In this way, goods are on hand when consumers or industrial users are ready to buy them
rather than only when they are produced. Other functions performed by intermediaries
include providing market information to producers, promoting the sale of goods and
services, extending credit, servicing sales, and providing management services, but none
of these are described in this instance.