Deck 4: Evaluating the Competition in Retailing

Question 1

Which of the following is a key characteristic of monopolistic competition?

A) Few sellers
B) Substitutable products
C) Horizontal demand curve
D) One seller
E) Lack of government regulation

Answer 1

B

Question 2

Retailers would like to compete in _____ since many retailers in such markets achieve an above-average return on investment due to the low level of competition in the marketplace.

A) intratype markets
B) overstored markets
C) understored markets
D) pure monopolies
E) divertive markets

Answer 2

C

Question 3

Which of the following factors is NOT characteristic of a market experiencing pure competition?

A) Ease of entry into the market
B) Many buyers
C) Many sellers
D) Similar products
E) Differentiated products

Answer 3

E

Question 4

If prices become too high,merchandise selection too limited,or services too poor,residents of these communities will travel to larger communities to shop.This is known as:

A) Outsourcing.
B) Store positioning.
C) Outshopping.
D) Internet shopping.
E) Transport shopping.

Question 5

Retailers compete for customers on five major fronts or factors.Which of the following is NOT one of the major fronts retailers compete for target customers?

A) The price for the value offered
B) Service level
C) Product selection
D) Customer experience
E) Employee compensation

Question 6

_____ describes a situation where consumers already have one unit of an item and as a result place a lower value on an additional unit.

A) Decreasing marginal revenue
B) Leveling product usage
C) Monopolistic decline
D) Declining marginal utility
E) The law of diminishing markets

Question 7

High-profit performance retailers must always be on the offensive in their study of the changing competitive environment,especially its _____ competition.

A) local
B) statewide
C) nationwide
D) worldwide
E) industry

Question 8

Retailing is often characterized as:

A) monopolistic competition.
B) vertical competition.
C) pure monopoly.
D) pure competition.
E) perfect competition.

Question 9

If the top four firms of an industry account for more than 60 percent to 80 percent of the market,which of the following occurs?

A) Monopolistic competition
B) Oligopoly
C) Pure monopoly
D) Pure competition
E) Perfect competition

Question 10

Retail experts would agree that a certain marketplace is _____ if the number of stores in relation to the number of households is so large that to engage in retailing is unprofitable or marginally profitable.

A) understored
B) saturated
C) overstored
D) overmarketed
E) over-spaced

Question 11

To be successful in retailing today,given the slower population growth rate,retailers will grow by:

A) taking away sales from competitors.
B) reducing the number of stores they have.
C) having their industry legislated as a monopoly.
D) accusing their competitors of unfair competition.
E) reducing customer services.

Question 12

The competition between American Airlines and Delta Airlines is an example of:

A) monopolistic competition.
B) oligopolistic competition.
C) pure monopoly.
D) pure competition.
E) perfect competition.

Question 13

A retailer who has already done a great job of developing a strategy:

A) should also be aware of changes on the national retailing scene, but need not concern itself with local changes.
B) need not worry what competitors are doing.
C) should never be seen visiting a competitor's store.
D) must make sure that its fixed costs exceed its variable costs.
E) must always remember that no retailer can ever design a strategy that will totally insulate it from the actions of competitors.

Question 14

When Gap Stores get an exclusive contract to sell uniforms to your old high school,it is an example of:

A) monopolistic competition.
B) oligopolistic competition.
C) pure monopoly.
D) pure competition.
E) perfect competition.

Question 15

A market offers rows of exotic produce,fresh prime meats,seafood flown in fresh,a bakery filled with artisan breads and over 220 cheeses.This market is competing for customers on which major front?

A) The price for the value offered
B) Service level
C) Product selection
D) Location or access
E) Employee compensation

Question 16

Customers can "self-inflict" this type of competition when a brand name is perceived as unique and highly valued,and a retailer controls its sale.

A) Pure competition
B) Pure monopoly
C) Monopolistic competition
D) Oligopolistic competition
E) Perfect competition

Question 17

Which of the following is NOT an example of a nonprice demand strategy that a retailer could employ as a means of increasing its demand?

A) Increasing the width of the store's aisles, so the customer can freely move around in the store.
B) Providing "out-of-town" customers with free gasoline.
C) Offering a 30-day guarantee to customers if they find the same product for a cheaper price.
D) Providing customers using public transportation with complimentary "ride and shop" coupons.
E) Developing an advertising campaign aimed at persuading consumers to make more of their purchases at its stores.

Question 18

Because many retailers have access to the same merchandise,high-profit performing retailers have sought to use _____ in order to develop a protected niche in the marketplace so that they cannot be easily copied by the competition.

A) revenue management
B) yield management
C) asset management
D) store positioning
E) category killers

Question 19

When the seller is the only one selling a particular product,it is known as:

A) Pure competition
B) Pure monopoly
C) Monopolistic competition
D) Oligopolistic competition
E) Perfect competition

Question 20

What type of competitive environment is characterized by a horizontal demand curve,where the retailer must sell all of its merchandise at the going "market" or equilibrium price?

A) Perfect competition
B) Oligopolistic competition
C) Pure competition
D) Pure monopoly
E) Monopolistic competition

Question 21

The _____ theory of retail evolution describes retail institutions as evolving from outlets that offer wide assortments to specialized stores that offer narrow assortments,and then return to the wide assortment stores,continuing this pattern again and again.

A) wheel of retailing
B) retail life cycle
C) retail accordion
D) dominant competitive
E) turnover

Question 22

The retail life cycle suggests that firms move from the _____ stage to the _____ stage to the _____ to _____ stage.

A) introduction; growth; maturity; decline
B) introduction; development; maturity; decline
C) entry; development; maturity; decline
D) entry; trading-up; vulnerability; decline
E) innovation; growth; development; decline

Question 23

The growth of nonstore retailing growth can be attributed to:

A) Accerelerated communication technology and changing consumer lifestyles.
B) Heightened global competition and increasing use of private labels.
C) The development of off price retailers and supercenters.
D) The rapid growth of qualified sales help in bricks-and-mortar stores and more convenient retail locations.
E) The development of recycled merchandise retailers and liquidators.

Question 24

According to the wheel of retailing theory,_____ currently appear to be in the vulnerability phase of their evolution.

A) outlet malls
B) warehouse clubs
C) health spas
D) The Internet
E) discount department stores

Question 25

According to most retail analysts,as a result of several key forces at work today,which of the following forms of nonstore retailing will experience significant growth over the next decade while the other forms will remain steady or decline?

A) Telemarketing
B) Vending machines
C) Catalog sales
D) Direct selling
E) Internet shopping

Question 26

According to the text,what is the one important difference between off-price retailers and discounters?

A) Discounters carry only brands that they are able to get on special deals from the manufacturer.
B) Off-price retailers offer better prices
C) Discounters offer greater selection
D) Off-price retailers offer more convenient locations
E) Discounters offer continuity of brands

Question 27

As a warehouse club manager,you have noticed that this format's market share has stabilized.As such,you fear severe profit declines as warehouse clubs are now in the _____ stage of the retail life cycle.

A) introduction
B) growth
C) maturity
D) decline
E) vulnerability

Question 28

The theory of retail competition that states that new retail institutions enter the marketplace as low-price,low-margin operations and eventually begin to offer more services and charge higher prices is the:

A) retail accordion theory.
B) high/low theory.
C) natural selection theory.
D) retail life cycle theory.
E) wheel of retailing theory.

Question 29

Dawn needed to drop off a few garments at the dry cleaners.On her way to work,she stopped at the local SuperCenter to pick up pastries for her staff at work.While at the SuperCenter,Dawn noticed that they now offer dry cleaning services.So,instead of going to the dry cleaner's on the corner,Dawn dropped off her garments at the SuperCenter.By offering dry cleaning,SuperCenter successfully engaged in what form of competition?

A) Perfect monopoly
B) Mixed-share
C) Divertive
D) Intratype
E) Interactive

Question 30

Which of the following is NOT a trend shaping the retail landscape today?

A) Decrease in competition from nonstore retailers
B) The advent of new retailing formats
C) Heightened global competition
D) The integration of technology into current operations
E) The increasing use of private labels

Question 31

Which stage of the retail life cycle is characterized by the entrance of many new competitors and tremendous growth in sales and profits?

A) Vulnerability
B) Maturity
C) Growth
D) Entry
E) Introduction

Question 32

The _____ is the point where total revenues equal total expanses.

A) break-even point
B) matched point
C) stabilization point
D) profit maximization point
E) point of highest revenue

Question 33

Albertson's Supermarkets recently began offering DVD rentals to compete with Blockbuster.What type of competition is this?

A) Intertype
B) Intratype
C) Scrambled
D) Mixed share
E) Mixed location

Question 34

In 2000,Samantha Toller started a small fast-food restaurant.In order to gain a competitive foothold,Samantha offered low prices with very few extras.As her business grew,Samantha started adding services and gradually had to increase prices to cover the costs of these services.Today,Samantha is vulnerable to new,low-price competitors.This is an example of what theory of retail evolution?

A) High price jinx
B) High/low
C) Retail life cycle
D) Wheel of retailing
E) Retail accordion

Question 35

The first stage of the retail life cycle is:

A) entry.
B) realignment.
C) introduction.
D) growth.
E) decline.

Question 36

Divertive competition occurs when:

A) retailer A sends its customer to retailer B to purchase any products that A had "out-of-stock."
B) the customer buys product A rather than product B, which was the one he/she was shopping for.
C) a retailer intercepts and makes a sale to a customer that normally would have purchased the product at another retail store.
D) the retailer tries to entice the customer to buy a more expensive model or brand than wanted.
E) the customer buys a private label instead of his/her usual brand.

Question 37

When two discount department stores such as Sears and JCPenney compete for the same customer,what type of competition is occurring?

A) Intertype
B) Conceptual
C) Divertive
D) Intercept
E) Intratype

Question 38

The _____ theory suggests that all firms seek superior financial performance in an ever-changing environment,and as a result,firms are forced to change the elements of their retail mix to match changing consumer preferences.

A) wheel of retailing
B) retail accordion
C) retail life cycle
D) resource-advantage
E) monopolistic competitive

Question 39

_____ sell products at a discount but do not carry certain brands on a continuous basis and carry those brands they can buy from manufacturers at closeout or deep one-time discount prices.

A) Full-price stores
B) Department stores
C) Specialty retailers
D) Discounters
E) Off-price retailers

Question 40

Retail historians have observed that,in the United States,retail trade was dominated by _____ until 1860; this type of store carried a broad assortment of merchandise ranging from farm implements to textiles to food.

A) mail order
B) general stores
C) door-to-door sales
D) corner stores
E) family owned business

Question 41

Competition at the local level is often more complex than at the national or regional level.

Question 42

Strategic plans that provide a differential advantage lead to high profit only if competitors need large amounts of time or money to overcome them.

Question 43

This retail format combines a discount store and grocery store to carry 80,000 to 100,000 products in order to offer one-stop shopping.

A) Warehouse club
B) Off-price retailer
C) Supercenter
D) Recycled merchandise retailer
E) Liquidator

Question 44

The rate of change in retailing around the world appears to be directly related to:

A) the internationalization of U.S. franchises such as McDonald's.
B) the internationalization of Walmart.
C) the use of discount stores as a retail format.
D) the stage and speed of economic development in the countries concerned.
E) the development of warehouse clubs.

Question 45

Technological innovations in retailing can best be viewed under three main areas:

A) Internet, order processing, and order taking.
B) Internet, supply chain management, and order processing.
C) Internet, customer management, and order processing.
D) supply chain management, customer management, and order processing.
E) supply chain management, customer management, and customer satisfaction.

Question 46

Market structures characterized as pure competition have heterogeneous products,many buyers and few sellers,and ease of entry for both buyers and sellers.

Question 47

The law of diminishing returns suggests that consumer demand for a specific product will increase once a consumer has already purchased one unit of that product.

Question 48

While a chocolate-covered donut would taste great right now,the second,third,or tenth one,purchased and consumed today,would be less desirable.This is an example of declining marginal utility.

Question 49

Identify the incorrect statement about warehouse clubs.

A) They charge patrons an annual membership fee.
B) They sell a limited selection of brand-name grocery items, appliances, and clothing.
C) These mature-stage retailers operate out of enormous, low-cost facilities.
D) They sell a vast, unlimited selection of miscellaneous items at a deep discount.
E) Warehouse stores, which have low costs because they buy products at huge quantity discounts and use limited labor, usually have low gross margins.

Question 50

Target has recently introduced Archer Farms Market as a separate department in its stores.This is an example of:

A) two different independently owned retailers operating within one retail store.
B) Target allowing a national food manufacturer to set up its operations within Target's store.
C) leveraging of a famous national brand from France to operate in the U.S.
D) a private label branding strategy extended to a department.
E) reintroducing products that have strong name recognition but that have fallen from the retail scene.

Question 51

Retailers today can achieve an above-average growth rate by maintaining their market share,since the country's population is growing so fast.

Question 52

What do the formats of stores such as those that recycle usable merchandise in good condition,liquidators,and rental operations have in common?

A) They offer convenient locations
B) They offer the consumer value in an untraditional manner
C) They offer the customer one-stop shopping
D) They carry an ever-changing assortment of higher-quality merchandise
E) The growth for these formats appears to be limited

Question 53

Which of the following is an off-price retailer that is owned and operated by the manufacturer,and stocks the manufacturers' surplus,discontinued,or irregular products?

A) Warehouse club
B) Factory outlet
C) Supermarket
D) Supercenter
E) Independent carrier

Question 54

Most retail experts agree that _____ will NOT be one of the four new retail formats to be successful in the near future.

A) liquidators
B) recyclers
C) off-pricers
D) supercenters
E) rental operations

Question 55

Today,retailers typically view private label brands as:

A) secondary to national brands.
B) leading brands that serve as a destination draw.
C) too high cost to maintain effectively.
D) lower margin offerings of the retailer when compared to national brands.
E) throwaway brands.

Question 56

In pure competition,each retailer faces a horizontal demand curve and must sell its products at the going "market" or equilibrium price.

Question 57

The late Michael O'Connor,former president of the Super Market Institute,suggested that the failure of many U.S.retailers to succeed in international markets was due to:

A) retailers from larger countries having operated in successful economies and therefore tending to be less involved in the small details when going international.
B) customers from other countries not understanding how retailers should operate.
C) the competitive intensity in international markets being too high.
D) increased distribution costs making U.S. retailers uncompetitive when they expanded internationally.
E) executives being sure of themselves, and not seeking more counsel or listening to more opinions before developing strategic plans.

Question 58

Local retailers can expect to compete with large discount stores such as Walmart and Target.

Question 59

_____ is a term used to refer to brands that are owned by the retailer.

A) Name brand
B) Retail brand
C) House brand
D) Private label brand
E) Manufacturer brand

Question 60

Which of the following statements about liquidators is false?

A) Liquidators do more than $15 billion in sales annually and earn between 3 percent and 7 percent of the sales.
B) Liquidators have a talent for pricing merchandise and estimating the expense of everything from ad budgets and payrolls to utility bills.
C) They are often called retailing's undertakers or vultures.
D) Most liquidators pay through credit for the merchandise-a plus for the strapped retailer-and then take all the risks and gain the rewards.
E) They assume responsibility for a retailer's leases, payroll, and other costs and agree either to take a percentage of what they sell or agree in advance to purchase the existing inventory.

Question 61

Retailers must always match or be lower than the competitor's price.

Question 62

Situations of near monopoly do exist.

Question 63

Competition is most intense in understored markets since many retailers are operating in stores too small to carry all the merchandise demanded by customers.

Question 64

The distinction between monopolistic competition and oligopolistic competition is that in monopolistic competition there are fewer sellers than in oligopolistic competition.

Question 65

Nonprice variables are directed at enlarging the retailer's demand by offering customers benefits beyond simply the lowest price.

Question 66

The early exit of many e-tailers was the result of the Internet being overstored given the demand at the time,as well as many e-tailers' inability to control back-office costs.

Question 67

Family Dollar competing with Dollar General is an example of intratype competition.

Question 68

In a monopolistically competitive market,the retailer will be confronted with a negatively sloping demand curve.

Question 69

While most price decisions are directed at influencing demand,the retailer's use of nonprice strategies seldom seeks to increase demand.

Question 70

Divertive competition can be intratype,but not intertype.

Question 71

A market is considered "understored" when the number of stores is less than the current demand of the market.

Question 72

Increased state and city tobacco taxes is an example of outshopping caused by lawmakers.

Question 73

Intertype competition is increasingly seen as many retailers compete using a scrambled merchandising strategy.

Question 74

According to the wheel of retailing theory,new types of retailers enter a trading up phase which allows retailers to compete effectively and take market share away from the more traditional retailers.

Question 75

Intratype competition is the most common type of retail competition.

Question 76

Every time different types of retail outlets sell the same lines of merchandise and compete for the same limited amount of consumer dollars available,intertype competition occurs.

Question 77

The wheel of retailing theory is an attempt to explain how retailers have reacted to the demands of consumers in this "wheeling and dealing" competitive economic system.

Question 78

The break-even point is where total revenues equal total expenses.

Question 79

Private label branding is an example of using nonprice competition to achieve a protected niche.

Question 80

Outshopping occurs when customers go "out" and patronize the retailer's store rather than using other methods of shopping such as telephone and mail order.