Deck 13: Managing Retailing, Wholesaling, and Logistics

Question 1

Which of the following is an example of retailing?

A) Dylan's sends catalogs to retail, industrial, and institutional customers.
B) SEZ U Inc. sells a limited line of fast-moving goods to small retailers for cash.
C) BEL Inc. sells consumer packaged goods to merchant wholesalers and distributors.
D) Praxis International sells products to consumers directly through the Internet.
E) Hub Styles procures its raw materials directly from farmers in the region.

Answer 1

D

Question 2

E&OE produces and markets its own brand of skincare products using herbal remedies and natural ingredients through stand-alone stores as well as an online portal. E&OE is a(n) ________ retailer.

A) off-price
B) specialty
C) discount
D) department
E) extreme value

Answer 2

B

Question 3

Most retailers will put low prices on some items in order to increase traffic to the store. These low-priced products are known as ________.

A) loss leaders
B) price ceilings
C) price skimmers
D) price floors
E) cold calls

Answer 3

A

Question 4

Why would a retailer measure direct product profitability (DPP)?

A) because DPP is highly correlated with the gross margin on a product
B) because handling expenses are negligible compared with gross margin
C) because handling costs can make products less profitable
D) because gross margin on a product is too difficult to measure accurately
E) because DPP removes the impact of paperwork expenses

Question 5

Which of the following is an example of a limited-service retailer?

A) Customers at TAB pick out the products they want and pay at the checkout counter.
B) Salespeople at Eli are always on hand to offer shoppers advice and assistance in choosing products.
C) Mina's allows customers to check out their own purchases in order to reduce the staff count.
D) CLO's offers a number of merchandise-return privileges, customers need information and assistance while shopping.
E) Alison's stocks a number of specialty products and the store's salespeople generally help shoppers with all their needs.

Question 6

Which of the following is True for the retail industry?

A) Retailers are experimenting with "pop-up" stores that let them create buzz.
B) Upscale retailers see a decline in sales as middle-market retailers thrive.
C) Fast fashion is offering more choice and longer-lived products.
D) Technology use by stores is driving up the cost of inventory.
E) Discount stores are not doing as well as middle-market retailers.

Question 7

Which of the following is a postpurchase service offered by retailers?

A) accepting orders over the telephone
B) advertising and window displays
C) delivery to the customer's doorstep
D) general information
E) interior decoration of the retail outlet

Question 8

A store selling expensive artwork and luxury goods typically falls into the ________ group with respect to margins and volume.

A) mixed-markup, high-volume
B) low-volume, mixed-markup
C) low-volume, low-markup
D) high-volume, low-markup
E) high-markup, low-volume

Question 9

Discount stores that try to keep prices as low as possible are more likely to function using ________ operations.

A) limited service
B) self-selection
C) full-service
D) self-service
E) limited-selection

Question 10

A factory outlet is an example of a(n) ________ retailer.

A) off-price
B) specialty
C) discount
D) department
E) catalog

Question 11

A large staff, along with a higher proportion of specialty goods and slower-moving items and many services, are usually features of ________ retailing.

A) self-service
B) self-selection
C) limited service
D) full-service
E) limited-selection

Question 12

Discount stores typically fall into the ________ group with respect to margins and volume.

A) mixed-markup, high-volume
B) low-volume, mixed-markup
C) low-volume, low-markup
D) high-volume, low-markup
E) high-markup, lower-volume

Question 13

________ includes all the activities in selling goods or services directly to final consumers for personal, nonbusiness use.

A) Wholesaling
B) Retailing
C) Procurement
D) Promoting
E) Warehousing

Question 14

A(n) ________ is a storeless retailer serving a specific clientele-usually employees of large organizations-who are authorized to buy from a list of retailers that have agreed to give discounts in return for inclusion on the list.

A) direct-selling vendor
B) direct marketing vendor
C) buying service
D) automatic vendor
E) corporate retailer

Question 15

An example of a restaurant with a narrow and deep assortment is a ________.

A) small lunch counter
B) cafeteria
C) large restaurant
D) fast-food restaurant chain
E) delicatessen

Question 16

Which of the following is an ancillary service offered by retailers?

A) accepting orders over the telephone
B) advertising and window displays
C) delivery to the customer's doorstep
D) general information
E) alterations and tailoring

Question 17

Companies that sell products door-to-door or at home sales parties are engaging in ________.

A) franchising
B) network marketing
C) direct-response marketing
D) corporate selling
E) direct marketing

Question 18

Which of the following is an example of direct marketing?

A) E&OE sells its herbal skincare products exclusively through its stand-alone stores.
B) TCJ is a telemarketing firm that sells products from a number of different suppliers.
C) Jayne's sells most of its products to customers through home sales parties.
D) J3 is a storeless retailer that organizes the retail activity of the employees of four firms.
E) Reynold's tries to minimize its staff costs by installing vending machines in its stores.

Question 19

An independent retailer using a central buying organization and joint promotion efforts with other retailers is part of a ________.

A) corporate chain store
B) voluntary chain
C) retailer cooperative
D) merchandising conglomerate
E) franchise organization

Question 20

Which of the following is a prepurchase service offered by retailers?

A) accepting orders over the telephone
B) shipping the product
C) delivery to the customer's doorstep
D) general information
E) interior decoration of the retail outlet

Question 21

List the four categories of nonstore retailing and briefly explain each.

Question 22

Firms are increasingly recognizing the importance of influencing consumers at the point of purchase.

Question 23

Electronic shopping is a form of direct marketing.

Question 24

Growth in the retail market is centered firmly in the middle market, leaving luxury retailers and discounting specialists struggling.

Question 25

List some differentiation strategies retailers can use to compete successfully in the market.

Question 26

Over the past three years, skincare products retailer E&OE has realized that it is losing sales to competitors who sell products online. E&OE has always cultivated an exclusive upscale image, and the management feels that shifting to the online route will only harm the brand image and sales in the long run. How can E&OE encourage customers to frequent its stores?

Question 27

Retailers are increasingly likely to reach their customers by using a single channel.

Question 28

List some recent trends in retailing.

Question 29

Skincare company E&OE has realized that its customers are very loyal to the brand and play a large part in popularizing it by word of mouth. E&OE wants to leverage this customer loyalty by using it to generate sales outside its store format. What retailing options are available for doing this?

Question 30

Some high-volume products may have such high handling costs that they are less profitable and deserve less shelf space than low-volume products.

Question 31

Which of the following is the strongest differentiator for brick-and-mortar stores who want to emphasize their superiority over online retailers?

A) product quality
B) the shopping experience
C) product range
D) pricing
E) the retailer's reputation

Question 32

Full-service retailers generally have the lowest costs of all retail types.

Question 33

"Pop-up" stores let retailers promote brands to seasonal shoppers for a limited time.

Question 34

The network marketing sales system works by recruiting independent businesspeople who act as distributors.

Question 35

Department stores only face competition from other department stores as other retailing forms pose little threat to their sales and profitability.

Question 36

Stores are using ________ to measure a product's handling costs from the time it reaches the warehouse until a customer buys it in the retail store.

A) electronic data interchange (EDI)
B) direct product profitability (DPP)
C) radio-frequency identification (RFID)
D) global positioning systems (GPS)
E) compounded annual grown rate (CAGR)

Question 37

Shopper marketing is the way manufacturers and retailers use stocking, displays, and promotions to affect customers while they are in a store.

Question 38

A superstore is a storeless retailer serving a specific clientele who are entitled to buy from a list of retailers that have agreed to give discounts in return for membership.

Question 39

Featuring exclusive national brands that are not available at competing retailers is a way of differentiating a retailer.

Question 40

List and explain the four service levels offered by retailers.

Question 41

________ are unbranded, plainly packaged, less expensive versions of common products such as spaghetti, paper towels, and canned peaches.

A) Common carriers
B) Shills
C) Generics
D) Private labels
E) Marques

Question 42

Which of the following is True for distributor brands?

A) They sell at higher volumes than national brands and are also known as generics.
B) They are usually sold at higher prices than national brands because production costs are higher.
C) They are always of better quality than national brands as production is strictly monitored.
D) They can generate a higher profit margin because of their lower cost structure.
E) Advertising costs for distributor brands are much higher than those for national brands.

Question 43

________ includes all the activities in selling goods or services to those who buy for resale or business use.

A) Retailing
B) Wholesaling
C) Procurement
D) Promoting
E) Warehousing

Question 44

In addition to its store brands and nationally well-known brands of detergents, Reynold's also carries much cheaper varieties of detergents that are not advertised and have little-known names. They are often manufactured from lower-quality ingredients and save on packaging and advertising costs. These are known as ________.

A) common carriers
B) shills
C) generics
D) private labels
E) marques

Question 45

Which of the following is considered a wholesaler?

A) retailer
B) broker
C) producer
D) manufacturer
E) farmer

Question 46

The owner of supermarket chain Reynold's wants to offer nonfood items such as greeting cards and magazines. However, Reynold's does not want to take care of setting up displays and maintaining inventory records. Which of the following types of wholesalers can help Reynold's meet customer demand while minimizing costs?

A) producers' cooperatives
B) cash and carry wholesalers
C) truck wholesalers
D) drop shippers
E) rack jobbers

Question 47

What should manufacturers do to compete against or collaborate with private labels?

Question 48

Private-label or store brands are also known as generics.

Question 49

Walmart developed the Ol'Roy brand of dog food to sell only in its stores. Ol'Roy is an example of a ________.

A) generic product
B) national brand
C) franchise
D) copy-cat brand
E) private label

Question 50

The growth of "house brands" has skyrocketed in recent years. What benefits do intermediaries receive from sponsoring their own brands?

Question 51

Supermarket chain Reynold's is considering stocking a number of private-label products in order to offer customers the lowest possible prices. Explain how this strategy could benefit the company.

Question 52

Janelle is planning to open a hardware store. What basic kinds of locations are available for her to consider?

Question 53

A brand developed by a retailer and/or wholesaler that is available only in selected retail outlets is called a ________ brand.

A) generic
B) franchisee
C) marque
D) national
E) private-label

Question 54

Which of the following is True of brokers?

A) Brokers represent buyers or sellers on a permanent basis.
B) Most brokers are hired by sellers and work for a salary.
C) Brokers bring buyers and sellers together and assist in negotiation.
D) Selling brokers have contractual authority to sell a manufacturer's entire output.
E) Brokers assume title and risk from the time an order is accepted to its delivery.

Question 55

The lower price of generics is made possible by lower-cost labeling and packaging and minimal advertising, and sometimes lower-quality ingredients.

Question 56

Describe how retailers and manufacturers are employing shopper marketing.

Question 57

Imagine that you are in charge of creating a distinctive store atmosphere with engaging experiences for a clothing retailer. What can you do to make your store stand out in the customer experience?

Question 58

Because shelf space is scarce, many supermarkets now charge a ________ for accepting a new brand, to cover the cost of listing and stocking it.

A) retainer
B) slotting fee
C) residual fee
D) contingent fee
E) royalty

Question 59

Supermarket chain Reynold's is considering making a switch to stocking almost exclusively private-label products in order to offer customers the lowest prices. Offer reasons why Reynold's should think twice before opting to stock exclusively private-label products.

Question 60

Which of the following wholesaler functions reduces inventory costs and risks to suppliers and customers?

A) selling and promoting
B) warehousing
C) transportation
D) market information
E) assortment building

Question 61

Why are marketers concerned about the cost of logistics?

Question 62

What activities are involved in an integrated logistics system?

Question 63

Companies who want to carry near-zero inventory should build for order, not for stock.

Question 64

More stocking locations mean goods can be delivered to customers more quickly, and warehousing and inventory costs are lower.

Question 65

List the major types of limited-service wholesalers and identify the functions of each.

Question 66

Optimal order quantities exist when the curves for the order-processing cost per unit and inventory-carrying cost per unit ________.

A) are collinear
B) are diagonal to each other
C) intersect
D) are parallel to each other
E) equal zero

Question 67

The elapsed time between an order's receipt, delivery, and payment is called the ________ cycle.

A) variable-costs-to-payment
B) product-to-payment
C) inventory-to-sale
D) order-to-inventory
E) order-to-payment

Question 68

________ consists of putting goods in boxes or trailers that are easy to transfer between two transportation modes.

A) Containerization
B) Haulage
C) Inventory carrying
D) Order processing
E) Warehousing

Question 69

Wholesaling includes all the activities in selling goods or services to those who buy for resale or business use.

Question 70

E&OE wants to minimize inventory costs as far as possible. Explain one way by which it can achieve a near-zero inventory.

Question 71

Reynold's, a supermarket chain, carries the K-Nine range of dog food manufactured by JGB. However, the chain does not interact directly with JGB, but obtains stocks from wholesalers. It has been suggested that Reynold's save costs by sourcing products directly from JGB. However, the CEO of the Reynold's, insists that wholesalers are actually more efficient. In general, what services can wholesalers efficiently provide to a retailer?

Question 72

A reorder point of 10 means ordering the product ________.

A) every 10 days
B) when stock falls to 10 units
C) every 10 units
D) when stock falls to 9 units
E) in batches of 10 items

Question 73

Wholesalers exclude manufacturers and farmers because they are engaged primarily in production, but include retailers, as they are selling to the end consumer.

Question 74

________ includes planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from points of origin to points of use to meet customer requirements at a profit.

A) Market logistics
B) Containerization
C) Transportation
D) Nonstore retailing
E) Wholesaling

Question 75

________ refers to buying large carload lots and dividing them into smaller units before shipping them out to consumers.

A) Bulk breaking
B) Containerization
C) Wholesaling
D) Warehousing
E) Broking

Question 76

If the shipper owns its own truck or air fleet, it becomes a ________ carrier.

A) containerized
B) private
C) contract
D) common
E) diversified

Question 77

Inventory cost increases at an accelerating rate as the customer-service level approaches 100 percent.

Question 78

Supply chain management starts before physical distribution.

Question 79

Differentiate between brokers and agents.

Question 80

Describe the four steps in market logistics planning.