Question 1

Skincare company E&OE retails its products through standalone stores or through its own stores within malls. The management uses this method so that customers are sure of finding only E&OE products at the stores and the brand image remains strong. In this scenario, what can E&OE do to generate consumer interest while retaining its exclusivity?

Accepted Answer

The answer of Skincare company E&OE retails its products through...

Question 2

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

Accepted Answer

The answer of List some differentiation strategies retailers can use...

Question 3

Give one example of a retailer that uses standalone stores as opposed to stores located in malls. Why do you think retailers opt for this channel?

Accepted Answer

The answer of Give one example of a retailer that...

Question 4

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

Accepted Answer

The answer of Imagine that you are in charge of...

Question 5

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

Accepted Answer

The shopping experience is the strongest differentiator for brick-and-mortar stores because they can provide a physical environment where customers can touch and feel products, receive personal attention from salespeople, and enjoy the ambiance of the store. Online retailers cannot replicate this type of experience.

Question 6

Retailers can target their customers more effectively by using only a single channel to reach them.

Accepted Answer

Retailers can target their customers more effectively by using multiple channels to reach them, as it allows for a wider reach and the ability to cater to different customer preferences and behaviors.

Question 7

The gross margin on a product bears a direct relation to the direct product profit.

Accepted Answer

Gross margin is the difference between sales and the cost of goods sold, while direct product profit considers additional direct costs, so they are related but not directly proportional.

Question 8

E&OE is looking to reduce its inventory costs for all its products. The company realizes that its inventory depends on the setup costs of its various products. How do setup costs affect E&OE's inventory costs?

Accepted Answer

The answer of E&OE is looking to reduce its inventory...

Question 9

EDLP can lead to lower advertising costs and higher retail profits.

Accepted Answer

By maintaining a consistent price, EDLP removes the need for frequent promotional activities and advertising which can lead to lower advertising costs. As a result, the retail profits can also increase.

Question 10

Low prices on some items serve as traffic builders or loss leaders for retailers.

Accepted Answer

Low prices on some items can be used as a tactic to attract customers to a store or website, even if the retailer may not make much profit on the item itself. This is known as a traffic builder or a loss leader.

Question 11

In order to clearly differentiate themselves from competitors, retailers must keep merchandise and prices consistent.

Accepted Answer

Actually, retailers can differentiate themselves by changing merchandise and pricing strategies. For instance, they can offer exclusive items, limited-time promotions, or higher-end products to stand out from the competition.

Question 12

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.

Accepted Answer

Direct Product Profitability (DPP) is used to measure a product's handling costs from the time it reaches the warehouse until it is bought by a customer, providing insights into the profitability of individual products.

Question 13

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?

Accepted Answer

The answer of Over the past three years, skincare products...

Question 14

Featuring exclusive national brands that are not available at competing retailers is a way of generating consumer interest in a retailer.

Accepted Answer

Offering exclusive national brands that cannot be found at other retailers creates a unique selling proposition and can attract consumers who are interested in purchasing those specific brands.

Question 15

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

Accepted Answer

The answer of Which of the following is an ancillary...

Question 16

Accepting telephone and mail orders is an example of the ancillary services that a retailer offers.

Accepted Answer

The answer of Accepting telephone and mail orders is an...

Question 17

Mass merchandisers are usually high-markup, lower-volume stores.

Accepted Answer

Mass merchandisers are typically low-markup, high-volume stores. They rely on selling large quantities of products at lower prices to make a profit.

Question 18

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

Accepted Answer

This statement is true. Handling costs, such as restocking, replenishing, and transporting, can eat into a product's profits. High-volume products may require more handling and thus have lower profit margins than low-volume products that require less handling. Therefore, it is necessary to consider handling costs when determining the profitability and shelf space allocation of products.

Question 19

Postpurchase services include shipping and delivery, gift wrapping, adjustments, and returns.

Accepted Answer

Postpurchase services are services that a company provides to the customer after the purchase has been made. These services may include shipping and delivery, gift wrapping, adjustments, and returns.

Question 20

In your neighborhood there is a small men's store that has a limited selection of clothing, but the selection that is carried is of very high quality and price. Services include free alterations and tailoring, personalized recordkeeping, and free dry cleaning. Inside the store are deep leather chairs and couches and thick pile carpet. Upon entering the store, a customer feels "special and rich." In terms of differentiation, what is this retailer trying to communicate by its decorations and service level?

Accepted Answer

The store is trying to differentiate itself based on its services mix and atmosphere. This is evident from the personalized recordkeeping, free alterations and tailoring, free dry cleaning, and luxurious atmosphere inside the store. All of these factors are geared towards making the customer feel special and taken care of, which is a unique service offering compared to other men's stores in the neighborhood.

Quiz 18: Managing Retailing, Wholesaling, and Logistics