Chapter 13



Chapter 11

Retailing and Wholesaling

GENERAL CONTENT: Multiple-Choice Questions

1. _____ includes all the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use.

a. Franchising

b. Retailing

c. Brokering

d. Wholesaling

e. Disintermediation

(Answer: b; p. 333; Easy)

2. In recent years, _____ has(have) been growing fast. This includes selling to final consumers through direct mail, catalogs, telephone, and the Internet.

a. specialty stores

b. shopping centers

c. superstores

d. nonstore retailing

e. e-commerce

(Answer: d; p. 333; Easy)

3. Different products require different amounts of service. Which is one level of service offered?

a. Self-service.

b. Limited service.

c. Full service.

d. A, B, and C

e. None of the above.

(Answer: d; p. 334; Easy)

4. A _____ is the basis of all discount operations and is typically used by sellers of convenience goods. These retailers serve customers who perform their own “locate-compare-select” process to save money.

a. limited-service retailer

b. self-service retailer

c. full-service retailer

d. specialty-service retailer

e. convenience retailer

(Answer: b; p. 334; Moderate)

5. _____, such as Sears, provide more sales assistance because they carry more shopping goods about which customers need information. Their increased operating costs result in higher prices.

a. Self-service retailers

b. Full-service retailers

c. Off-price retailers

d. Limited-service retailers

e. Specialty-service retailers

(Answer: d; p. 334; Easy)

6. Some retailers, such as _____, carry narrow product lines with deep assortments within those lines.

a. chain stores

b. specialty stores

c. convenience stores

d. discount stores

e. off-price stores

(Answer: b; p. 334; Easy)

7. This type of stores carries a wide variety of product lines. They have been squeezed between more focused and flexible specialty stores on the one hand and more efficient, lower-priced discounters on the other. Service remains the key differentiating factor. What type is it?

a. Chain stores.

b. Department stores.

c. Factory outlet stores.

d. Merchant wholesaler stores.

e. Independents.

(Answer: b; p. 334; Challenging)

8. _____ are the most frequently shopped type of retail store. They are facing slow sales growth because of slower population growth and the rapid growth of out-of-home eating.

a. Convenience stores

b. Department stores

c. Chain stores

d. Supermarkets

e. Hypermarkets

(Answer: d; p. 334; Easy)

9. These stores are much larger than regular supermarkets and offer a large assortment of routinely purchased food products, nonfood items, and services. They are a combination food and discount store. What type is it?

a. Category killer stores.

b. Chain stores.

c. Factory outlet stores.

d. Superstores.

e. Off-price retailers.

(Answer: d; p. 335; Easy)

10. These stores are actually superstores that are giant specialty stores. What are they called?

a. Category killer stores.

b. Chain stores.

c. Factory outlet stores.

d. Shopping center stores.

e. Mom-and-pop stores.

(Answer: a; p. 336; Moderate)

11. Another superstore variation, _____, are huge superstores, perhaps as large as six football fields. They have been very successful in Europe.

a. category killer stores

b. shopping center

c. hypermarkets

d. chain stores

e. off-price retailers

(Answer: c; p. 336; Moderate)

12. _____ retailers in the United States are growing faster than product retailers.

a. Discount

b. Merchant

c. Service

d. Specialty

e. Off-price

(Answer: c; p. 336; Challenging)

13. _____ sell standard merchandise at lower prices by accepting lower margins and selling higher volume.

a. Merchant wholesalers

b. Discount stores

c. Full-service retailers

d. Limited-service retailers

e. None of the above

(Answer: b; p. 337; Easy)

14. The early _____ cut expenses by offering few services and operating in warehouse-like facilities in low-rent, heavily traveled districts.

a. chain stores

b. department stores

c. discount stores

d. off-price retailers

e. full-service retailers

(Answer: c; p. 337; Moderate)

15. _____ moved in to fill the low-priced, high-volume gap. They buy at less than regular wholesale prices and charge consumers less than retail.

a. Off-price retailers

b. Discount stores

c. Convenience stores

d. Chain store

e. Limited-service retailers

(Answer: a; p. 338; Easy)

16. Which is not one of the three main types of off-price retailers?

a. Independents.

b. Factory outlets.

c. Warehouse clubs.

d. Category killers.

e. B and C

(Answer: d; p. 338; Challenging)

17. _____ either are owned and run by entrepreneurs or are divisions of larger retail corporations. They buy at less than regular wholesale prices and charge consumers less than retail.

a. Discount stores

b. Warehouse clubs

c. Superstores

d. Independent off-price retailers

e. Full-service retailers

(Answer: d; p. 338; Moderate)

18. _____ are sometimes several stores grouped together. These stores offer prices as low as 50 percent below retail on a wide range of items.

a. Category killers

b. Factory outlets

c. Specialty stores

d. Superstores

e. Power centers

(Answer: b; p. 338; Easy)

19. Manufacturers send last year’s merchandise and seconds to the _____, while they send new merchandise to the department stores.

a. convenience stores

b. chain stores

c. factory outlets

d. retailers

e. power centers

(Answer: c; p. 338; Easy)

20. _____ operate in huge, drafty, warehouse-like facilities and offer few frills. Customers have to carry large items to the checkout line.

a. Warehouse clubs

b. Independent off-price retailers

c. Factory outlets

d. Discount stores

e. Superstores

(Answer: a; p. 338; Easy)

21. This type of store offers no home deliveries and often accepts no credit cards; however, this type of store does offer ultralow prices and deals on selected branded merchandise. What is it called?

a. A superstore.

b. A specialty store.

c. A warehouse club.

d. A chain store.

e. A premium.

(Answer: c; p. 338; Moderate)

22. _____ are two or more outlets that are commonly owned and controlled.

a. Chain stores

b. Convenience stores

c. Off-price retailers

d. Independent off-price retailers

e. Power centers

(Answer: a; p. 339; Easy)

23. The great success of _____ caused many independents to band together in one of two forms of contractual associations.

a. factory outlets

b. corporate chains

c. independent off-price retailers

d. warehouse clubs

e. convenience stores

(Answer: b; p. 339; Moderate)

24. The main difference between _____ organizations and other contractual systems is that these systems are normally based on some unique product or service.

a. voluntary chain

b. retailer cooperative

c. franchise

d. agent

e. warehouse-club

(Answer: c; p. 340; Easy

25. Merchandising _____ are corporations that combine several different retailing forms under central ownership.

a. conglomerates

b. agents

c. brokers

d. franchises

e. independents

(Answer: a; p. 340; Challenging)

26. Until retailers _____ and _____ their markets, they cannot make consistent decisions about product assortment, services, pricing, advertising, store décor, or any of the other decisions that must support their positions.

a. compete with; position

b. target; compete with

c. define; profile

d. limit; serve

e. divest; eliminate

(Answer: c; p. 341; Challenging)

27. Too many retailers fail because they try to have “something for everyone” and end up satisfying no market well. Successful retailers _____ their target markets well and position themselves strongly.

a. increase

b. franchise

c. wholesale

d. define

e. position

(Answer: d; p. 341; Moderate)

28. Each store has a “feel”; one store is cluttered, another cheerful, a third plush, a fourth somber. The store must plan a(n) _____ that suits the target market and moves customers to buy.

a. agent

b. broker

c. atmosphere

d. shopping center

e. none of the above

(Answer: c; p. 342; Easy)

29. The Mall of America near Minneapolis is one of the most dramatic conversions of stores into a(n) _____.

a. merchant wholesaler

b. off-price retailer

c. factory outlet

d. theater

e. restaurant

(Answer: d; p. 343; Challenging)

30. Stores that carry narrow product lines with deep assortments within those lines are called _____.

a. category killer stores

b. specialty stores

c. merchant stores

d. discount stores

e. power centers

(Answer: b; p. 334; Easy)

31. Stores that have low markups on higher volume are called _____.

a. category killer stores

b. specialty stores

c. merchant stores

d. discount stores

e. factory outlets

(Answer: d; p. 337; Moderate)

32. What is the most important point in retailing success?

a. Fair prices.

b. Good atmosphere.

c. Helpful employees.

d. Location.

e. Service.

(Answer: d; p. 345; Challenging)

33. _____ were the main form of retail cluster until the 1950s.

a. Department stores

b. Discount stores

c. Independent off-price retailers

d. Central business districts

e. Mom-and-pop stores

(Answer: d; pp. 345–346; Moderate)

34. In recent years, many cities have joined with merchants to try to revive downtown shopping areas. What is one thing they do not do?

a. Build malls.

b. Provide underground parking.

c. Advertise.

d. Discourage police in the business area.

e. Add restaurants.

(Answer: d; p. 346; Easy)

35. A _____ is a group of retail businesses planned, developed, owned, and managed as a unit.

a. merchant wholesaler

b. franchise

c. shopping center

d. supermarket

e. hypermarket

(Answer: c; p. 346; Challenging)

36. A _____, the largest and most dramatic of its kind, contains from 40 to 200 stores. It is like a covered mini-downtown and attracts customers from a wide area.

a. community shopping center

b. neighborhood shopping center

c. strip mall

d. regional shopping center

e. power center

(Answer: d; p. 346; Challenging)

37. A _____ contains between 15 and 40 retail stores. It normally contains a branch of a department store or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank.

a. community shopping enter

b. neighborhood shopping center

c. strip mall

d. regional shopping center

e. power center

(Answer: a; p. 346; Challenging)

38. Most shopping centers are _____ that generally contain between 5 and 15 stores. They are close and convenient for consumers.

a. community shopping centers

b. neighborhood shopping centers

c. strip malls

d. regional shopping centers

e. factory outlets

(Answer: b; p. 346; Challenging)

39. A recent addition to the shopping center scene is the ______. These huge unenclosed shopping centers consist of a long strip of retail stores, including large, freestanding anchors such as Wal-Mart. Each store has its own entrance with parking directly in front for shoppers who wish to visit only one store.

a. shopping mall

b. power center

c. superstore

d. chain store

e. regional shopping center

(Answer: b; p. 346; Challenging)

40. _____ have increased rapidly during the past few years to challenge traditional indoor malls.

a. Power centers

b. Superstores

c. Warehouse clubs

d. Chain stores

e. Franchises

(Answer: a; p. 346; Challenging)

41. Combined, all shopping centers now account for about _____ of all retail sales.

a. one-half

b. three-fourths

c. one-quarter

d. one-sixth

e. one-tenth

(Answer: b; p. 346; Challenging)

42. A _____ is a smaller mall with upscale stores, convenient locations, and expensive atmosphere. Think of it as part of Main Street and part Fifth Avenue.

a. regional shopping center

b. lifestyle center

c. community shopping center

d. franchise

e. upscale shopping center

(Answer: b; p. 346; Challenging)

43. Of the top 10 discount retailers in 1962, how many exist today?

a. Five.

b. Four.

c. Three.

d. Two.

e. None.

(Answer: e; p. 347; Moderate)

44. What was the first warehouse store chain?

a. Sam’s Club

b. Price Club

c. T G & Y

d. Ben Franklin’s

e. Costco

(Answer: b; p. 347; Challenging)

45. The _____ is used/depicted when new types of retailing forms begin as low-margin, low-price, low-status operations. These new retailers challenge established retailers and eventually take their place.

a. agent

b. broker

c. wheel-of-retailing concept

d. warehousing

e. product life cycle

(Answer: c; p. 347; Moderate)

46. _____ seems to explain the initial success and later troubles of department stores, supermarkets, and discount stores, and the recent success of off-price retailers.

a. Franchising

b. Merchant wholesaling

c. Wheel-of-retailing concept

d. Warehousing

e. Retail convergence

(Answer: c; p. 347; Moderate)

47. More online retailing is conducted by _____ retailers than by other retail types.

a. click-and-brick

b. click-only

c. brick-and-mortar

d. B or C

e. none of the above

(Answer: a; p. 348; Challenging)

48. The merging of consumers, products, prices, and retailers is called _____.

a. retail conglomeration

b. consumer convergence

c. price merging

d. retail convergence

e. none of the above

(Answer: d; p. 349; Challenging)

49. Convergence means greater _____ for retailers and greater difficulty in _____ offerings.

a. differentiating; competition

b. sales; differentiating

c. product; sales

d. competition; differentiating

e. integrating; differentiating

(Answer: d; p. 349; Challenging)

50. The rise of huge mass merchandisers and specialty superstores has created a core of _____.

a. category killers

b. franchises

c. superpower megaretailers

d. power centers

e. none of the above

(Answer: c; p. 349; Moderate)

51. Perhaps the most startling advances in retailing technology concern the ways in which today’s retailers are connecting with _____.

a. other businesses

b. their employees

c. other countries

d. customers

e. the Internet

(Answer: d; p. 350; Challenging)

52. _____ retailers are still significantly behind _____ when it comes to global expansion.

a. African; Peru

b. European; the United States

c. U.S.; Europe and Asia

d. Asian; the United States

e. Asian; African

(Answer: c; p. 350; Challenging)

53. _____, the world’s second largest retailer after Wal-Mart, has embarked on an aggressive mission to extend its role as a leading international retailer.

a. McDonald’s

b. The Gap

c. Carrefour

d. Toys “R” Us

e. Costco

(Answer: c; p. 350; Challenging)

54. _____ includes all activities involved in selling goods and services to those buying for resale or business use.

a. Wholesaling

b. Retailing

c. Franchising

d. Discounting

e. Disintermediation

(Answer: a; p. 352; Easy)

55. _____ buy mostly from producers and sell mostly to retailers and industrial consumers.

a. Independents

b. Factory outlets

c. Wholesalers

d. Discount stores

e. None of the above

(Answer: c; p. 352; Moderate)

56. Wholesalers add value by performing channel functions. Which is a channel function?

a. Selling and promoting.

b. Buying and assortment building.

c. Bulking-breaking.

d. All of the above.

e. A and C

(Answer: d; p. 352; Moderate)

57. Which of the following is not one of the wholesaler’s channel functions?

a. Financing.

b. Risk bearing.

c. Market information.

d. Off-price retailing.

e. Bulk-breaking.

(Answer: d; p. 352; Challenging)

58. Wholesalers fall into three major groups. Which is not one of these groups?

a. Merchant wholesalers.

b. Agents and brokers.

c. Manufacturers’ sales branches and offices.

d. Specialty wholesalers.

e. B and C

(Answer: d; p. 352; Challenging)

59. _____ are the largest group of wholesalers. Two broad types are full-service and limited-service.

a. Brokers

b. Manufacturer sales

c. Agents

d. Merchant wholesalers

e. Specialty wholesalers

(Answer: d; p. 352; Challenging)

60. _____ and _____ differ from merchant wholesalers in two ways: They do not take title to goods, and they perform only a few functions.

a. Full-service; limited-service

b. Brokers; agents

c. Branches; office

d. Power centers; independent wholesalers

e. none of the above

(Answer: b; p. 352; Moderate)

61. The _____ brings buyers and sellers together and assists in negotiations.

a. agent

b. broker

c. retailer

d. wholesaler

e. retail convergence

(Answer: b; p. 352; Moderate)

62. _____ represent buyers or sellers on a more permanent basis. Another name for them is manufacturers’ representatives.

a. Brokers

b. Franchises

c. Agents

d. Retailers

e. Intermediaries

(Answer: c; p. 352; Challenging)

63. A major type of wholesaling is that done in manufacturers’ sales branches and offices. Who does the wholesaling in these?

a. Brokers.

b. Agents.

c. Sellers or buyers.

d. Category buyers.

e. The main office.

(Answer: c; p. 352; Challenging)

64. Like retailers, wholesalers must _____ their target markets and _____ themselves effectively—they cannot serve everyone.

a. define; position

b. position; define

c. discount; franchise

d. franchise; discount

e. identify; align

(Answer: a; p. 354; Challenging)

65. _____ are under great pressure to carry a full line and to stock enough for immediate delivery.

a. Convenience stores

b. Factory outlets

c. Wholesalers

d. Category killer stores

e. None of the above

(Answer: c; p. 354; Moderate)

66. Wholesalers are always rethinking which _____ count most in building strong customer relationships and which should be dropped or charged for.

a. products

b. services

c. franchises

d. agents

e. brokers

(Answer: b; p.354; Easy)

67. Most wholesalers are not _____-minded. Many are behind the times in personal selling—they still see selling as a single salesperson talking to a single customer instead of as a team effort.

a. absent

b. promotion

c. management

d. franchise

e. customer

(Answer: b; p. 354; Challenging)

68. _____ typically locate in low-rent, low-tax areas and tend to invest little money in their buildings, equipment, and systems.

a. Retailers

b. Agents

c. Brokers

d. Wholesalers

e. Factory outlets

(Answer: d; p. 354; Challenging)

69. Because _____ invest little money in their equipment, their materials-handling and order-processing systems are often outdated.

a. retailers

b. agents

c. wholesalers

d. brokers

e. industrial consumers

(Answer: c; p. 354; Challenging)

70. Specialty stores carry _____ with _____ within them.

a. convenience items; mostly staples

b. narrow product lines; deep assortments

c. narrow product lines; shallow assortments

d. wide product lines; shallow assortments

e. wide product lines; deep assortments

(Answer: b; p. 334; Moderate)

71. Which of the following retailers likely require more emphasis on salespeople to assist customers?

a. Limited-service retailers.

b. Full-service retailers.

c. Self-service retailers.

d. Retailers that carry specialty goods.

e. A and D

(Answer: e; p. 334; Challenging)

72. Which type of retailer tends to be the most frequently shopped?

a. Department stores.

b. Convenience stores.

c. Supermarkets.

d. Superstores.

e. Off-price retailers.

(Answer: c; p. 334; Moderate)

73. Which type of retail store is most similar to a hypermarket?

a. Department store.

b. Convenience store.

c. Supermarkets.

d. Superstores.

e. Off-price retailers.

(Answer: d; p. 335; Moderate)

74. Which of the following represent a type of sales promotion?

a. TV ads.

b. In-store demonstrations.

c. Displays.

d. Publicity.

e. B and C.

(Answer: e; p. 345; Easy)

75. Which of the following is not true about the so-called power center?

a. They are enclosed shopping centers.

b. They likely do not include Wal-Mart.

c. The power center has one main entrance.

d. Power centers have decreased in number in recent years.

e. All of the above.

(Answer: e; p. 346; Challenging)

True/False

76. Wholesaling includes all the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use.

(False; p. 333; Easy)

77. Retailers can be classified in terms of several characteristics, including the amount of service they offer, the breadth and depth of their product lines, the relative prices they charge, and how they are organized.

(True; p. 333; Moderate)

78. Full-service retailers, such as Sears or JC Penney, provide more sales assistance because they carry more shopping goods about which customers need information.

(False; p. 334; Challenging)

79. In limited-service retailers, such as specialty stores and first-class department stores, salespeople assist customers in every phase of the shopping process.

(False; p. 334; Moderate)

80. Department stores carry narrow product lines with deep assortments within those lines.

(False; p. 334; Easy)

81. Department stores have been squeezed between more focused and flexible specialty stores on the one hand, and more efficient, lower-priced discounters on the other. Service remains the key differentiating factor.

(True; p. 334; Moderate)

82. Supermarkets are the most frequently shopped type of retail store.

(True; p. 334; Moderate)

83. Supercenters are a combination of food and discount stores that emphasize cross-merchandising.

(True; p. 335; Easy)

84. Category killers carry a deep assortment of a particular line with a knowledgeable staff.

(True; p. 336; Easy)

85. Off-price retailers sell standard merchandise at lower prices by accepting lower margins and selling higher volume.

(False; p. 338; Challenging)

86. A discount store buys at less than regular wholesale prices and charges consumers less than retail.

(False; p. 337; Challenging)

87. Independent off-price retailers are either owned and run by entrepreneurs or are divisions of larger retail corporations.

(True; p. 338; Easy)

88. Factory outlets, independents, and warehouse clubs buy their merchandise in a similar fashion.

(True; p. 338; Challenging)

89. Department stores are protesting to the manufacturers because factory outlet malls are being built at an alarming rate.

(False; p. 338; Moderate)

90. In warehouse clubs, customers must wrestle furniture and other large items to the checkout line.

(True; p. 338; Easy)

91. Chain stores are located near a residential area, are open long hours, seven days a week, and carry a limited line of high-turnover goods.

(False; p. 339; Moderate)

92. The main difference between franchise organizations and other contractual systems is that franchise systems are not normally based on some unique product or service.

(False; p. 340; Easy)

93. Merchandising conglomerates are corporations that combine several different retailing forms under different ownership.

(False; p. 340; Challenging)

94. Retailers first must define their target markets and then decide how they will position themselves in these markets.

(True; p. 341; Easy)

95. Target’s ability to position itself as an upscale alternative really has affected many stores, but Wal-Mart still sells much more products.

(True; p. 341; Easy)

96. Each store has a “feel”; one store is cluttered, another cheerful, a third plush, a fourth somber. This is referring to each store’s franchise.

(False; p. 342; Easy)

97. The Mall of America near Minneapolis is perhaps the most dramatic conversion of stores into theater.

(True; p. 343; Moderate)

98. The undisputed winner in the “place race” has been Target, whose strategy of being the first mass merchandiser to locate in small and rural markets was one of the key factors in its phenomenal early success.

(False; p. 350; Easy)

99. A community shopping center usually contains 5 to 15 stores, including a supermarket, a discount store, and several service stores.

(False; p. 346; Challenging)

100. Shopping centers now account for about three-fourths of all retail sales.

(True; p. 346; Moderate)

101. The wheel-of-retailing concept deals mainly with wholesalers trying to replace higher prices with lower costs.

(False; p. 347; Challenging)

102. The merging of wholesalers, retailers, products, and prices is called retail convergence.

(False; p. 349; Challenging)

103. Convergence means greater competition for retailers and greater difficulty in differentiating offerings.

(True; p. 349; Moderate)

104. A broker brings buyers and sellers together and assists in negotiation.

(True; p. 352; Easy)

105. Power centers are decreasing in number.

(False; p. 346; Easy)

Essay

106. Retail stores can be classified in terms of several characteristics. Name four of these.

These include: the amount of service they offer, the breadth and depth of their product lines, the relative prices they charge, and how they are organized.

(p. 333; Challenging)

107. Compare and contrast specialty stores and convenience stores.

Specialty stores carry narrow product lines with deep assortments within those lines. Convenience stores are small stores that carry a limited line of high-turnover convenience goods. More than 60 percent of their revenues come from sales of gasoline; more than 50 percent are from cigarette or beverage sales.

(p. 334; Easy)

108. Describe the differences between discount stores and off-price retailers.

A discount store sells standard merchandise at lower prices by accepting lower margins and selling higher volume. Off-price retailers buy at less-than-regular wholesale prices and charge consumers less than retail.

(pp. 337–338; Moderate)

109. A form of contractual retail organization is a franchise. Name five types of business in which franchising has been prominent.

These may include fast foods, video stores, health or fitness centers, hair cutting salons, and auto rentals.

(p. 340; Moderate)

110. What are some reasons why Target is able to compete against Wal-Mart?

Target has developed its own distinct targeting and positioning. Target’s aim is to stick to low prices, but rises above the discount fray with upmarket style and design and higher-grade service. This upscale alternative really separates it from its mass-merchant peers. It targets the higher income, better-educated guests in its stores.

(p. 341; Challenging)

111. Name five promotional tools that retailers use.

These may include advertising, personal selling, sales promotion, public relations, and direct marketing.

(pp. 344–345; Easy)

112. Three types of shopping centers are regional shopping centers, community shopping centers, and neighborhood shopping centers/strip malls. Describe how they are different from each other.

Regional shopping centers are the largest and most dramatic shopping centers. They contain from 40 to more than 200 stores. They are like covered mini-downtowns and attract customers from a wide area. Community shopping centers contain between 15 and 40 stores. They normally contain a branch of a department store or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank. Neighborhood shopping centers/strip malls generally contain 5 to 15 stores. They are close and convenient for consumers, usually containing a supermarket, a discount store, and several service stores.

(p. 346; Challenging)

113. Describe the major types of retailers and give examples of each.

Retailers can be classified as store retailers and nonstore retailers. Although most goods and services are sold through stores, nonstore retailing has been growing much faster than has store retailing. Store retailers can be further classified by the amount of service they provide, product line sold, and relative prices. Today, many retailers are banding together in corporate and contractual retail organizations.

(p. 333; Moderate)

114. Explain the marketing decisions facing wholesalers.

Today, wholesaling is holding its own in the economy. Progressive wholesalers are adapting their services to the needs of target customers and are seeking cost-reducing methods of doing business. Faced with slow growth in their domestic markets and developments such as the North American Free Trade Association, many large wholesalers are also now going global.

(p. 358; Moderate)

APPLICATION CONTENT: Multiple-Choice Questions

115. These stores usually carry more specialty goods for which customers like to be “waited on.” They have much higher operating costs, which are passed along to the customer.

a. Self-service stores.

b. Category killer stores.

c. Full-service stores.

d. Independent stores.

e. Off-price stores.

(Answer: c; p. 334; Moderate)

116. These stores are small stores that carry a limited line of high-turnover convenience goods. Most of the store’s revenues are from cigarette, beverage, and gasoline sales.

a. Convenience stores.

b. Department stores.

c. Chain stores.

d. Supermarkets.

e. Hypermarkets.

(Answer: a; p. 334; Easy)

117. A growing number of outlet malls now feature brands such as Coach, Polo Ralph Lauren, Dolce & Gabbana, and Giorgio Armani, causing _____ to protest to the manufacturers of these brands.

a. the wheel-of-retailing concept

b. agents

c. brokers

d. department stores

e. factory outlets

(Answer: d; p. 338; Moderate)

118. Service differentiation among retailers has _____. National brands are found not only in department stores but also in mass-merchandise, off-price discount stores, and on the Web.

a. increased

b. eroded

c. stayed the same

d. franchised

e. tripled

(Answer: b; p. 340; Easy)

119. How can any discounter hope to compete with the likes of huge and dominating Wal-Mart? The answer is _____.

a. good targeting

b. being very competitive

c. good positioning

d. A and C

e. none of the above

(Answer: d; p. 341; Moderate)

120. The retailer’s _____ should differentiate the retailer while matching target shoppers’ expectations. One strategy is to offer merchandise that no other competitor carries.

a. agent

b. broker

c. product assortment

d. chain stores

e. distribution strategy

(Answer: c; p. 342; Challenging)

121. Lane Bryant carries goods in larger sizes; this allows this store to _____ from other stores.

a. be off-priced

b. differentiate itself

c. franchise

d. retail

e. none of the above

(Answer: b; p. 342; Moderate)

122. _____ may include in-store demonstrations, displays, contests, and visiting celebrities.

a. Franchises

b. Sales promotions

c. Agent promotions

d. Publicity

e. None of the above

(Answer: b; p. 345; Easy)

123. Press conferences and speeches, store openings, special events, newsletters, magazines, and public service activities are examples of ways that retailers promote _____.

a. public relations

b. sales promotions

c. high markups

d. the wheel-of-retailing concept

e. retail convergence

(Answer: a; p. 345; Moderate)

124. Retailers operate in a fast-changing environment. What is one way that consumers are not changing?

a. Demographics.

b. Lifestyles.

c. Shopping patterns.

d. Competitive strategies.

e. Marketing mixes.

(Answer: d; p. 346; Challenging)

125. _____ downfall occurred because it refused to expand beyond its California base.

a. 7-11’s

b. Price Club’s

c. Ben Franklin’s

d. T G & Y’s

e. K-Mart’s

(Answer: b; p. 347; Challenging)

126. 7-Eleven, Stop-N-Go, and Circle K are examples of _____.

a. specialty stores

b. department stores

c. convenience stores

d. supermarkets

e. category killers

(Answer: c; p. 334; Moderate)

127. Which wholesaler’s channel is this describing? The wholesaler’s sales forces help manufacturers reach many small customers at a low cost. The wholesaler has more contacts and is often more trusted by the buyer than the distant manufacturer.

a. Bulk-breaking.

b. Selling and promoting.

c. Buying and assortment building.

d. Warehousing.

e. Rack jobber.

(Answer: b; p. 352; Challenging)

128. Which wholesaler’s channel is this describing? Wholesalers hold inventories, thereby reducing the inventory costs and risk of suppliers and customers.

a. Bulk-breaking.

b. Buying and assorting building.

c. Warehousing.

d. Financing.

e. Transporting.

(Answer: c; p. 352; Challenging)

129. Which wholesaler’s channel is this describing? Wholesalers can provide quicker delivery to buyers because they are closer than the producers.

a. Buying and assortment building.

b. Financing.

c. Transportation.

d. Risk bearing.

e. Warehousing.

(Answer: c; p. 352; Easy)

130. What might a retailer do to “trade up”?

a. Reduce prices.

b. Add new product lines.

c. Change the target market.

d. A and C

e. None of the above.

(Answer: b; p. 339; Moderate)

131. Which of the following may be true about shoppers who prefer to shop at “lifestyle centers”?

a. They prefer inexpensive atmospheres.

b. They prefer upscale stores.

c. They prefer out-of-the-way locations.

d. All of the above.

e. None of the above.

(Answer: b; p. 347; Challenging)

132. Wal-Mart attracts consumers of all demographic, psychographic, and geographic segments with many varieties and prices. This depicts _____.

a. positioning

b. a change in target market

c. trading up

d. retail convergence

e. the marketing mix

(Answer: d; p. 349; Moderate)

133. You own a local mom-and-pop store in your neighborhood. You still like to offer fresh seafood in your meat display case. Which type of wholesaler might best serve you?

a. Cash-and-carry wholesaler.

b. Rack jobber.

c. Drop shipper.

d. Mail-order wholesaler.

e. Agents and brokers.

(Answer: a; p. 353; Moderate)

134. To change your store’s atmosphere, you may change the store’s _____.

a. lighting

b. scent

c. overhead music

d. product assortment

e. all of the above

(Answer: e; p. 342; Easy)

Short Answer

135. What is the difference between a limited-service and a full-service retailer?

Limited-service retailers carry more shopping goods about which customers need information; their increased operating costs result in higher prices. Full-service retailers provide salespeople who assist customers in every phase of the shopping process; these retailers usually carry more specialty goods for which customers like to be “waited on.”

(p. 334; Easy)

136. What types of products do specialty stores carry?

Specialty stores carry narrow product lines with deep assortments within those lines.

(p. 334; Easy)

137. How have department stores responded to increased competition by specialty stores?

Many department stores have added promotional pricing to meet the threat; in addition, they have stepped up the use of store brands and single-brand “designer shops” to compete with specialty stores. Department stores are also trying mail-order, telephone, and Web selling.

(p. 334; Moderate)

138. What types of products may be sold through category killers?

Category killers are prevalent in a wide range of categories, including books, baby gear, toys, electronics, home improvement products, linens and towels, party goods, sporting goods, and pet supplies.

(p. 336; Easy)

139. How can discount stores sell merchandise at lower prices?

Discount stores sell merchandise at lower prices by accepting lower margins and selling higher volume.

(p. 337; Easy)

140. What is a major concern for a manufacturer whose merchandise is sold through factory outlets?

Manufacturing facilities might be concerned with the manner in which their products are being displayed. For example, such manufacturers might be concerned that a particular product with an established, upscale image is being displayed as a substandard item, tarnishing the overall image of the brand in the minds of the consumers.

(p. 338; Challenging)

141. What are three advantages a chain has over an independent?

A chain may benefit from a regionally or nationally known name, as well as an established promotional campaign. In addition, because a chain is held together by a centralized purchasing or administrative center, there is much bargaining power with suppliers.

(p. 339; Easy)

142. What are merchandising conglomerates?

Merchandising conglomerates are corporations that combine several different retailing forms under central ownership.

(p. 340; Moderate)

143. What elements comprise a store’s atmosphere?

A store’s atmosphere includes the sights, sounds, and smells that customers typically associate with the store.

(p. 342; Easy)

144. How have shopping centers changed in the past few decades?

Central business districts were the wave in the 1950s; such areas included department stores, specialty stores, banks, and movie theaters; these shopping areas were located downtown. With the move of people to the suburbs came branches of some of the downtown merchants in suburban shopping centers. In recent years, many cities have joined with merchants to try to revive downtown shopping areas by building malls and providing underground parking.

(pp. 345–3466; Challenging)

145. What attracts shoppers to the so-called power center?

Power centers are unenclosed shopping centers that consist of a long strip of retail stores, including large, freestanding anchors such as Wal-Mart or Home Depot. Each store has its own entrance with parking directly in front for shoppers who wish to visit only one store.

(p. 346; Moderate)

146. Briefly explain the wheel-of-retailing concept.

According to this concept, many new types of retailing forms begin as low-margin, low-price, low-status operations. Over time, the retailers’ success leads them to upgrade their facilities and offer more services; consequently, their costs increase, forcing them to increase their prices. Eventually, these retailers become prey to the new retailers entering the marketplace.

(p. 347; Challenging)

147. What constitutes retail convergence?

Retail convergence is the coming together of shoppers, goods, and prices. Customers of all income levels are shopping at the same stores, often for the same goods. Old distinctions such as discount store, specialty store, and department store are losing significance.

(p. 349; Moderate)

148. How do merchant wholesalers and agents/brokers differ?

Merchant wholesalers “take title to” (or own) what it is they sell; agents/brokers merely serve as liaisons, bringing buyers and sellers together.

(p. 352; Easy)

149. What marketing mix elements are important to wholesalers?

All marketing mix elements are important to wholesalers. The characteristics of the products being distributed often help to define the functions of the wholesaler. In addition, price is important because markups must be considered as products are distributed through intermediaries. Promotion is critical, though many wholesalers are not promotion-minded. Place is especially important because locations, facilities, and Web locations must be selected carefully.

(p. 354; challenging)

150. What are three major trends in wholesaling?

The wholesaling industry is vulnerable to fierce resistance to price increases and winnowing out of suppliers who are not adding value based on cost and quality. Wholesalers must constantly improve their services and reduce their costs because they must constantly be aware of their suppliers’ and target customers’ changing needs.

(p. 355; Challenging)

151. What types of services do wholesalers provide to retailers?

Wholesalers provide retail pricing, cooperative advertising, marketing and management information reports, accounting services, online transactions, storage space, speed of delivery, and so on.

(p. 355; Moderate)

152. Why are convenience stores redesigning their stores to attract females?

They are shredding the image of a “truck stop” where men go to buy beer, cigarettes, and magazines, and instead offer freshly prepared foods and a cleaner, more upscale environment.

(p. 334; Easy)

153. How does a retailer cooperative function?

A retailer cooperative is a group of retailers that join to set up a jointly owned, central wholesale operation, and conducts joint merchandising and promotion efforts.

(p. 339; Moderate)

154. What are the main differences between a franchise and a voluntary chain?

Franchise systems are normally based on some unique product or service, a method of doing business, the trade name, goodwill, or a patent that the franchiser has developed. A voluntary chain is a wholesaler-sponsored group of independent retailers that engages in group buying and common merchandising.

(p. 339; Challenging)

Scenario

In the 1970s, Shipshewana was only a small town with a hardware store, a grain mill, a shoe store, a small restaurant, and a grocery store. Over the next two decades, the small town transformed into an international tourist attraction, attracting thousands of tourists who are intrigued with the lifestyle of Shipshewana’s largest population—the Amish.

Ben and Mary Miller, having grown up within the Amish faith, decided to capitalize on their town’s popularity and their woodworking skills. Their shop, Indiana Wood, began with a small display of handmade hickory rocking chairs, Ben Miller’s specialty. But within a few months, the display at Indiana Wood included picnic tables, flower boxes, and small handmade novelty items. No other shop offers the same.

Mary Miller decorated the shop’s display room with authentic Amish décor and eventually hired three Amish friends to sew and embroider napkins and other textiles per customer request. In addition, two women from the Amish community sought permission from the Millers to display home-baked pastries and jellies on Tuesdays and Wednesdays, the town’s busiest tourist days, when Shipshewana attracted swarms of visitors to its flea market on the south edge of town.

“Shipshewana is full of specialty shops,” Mary Miller stated. “People don’t come here to buy things made in China or Taiwan. They want real, Amish-made goods.”

155. Why might Indiana Wood be classified as a full-service retailer?

Indiana Wood offers specialty goods. Customers are waited on hand and foot as their customized products are produced on the spot, right in front of them.

(p. 334; Easy)

156. Why do specialty stores flourish in Shipshewana?

Customers are attracted to the lifestyle of the Amish people; customers like to take a part of the unique Amish culture and tradition home with them as they buy any number of specialty goods.

(p. 334; Moderate)

157. Could Indiana Wood be part of a retailer cooperative? Explain.

It is possible. Any group of Amish specialty stores could band together to form a larger jointly owned enterprise. This, however, could take away from each shop’s uniqueness that is contributing to Shipshewana’s business success.

(p. 339; Moderate)

158. How does Indiana Wood position itself?

This shop attracts Shipshewana’s tourists. The traditional products offered are Amish-made and the shop’s décor is strictly Amish. No other shop currently offers the same products; therefore, Indiana Wood complements the other shop’s offerings.

(p. 341; Challenging)

159. Explain this retailer’s atmosphere.

The Amish décor, offerings, and even shop workers give visitors an authentic impression of the pride and skill built into the shop’s products.

(p. 342; Easy)

160. How might this unique retailer promote?

Promoting locally may be ineffective because Indiana Wood aims to attract tourists. Promoting in tourist pamphlets and through promotional options available at the local Chamber of Commerce may be the most profitable.

(p. 344; Easy)

161. How does location play a critical part in this retailer’s success?

Location in this scenario is everything! The large Amish population attracts visitors; the shops capitalize on that.

(p. 345; Moderate)

162. Would this retailer benefit from retail convergence? Explain.

No. Each specialty shop in this town does what it does best. The town would lose its special aura if all shops competed, offering the same products.

(p. 349; Moderate)

163. If Indiana Wood expanded beyond Shipshewana, what are three critical functions that may need to be performed by a wholesaler?

Such functions may include selling and promoting, warehousing, transportation, and marketing information.

(p. 352; Moderate)

164. How might this retailer benefit with a manufacturer’s sales branch/office?

Such an option would allow Ben and Mary Miller to control how their products, and the Amish traditions, are being explained to those unfamiliar with them. Such an office would have direct contact with Ben and Mary.

(p. 352; Moderate)

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