Deck 11: Buying Strategies

Question 1

With so many retailers offering Elizabeth Arden's Green Tea Scent Spray, how can a cosmetics store manager attract customers to her store to purchase the product?

A) Put all perfumes on sale for a one-day event
B) Advertise heavily in local papers and media about the product's availability at her store
C) Negotiate better delivery dates with the vendor to coordinate with selling events
D) Offer a significant discount on the product
E) Do none of these

Answer 1

D

Question 2

National brands are also called brands.

A) distributor
B) manufacturer
C) exclusive
D) private-label
E) generic

Answer 2

B

Question 3

Which of the following is a drawback of selling private-label merchandise?

A) Gross margins are lower than margins with national brands
B) They are limited to being sold only in department stores
C) Vendors that sell private labels still view national brands as their priority
D) National brands are still produced with better quality
E) Sales associates need additional training to sell them against national brands

Answer 3

E

Question 4

Retailers achieve lower gross margins from selling national brands because of:

A) the costs incurred by the vendors of promoting the national brands
B) the popularity of private-label brands
C) poor customer service
D) the cost of quality control
E) the distinctive identity national brands have assumed

Question 5

Paul ran a chain of discount sporting goods stores which struggled for years when Walmart opened in the surrounding area. Walmart carried the same brands as Paul's shops, but Paul couldn't compete with the giant's pricing, so merchandise in his shops didn't sell. Which of the following would have been Paul's best chance for surviving?

A) Paul should consider going out of business
B) Paul should sell other discount sporting brands other than the brands Walmart carries
C) Paul should consider partnering with Walmart's sportswear buyers
D) Paul should advertise more and extend his hours
E) Paul should consider developing a private label for his stores

Question 6

The problems with selling private-label merchandise are most severe with:

A) high-fashion merchandise
B) housewares
C) power and hand-held tools
D) outdoor wear
E) canned foods

Question 7

Gerber baby food, Lubriderm moisturizer, Dell computers, and Harley Davidson
motorcycles are all examples of

A) generic
B) national
C) general
D) private-label
E) licensed

Question 8

Which of the following is TRUE of a grey-market good?

A) A grey-market good is merchandise that possesses a valid North American registered trademark and is made by a foreign manufacturer but is imported into North America without permission of the trademark owner.
B) Grey-market merchandise often is not the same quality and is visually different to merchandise brought into the country through normal channels.
C) Grey-markets are a declining business
D) Grey-market merchandise is counterfeit merchandise.
E) All of these are true of a grey-market good.

Question 9

Why might The Bay shift suppliers from Asian countries to Caribbean countries or even local suppliers in Canada?

A) Some customers may prefer "Made in Canada" merchandise.
B) It may be easier to monitor working standards in domestic factories.
C) It may be more profitable.
D) The Caribbean countries may offer shorter and more consistent lead times.
E) All of these are valid reasons to consider this change.

Question 10

Which of the following is not a type of retail branding strategy?

A) Exclusive
B) Generic
C) Complementary
D) Parallel
E) Premium

Question 11

Save-A-Lot grocery stores offer shoppers a no-frills environment and many discount brands found in no other store. Which of the following categories would best describe this type of private label?

A) Generic
B) Complementary
C) Copycat
D) Parallel
E) Premium

Question 12

Disney's Donald Duck brand orange juice is an example of a(n) brand.

A) exclusive
B) private-label
C) licensed
D) generic
E) general

Question 13

Why do department stores organize some of their categories around national brands as opposed to the traditional classification scheme?

A) Merchandise can be purchased and coordinated around a central theme
B) Sales are unpredictable and retailers prefer a sure thing with national brands
C) National brands are much more profitable for the retailer than the private brands
D) It is ethical for retailers to support their vendors by selling their national brands
E) It is helpful to the vendors as they can make their quotas in department stores

Question 14

Some customers who have shopped in a variety of malls have used the term "cookie cutter stores" to describe how similar each apparel store appears and how each seems to stock identical merchandise. The stores look like they were cut from the same cookie
Cutter. This sameness is due in large part to:

A) a perceived rather than an actual image
B) mall promotional campaigns
C) using the same architects
D) the stocking of manufacturer brands
E) the development of store loyalty

Question 15

Which of the following is true about licensed brands?

A) There is always a fee associated with licensing the right to use a name
B) Licensed brands' market share has grown large in recent years
C) Owners of trade names have gotten into the licensing business
D) A licensee can be a retailer
E) All of these are true

Question 16

What can a successful private label do for a retailer?

A) It can differentiate a retailer from its competitors
B) It can increase store traffic
C) It can enhance store image
D) It can help develop store loyalty
E) It can do all of these

Question 17

A discount store would most likely buy from vendors of manufacturer brands to:

A) increase its promotional expense
B) create brand recognition
C) gain a positive impact on its store image
D) moderate its traffic flow
E) do all of these

Question 18

When given a choice between a national brand of jeans and a private-label brand, the buyer for a chain of mall specialty stores might choose the private-label brand:

A) to increase its sales expenses
B) to prevent its customers from comparison shopping
C) to limit its store traffic to qualified buyers
D) to increase its merchandising flexibility
E) for all of these reasons

Question 19

Reasons for a chargeback may include all of the following, EXCEPT:

A) wrong-size boxes or hangers
B) fees paid by a vendor for space in a retail store
C) vendor mistakes such as shoddy labelling
D) late shipments
E) merchandise isn't selling

Question 20

Which of the following type of brands would a retailer normally expect to get the lowest gross margin?

A) Exclusive brands
B) Unique brands
C) Private-label brands
D) Generic brands
E) National brands

Question 21

Why have some traditional manufacturers like Calvin Klein and Nike become retailers?

A) They can use their stores as a showcase for the public which can enhance the manufacturer's image.
B) These manufacturers/retailers can use these stores to test new merchandise and concepts.
C) They have total control over the way their merchandise is priced, promoted, and merchandised.
D) These stores create a name recognition and synergy between the manufacturer and the retailer that can benefit both parties.
E) All of these.

Question 22

An ad campaign run by the Shoppers Drug Mart drugstore chain compares the Life brand over-the-counter drugs with their national brand equivalent. The goal was to get consumers to perceive Life brand as being just as effective as Bayer Aspirin. Shoppers Drug Mart used branding.

A) confrontational
B) premium
C) no name
D) complementary
E) parallel

Question 23

A(n) _ is a tax placed by a government upon imports.

A) country-of-origin effect
B) foreign currency fluctuation
C) inventory carrying cost
D) maquiladoras
E) tariff

Question 24

Mark's Work Wearhouse features Denver Hayes jeans which are high quality denim that washes and wears as well as or better than many of the leading national brands of jeans, yet are lower-priced. Which of the following best describes this type of private-labelling?

A) Comparison branding
B) Premium branding
C) Bargain branding
D) Promotional branding
E) Exclusive branding

Question 25

Retailers often say they are "going to market." What does "market" mean in this context?

A) The intention to price merchandise at whatever the "going rate" happens to be in a particular location
B) A shopping center in which the firm plans to open a new store
C) A geographic location where the retailer anticipates remarkably good prospects for above-average levels of sales
D) The place where a large number of vendors are concentrated
E) The target consumers at whom a line of merchandise will be aimed

Question 26

Denise is a small scale fashion designer who sourced out to a manufacturer in India to assemble her new fall line. She assumed the patterns for the clothes were simple and obvious, so she thought it unnecessary to personally visit the factory and supervise the workers sewing her clothes. Months later, the shipment arrived in Montreal, and much to her surprise, the seams on all of the blouses were sewn incorrectly. This mishap is an
Issue of:

A) limited foreign vendors
B) tariff restrictions
C) quality control
D) global trends
E) poor marketing

Question 27

In which of the following stores would you be most likely to find house brands?

A) Chapters
B) Lululemon yoga stores
C) HMV music stores
D) Shoppers Drug Mart stores
E) The Bay

Question 28

A German manufacturer has developed the next generation of hand held computers, and retailers in Europe have enjoyed its success with minimal promotion. The manufacturer wants to market it in North America, but the tariffs are too high. Which of the following would be the German company's best option?

A) Supply only the markets in Europe
B) Wait until NAFTA has reduced tariffs
C) Concentrate on selling globally in duty-free shops
D) Sell to Asian markets
E) Seek a free trade zone in Central America to assemble the item

Question 29

Generic brands are successful because they are:

A) offered at lower prices
B) of lower quality
C) packaged attractively
D) effectively displayed
E) heavily promoted

Question 30

Foods with no brand names and household products are examples of brands found in Loblaws supermarkets.

A) copycat
B) parallel
C) complementary
D) premium
E) generic

Question 31

Which of the following statements supports sourcing closer to, or in, Canada?

A) It enables quick response delivery
B) It is easier to maintain a good standard of quality control
C) Some customers prefer products made in Canada
D) It is easier to monitor potential human rights and child labour violations
E) All of these

Question 32

The North American Free Trade Agreement (NAFTA):

A) has 12 member countries
B) provides manufacturers with ready access to relatively low-cost and abundant Mexican labour
C) has member countries from Canada to Chile
D) has assisted Europe in the development of the Euro
E) is supervised by the World Trade Organization (WTO)

Question 33

Helen is planning to open a boutique in Victoria, specializing in large women's sizes. What is her best option for merchandising her store on her limited budget?

A) Convince vendors to visit her store
B) Use a resident buying office to buy in Montreal and Hong Kong
C) Buy at similar shops going out of business
D) Interact electronically with vendors on a retail exchange
E) Visit trade shows in Toronto once a year

Question 34

Bianca starts college in the fall and her parents want to buy her a computer as a graduation gift. She has researched the different brands of computers, and knows the price differences for the components she desires in her new PC. Being price-sensitive, she is aware of an inexpensive Korean-made computer, but she worries it may be of
Lower quality. Bianca is dealing with:

A) commitment credibility
B) supply and demand discrepancies
C) foreign currency fluctuations
D) a problem with free trade zones
E) a country-of-origin effect

Question 35

Parallel branding:

A) targets a price-sensitive consumer
B) abounds in the fragrance market
C) is frequently referred to as the house brand
D) can be used to bolster private-label sales
E) imitates the manufacturer brand and is perceived as lower quality

Question 36

Which of the following statements about tariffs is true?

A) Retailers want to raise them
B) Tariffs have never been used as a government fund raiser
C) The World Trade Organization is responsible for the increase in the tariff rate
D) Import tariffs have been used to shield domestic manufacturers from foreign competition
E) Tariffs lower the cost of imported merchandise

Question 37

Sears sells men's casual wear under the private brand name Nevada. It also carries sportswear by Arrow, Adidas, Dockers, Point Zero, and other manufacturer brands, but Nevada is priced slightly below the manufacturer brands. Sears makes no attempt to trade off the manufacturer brand equity, however, consumers perceive the Nevada to be the equivalent of the manufacturer brand. With the Nevada brand, Sears is using
________ branding.

A) premium
B) parallel
C) bargain
D) complementary
E) copycat

Question 38

When making a decision about global sourcing, which of the following would be a cost consideration?

A) Retailer's differentiation from competitors
B) Vendor negotiation fees
C) Retailer inventory carrying costs
D) Vendor employees' working conditions
E) Vendor factory standards

Question 39

On the product label for Walmart's Equate Antacid Tablets, it says "Compare to Tums active ingredient". What type of private labelling is demonstrated by this approach?

A) bargain
B) complementary
C) copycat
D) parallel
E) premium

Question 40

Premium branding:

A) is an example of leveraging strategy used to bolster a retailer's private-brand sales
B) offers the consumer a private label at a comparable manufacturer-brand quality, usually with modest price savings
C) is primarily a manufacturer product strategy
D) is often called house branding
E) is a risky private-branding strategy because the act may constitute trademark infringement

Question 41

Slotting fees:

A) are found only in grocery retailers.
B) values are set by the government to ensure fairness and legality.
C) when viewed from the vendor's perspective, are fees paid by the retailer to the vendor.
D) differ from commercial bribes in that they are made to the retailer itself rather than to an individual buyer.
E) are considered to be illegal in Canada.

Question 42

Why would a buyer consider utilizing a retail exchange if he is already a successful buyer?

A) The traditional trade show is obsolete, leaving him no option
B) Vendors are more likely to offer lower prices if a buyer uses the Internet
C) Exchanges can increase his efficiency by saving time and money
D) Vendors are no longer visiting the buyer's office
E) Exchanges are able to bring better merchandise to the negotiating table

Question 43

What benefits does a retailer receive from buying from vendors of manufacturer brands?

Question 44

What is the best reason for retailers to develop and maintain relationships with multiple and sometimes competing suppliers?

A) A function of retailers is to provide assortments, so they must deal with a variety of suppliers
B) By working with multiple suppliers, retailers tend to make better negotiators
C) A buy should never be contracted with a sole supplier
D) Buyers need to always have a way to cut and move on to better vendors without a break in the supply chain
E) A variety of vendors assures more buys on behalf of the retailer

Question 45

Which of the following is a type of retail exchange?

A) Reliant
B) Concurrent
C) Consortium
D) Interdependent
E) Concrete

Question 46

How are slotting fees different than commercial bribes?

Question 47

In reverse auctions:

A) buyers are required to place an order with the lowest bidder
B) strategic relationships are difficulty to nurture
C) vendors win with the highest bid
D) there are usually several retail buyers and only one vendor
E) all of these are true

Question 48

Which of the following is best described by tangible investment in a strategic relationship?

A) Common goals
B) Partnering
C) Credible commitments
D) Open communication
E) Mutual trust

Question 49

By sharing common goals, buyers and vendors:

A) can pool their strengths and abilities to exploit potential opportunities
B) can conclude that the long-term results of the relationship are insignificant
C) can avoid sharing each firm's most strategic information
D) do not have to coordinate systems for the partnership to succeed
E) commonly miscalculate the cost of merchandise

Question 50

Which of the following is an important retail exchange function?

A) Supervision
B) Quality control
C) Pricing
D) Advertising
E) Distributing

Question 51

Private-label options may be grouped into four categories: generic, premium, exclusive, and parallel. Compare and contrast their differences.

Question 52

Why do manufacturer brands often generate lower gross margins for retailers than do private- label brands?

Question 53

Retail exchanges enable buyers to search for merchandise by vendor or type of product electronically, with buyers no longer wandering through trade shows and showrooms. Which of the following best describes this function?

A) Directory
B) Selection
C) Content
D) Pricing
E) Collaboration

Question 54

Eve worked as a senior buyer for jewellery. On a recent visit to a trade show, she noticed a new vendor selling unique earrings, necklaces, and bracelets with small gemstones depressed into the gold. She had seen such pieces in trade magazines before, but ignored them because of the exorbitant price. She thought her affluent customers would appreciate the look, so she decided to make a smaller buy than usual, and try the jewellery out in only a few urban markets. Which phase best describes Eve's level of
Commitment to a retailer-vendor relationship?

A) Consideration
B) Awareness
C) Commitment
D) Exploration
E) Expansion

Question 55

A department store chain is considering a promotion for one of their buyers. This buyer has strong communication skills, learns quickly, and has an ability to develop long-term relationships. Which of the following would be the least advantageous to the store in utilizing this buyer's talents?

A) Give the buyer responsibility for men's socks
B) Have the buyer purchase Tommy Hilfiger apparel
C) Move the buyer into buying Liz Claiborne apparel
D) Give the buyer responsibility for women's intimate apparel
E) Put the buyer in charge of Lancôme cosmetics

Question 56

Which of the following is the best type of exchange to use if you are operating a large retail firm?

A) Private
B) Independent
C) Concrete
D) Reliant
E) Consortium

Question 57

Kim owns a small toy shop specializing in hobbies. At a recent trade show, he saw a new vendor selling electric trains that were powered by a single track. The merchandise looked detailed, seemed to run smoothly, and didn't jump the track. He went back to his hotel to research the vendor on the Internet, and to make a few calls to other shops to
Inquire about its reputation. Kim is in which phase of the level of commitment to a retailer-vendor relationship?

A) Awareness
B) Exploration
C) Expansion
D) Commitment
E) Consideration

Question 58

What are some of the benefits of offering private labels?

Question 59

Many of the independent grocery stores in Hamilton use the same bags at the checkout and the same polystyrene trays for meats in the meat department. What can these stores do to minimize the costs of the bags and the trays?

A) The stores can independently search for new vendors
B) The stores can work together to encourage recycling
C) The stores can outbid each other to pay the lowest cost on the products
D) The stores can independently purchase lower-grade products
E) The stores can work together and run a reverse auction to find a low-cost supplier

Question 60

What are some of the drawbacks of using private-label brands?

Question 61

Why would a retailer want to buy from vendors of manufacturer brands?

Question 62

Why is it important to have open communication in a strategic relationship?

Question 63

Why should retailers be interested in reducing tariffs?

Question 64

Why is collaboration possibly the most important benefit of retail exchanges?

Question 65

Why are auctions conducted by retailer buyers called reverse auctions?

Question 66

Why is it difficult to build strategic partnerships when sourcing globally?

Question 67

What is the advantage of a consortium exchange?

Question 68

What caused private labels to assume new levels of significance in recent years?

Question 69

What is the main disadvantage of a consortium exchange?

Question 70

Why is it important for retailers to develop and maintain relationships with multiple, and sometimes competing suppliers?

Question 71

If parallel branding attempts to benefit from the brand equity of a national brand by imitating its packaging and product qualities, then why is it not illegal?

Question 72

How can the retail exchange function of collaboration be useful in the fashion industry?

Question 73

Describe resident buying offices and their activities.

Question 74

Why are some Canadian retailers shifting suppliers from Asia and Europe to nearby Central American and Caribbean countries, or seeking products made in Canada?

Question 75

What are the advantages of retail exchanges?

Question 76

What are some of the more prominent exchange functions?

Question 77

How is parallel branding a leveraging strategy used to bolster a retailer's private-label sales?

Question 78

How has the North American Free Trade Agreement (NAFTA) put Canadian retailers in a favourable position?

Question 79

With many retailers successfully selling their brands, why have some manufacturers chosen to become retailers?

Question 80

How does carrying a manufacturer brand lower a retailer's selling and promotional expenses?