Question 1

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

Accepted Answer

Monopolistic competition is characterized by many sellers offering products that are similar but not identical, allowing for substitutability among them. This differentiates it from perfect competition (where products are identical) and monopoly (where there is only one seller).

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.

Accepted Answer

Understored markets have a low level of competition, which allows retailers to achieve above-average returns on investment. In contrast, overstored markets have too many competitors, leading to reduced profits for all participants. Intratype markets refer to markets with intense competition among similar types of retailers, while pure monopolies have only one supplier in a particular market. Divertive markets involve retailers creating new market segments by promoting the use of their products in non-traditional ways.

Question 3

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

Accepted Answer

In a market experiencing pure competition, products are homogeneous or identical, meaning that there is no differentiation between the products offered by sellers. Therefore, option E, which states "Differentiated products," is not characteristic of a market experiencing pure competition.

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:

Accepted Answer

Outshopping refers to the act of traveling outside of one's community to shop due to higher prices, limited selection, or poor services within the community. It is a common phenomenon that affects the economic growth and sustainability of small communities. Other options such as outsourcing, store positioning, internet shopping, or transport shopping do not accurately describe this phenomenon.

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?

Accepted Answer

Employee compensation is not typically considered a major front that retailers compete on to attract target customers. Instead, retailers focus on offering competitive prices, high levels of customer service, a wide selection of products, and a positive overall customer experience. While employee compensation is important for attracting and retaining talented staff, it is not typically a factor that is directly marketed to customers as a way to attract their business.

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.

Accepted Answer

This scenario is described by the law of diminishing marginal utility, which states that as a consumer consumes more units of a product, the additional satisfaction or utility they receive from each additional unit decreases. This results in the consumer placing a lower value on each additional unit, as they already have enough to satisfy their needs or wants.

Question 7

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

Accepted Answer

The answer of High-profit performance retailers must always be on...

Question 8

Retailing is often characterized as:

Accepted Answer

Retailing is often characterized as a form of monopolistic competition because there are many firms operating in the market, but each has some degree of market power due to differentiation of products, advertising, and other factors.

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?

Accepted Answer

An industry where the top four firms account for more than 60 percent to 80 percent of the market is considered an oligopoly, where a small number of large firms dominate the market. In an oligopoly, the actions of one firm greatly impact the other firms in the market, leading to interdependent decision-making and strategic behavior.

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.

Accepted Answer

The correct term is "overstored," which describes a situation where there are too many stores for the market to sustain profitably, leading to reduced profitability or unprofitability for retailers due to excessive competition and market saturation.

Question 11

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

Accepted Answer

With slower population growth rates, the market size may not increase, so retailers will have to find ways to gain market share by taking away sales from their competitors. This can be done through strategic pricing, product differentiation, and marketing efforts.

Question 12

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

Accepted Answer

The competition between American Airlines and Delta Airlines is an example of oligopolistic competition because there are only a few dominant players in the market who have significant control over pricing and marketing strategies. Both airlines have a significant amount of market share and can influence the industry's direction.

Question 13

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

Accepted Answer

Regardless of how well-developed a retailer's strategy is, they must always be aware that competitors may take actions that can impact their business. No retailer can completely insulate themselves from the actions of their competitors. It is important for retailers to adapt and adjust their strategies as needed in response to changes in the market and actions taken by competitors.

Question 14

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

Accepted Answer

When Gap Stores get an exclusive contract to sell uniforms to your old high school, it is an example of a pure monopoly in that specific context. This is because Gap Stores would be the only supplier of uniforms to the school, eliminating competition for that particular product within that specific market.

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?

Accepted Answer

The market is competing on product selection by offering a wide range of exotic produce, fresh prime meats, seafood, bakery items and over 220 cheeses.

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.

Accepted Answer

The answer of Customers can "self-inflict" this type of 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?

Accepted Answer

Offering a 30-day guarantee to customers if they find the same product for a cheaper price is actually a type of price competition strategy, not a nonprice demand strategy. The other options, like increasing aisle width, providing free gasoline or transportation, and developing advertising campaigns, are examples of nonprice demand strategies that a retailer could employ.

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.

Accepted Answer

Store positioning refers to the strategic placement or positioning of a retailer's store or stores in the marketplace in relation to its competitors. By carefully choosing a location and creating a unique shopping experience, retailers can differentiate themselves from the competition and develop a protected niche in the marketplace. This can make it harder for competitors to copy their business model and steal their customers. Revenue management and yield management are strategies used in pricing and inventory management, while asset management refers to the management of a company's assets. Category killers are retailers that specialize in a particular product category and dominate that market segment.

Question 19

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

Accepted Answer

When the seller is the only one selling a particular product, it is known as a pure monopoly. In this situation, the seller has complete control over the price and supply of the product. There are no competitors to challenge their market dominance, and potential barriers to entry make it difficult for new players to enter the market. Therefore, choice B is the best option.

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?

Accepted Answer

Pure competition is characterized by a large number of small firms producing a standardized product and having no control over the price. In this type of competitive environment, the demand curve is perfectly elastic, which means that the retailer must sell all of its merchandise at the going market or equilibrium price, otherwise, customers will buy from other firms. Overall, under pure competition, there is a level playing field for all firms, and entry and exit are easy.

Quiz 4: Evaluating the Competition in Retailing