Deck 15: Retailing

Question 1

Retailing includes the sales, and all activities directly related to the sale of:

A) tangibles and intangibles to businesses.
B) goods and services to ultimate consumers for personal, nonbusiness use.
C) consumer goods and services to businesses.
D) goods and services to institutions and governments.
E) all of the above.

Answer 1

goods and services to ultimate consumers for personal, nonbusiness use.

Question 2

Which of the following is an example of a retailing activity?

A) Pamela peddles fresh vegetables at the Winchester flea market.
B) Cynthia markets silk flowers for cemeteries to customers who visit her beauty salon.
C) Chenoa vends hot dogs at a baseball park.
D) Sandra sells software for surfing the Internet to students.
E) All of the above are examples of retailing activities.

Answer 2

All of the above are examples of retailing activities.

Question 3

Which of the following is NOT an example of a retail activity?

A) A secretary orders airline tickets for her summer vacation.
B) A shoe store owner buys his wife a pair of sandals.
C) A contractor orders a skylight kit for a house she is contracted to build for a client.
D) A bookstore sells paperbacks to students at a book fair.
E) A member of the U.S. Olympic table tennis team buys himself an Olympic pin from a street vendor.

Answer 3

A contractor orders a skylight kit for a house she is contracted to build for a client.

Question 4

Which of the following statements about retailing is True?

A) By definition, sales made by farmers or manufacturers are not retail sales.
B) It is difficult to become a retailer.
C) Retailing is done only through retail stores.
D) Small retailers have the same buying, promotion, staffing, and expense control strategies as large retailers.
E) None of the above statements about retailing is True.

Question 5

Which of the following statements about retailing is True?

A) Goods are retailed; services are marketed, not retailed.
B) It is difficult to become a retailer.
C) There is a high degree of concentration in retailing.
D) Any firm that sells to the ultimate consumer is a retailer.
E) None of the above statements about retailing is True.

Question 6

James Witt plans to open a retail store to sell fishing equipment. What can you tell him about his plan?

A) He will not have a large investment in production material.
B) The merchandise he wants to sell can more than likely be purchased on credit.
C) Store space can be easily leased.
D) The probability of his survival as a retailer is low.
E) All of the above statements about Witt's plans are True.

Question 7

What is a significant competitive advantage large retail stores have over small ones?

A) flexibility of operations
B) producers' brands
C) division of labor and specialization of management
D) ability to reflect the owner's personality
E) ability to provide top-quality personnel

Question 8

What is the greatest competitive advantage small retail stores have over large ones?

A) opportunity to experiment with new products
B) store brands
C) flexibility of operations
D) division of labor and specialization of management
E) producers' brands

Question 9

What advice would you give a friend who is interested in becoming a small retailer?

A) The flexibility of operations is the biggest advantage a small retailer has over a larger one.
B) A large investment in production equipment is required to become a retailer.
C) Buy store space rather than rent it, so that you can control the store layout and fixtures.
D) Small retailers should develop their own brands to create a competitive advantage.
E) Competition is seldom a problem.

Question 10

To be a successful retailer, the owner of The Artist Nook, a small artist supply store, would need to know:

A) what type of merchandise artists will want to buy.
B) how to correctly value the art supplies she sells.
C) the location of possible sources of art supplies.
D) what kind of product assortments would appeal to artists.
E) all of the above.

Question 11

To survive in retailing, a firm's primary job is to:

A) use a large down payment to reduce monthly rental costs.
B) create a retailing concept that is totally new to the marketplace.
C) avoid buying merchandise on credit.
D) satisfy customers' needs.
E) buy the finest production equipment it can afford.

Question 12

According to the text, high retailing costs are generally related to the:

A) directness of the channel.
B) expense of selling directly to ultimate consumers.
C) efficiency of the marketing plan's implementation.
D) complexity of the buying center.
E) choice of wholesaler.

Question 13

Compared to wholesalers, retailers:

A) have lower total sales.
B) buy larger quantities of merchandise.
C) have higher rates of merchandise turnover.
D) use their sales people more efficiently.
E) do all of the above.

Question 14

Compared to wholesale customers, ultimate consumers typically:

A) expect higher rates of merchandise turnover.
B) buy larger quantities of merchandise.
C) do not want financing services.
D) demand more services.
E) require less from a sales person.

Question 15

Which of the following types of retailers typically has the lowest gross margin?

A) supermarket
B) jewelry store
C) convenience store
D) gasoline service station
E) pharmacy

Question 16

As a prospective owner of a used book store, Lawson's first decision about facilities should be:

A) where he will get the financing for the operation.
B) how big an operation he will open.
C) where he will locate his store.
D) how the store will be laid out.
E) what kind of atmosphere the store will have.

Question 17

Rufina is opening a store for people who like to cook ethnic cuisines. In terms of the physical aspects of her store, Rufina must decide:

A) whether to use a green and blue color combination or the more lively red and yellow colors in her store.
B) whether she wants the store in a downtown area or a shopping center.
C) how much shelf space she will devote to fresh herbs.
D) where she will locate her kitchen demonstration area.
E) all of the above.

Question 18

In deciding about a new shoe store's physical facilities, the retailer would NOT need to determine:

A) the location of the store.
B) the amount of space allocated to displaying shoes and for trying on shoes.
C) the total square footage of the store.
D) whether the shoes sold will be seconds and manufacturer overruns or only first quality.
E) how the store is decorated.

Question 19

Which of the following statements about shopping centers is True?

A) Each retailer in a shopping center owns his or her own store.
B) Shopping centers are typically not planned.
C) A convenience center is larger than a neighborhood center.
D) A community center is the smallest type of shopping center.
E) Shopping centers are classified according to market served, types of tenants, and size.

Question 20

The shopping center near Wendy's house has a Toys "R" Us, PETsMART and a Bed, Bath, and Beyond, all of which are large limited-line stores that stress value. There are also about ten smaller retailers. This shopping center would be classified as a(n) _____ center.

A) power
B) super
C) MSA
D) community
E) convenience

Question 21

Which of the following statements about regional centers is True?

A) To reach time-poor consumers, many regional centers are placing stores that sell similar products close to each other.
B) Many new regional centers are designed to look like Main Streets to evoke memories of historic downtown areas.
C) Regional centers were first developed to be the hub of shopping and social activities in many communities.
D) Few regional centers were built in the 1990s, but many were renovated.
E) All of the above statements about regional centers are True.

Question 22

Which of the following statements about regional centers is True?

A) The average amount of time consumers spend in regional shopping centers has increased over the last two decades.
B) Virtually all consumers enjoy regional centers as a great place to socialize.
C) Entertainment is taking center stage in some of today's malls, both renovated ones and new ones.
D) The period between 1995 and 2000 was a time of tremendous growth in the number of regional malls.
E) All of the above statements about regional centers are True.

Question 23

The Edgewater Mall is an enclosed, climate-controlled shopping center. It has Sears, Proffit's, JCPenney, and Dillard's as its anchor stores, and 135 other specialty stores and boutiques. Since the mall draws customers from all over the state of Mississippi, it can be classified as a(n) _____ center.

A) community
B) neighborhood
C) urban
D) convenience
E) regional

Question 24

To understand how they serve both suppliers and customers, retailers are typically classified according to:

A) size and location.
B) location and design.
C) dollar value of sales.
D) location, design, and layout.
E) form of ownership and marketing strategies.

Question 25

Corporate chains:

A) avoid price competition.
B) have central ownership.
C) have narrow, relatively deep assortments.
D) are classified as limited-line stores.
E) provide extensive personal service.

Question 26

According to census data, what kind of retail operation is MOST likely to be part of a corporate chain?

A) pet supply stores
B) hardware store
C) restaurants
D) department store
E) video rental stores

Question 27

Which of the following statements about corporate chains is True?

A) Most auto parts and home supply stores are chain stores.
B) Corporate chains are the same as contractual vertical marketing systems.
C) Corporate chains are very responsive to changing market conditions.
D) A high degree of standardization is the hallmark of a chain of retail stores.
E) Individual units in a chain typically have complete autonomy.

Question 28

A corporate chain:

A) contains two or more stores, according to the U.S. Census Bureau.
B) gives autonomy to each of its member stores.
C) is synonymous with a contractual VMS arrangement.
D) has centralized ownership.
E) tends to give its member stores a great deal of flexibility.

Question 29

______ is a major factor in the success of corporate chains.

A) A high degree of standardization
B) Decentralization
C) A high degree of local autonomy
D) Delegation
E) A wide span of control

Question 30

A(n) _____ is a company with a single store that is not affiliated with any type of contractual vertical marketing system.

A) retail unit
B) voluntary retailer
C) independent retailer
D) horizontal contracted retailer
E) unaffiliated wholesaler

Question 31

The Dove and Laurel is a Christian book and gift store that operates as an independent retailer. What is the greatest advantage it has over other similar stores that are members of a corporate chain?

A) increased buying power
B) flexibility of operation
C) ability to use economies of scale in advertising
D) division of labor and specialization of management
E) ability to take greater financial risks

Question 32

Which of the following statements about independent retailers is True?

A) The majority of retailers are independent.
B) It is difficulty to compare the prices of chains and independent retailers directly.
C) Convenience stores frequently provide a higher level of service than independent stores do.
D) Most independent retailers are affiliated with vertical marketing systems.
E) None of the above statements about independent retailers is True.

Question 33

Which of the following is the best example of a vertical marketing system?

A) corporate chain
B) regional shopping center
C) wholesaler-sponsored voluntary chain
D) retailers and wholesalers operating autonomously
E) all of the above

Question 34

The main difference between retailer cooperatives and voluntary chains is:

A) their offensive versus defensive posture.
B) the length of the distribution channel.
C) the type of promotion used.
D) who organizes them.
E) the pricing strategy.

Question 35

A voluntary chain is:

A) a group of independent retailers who get together to form their own wholesale warehouse.
B) virtually identical to a corporate chain.
C) sponsored by a wholesaler.
D) not found in the grocery business.
E) an organization that provides more services than a retailer cooperative.

Question 36

In order to compete more effectively with large corporate chains, small independent retailers may join a chain organization sponsored by a wholesaler. This organization is called a(n):

A) retailer cooperative.
B) voluntary chain.
C) business-format franchise.
D) independent chain.
E) consumer cooperative.

Question 37

A retailer cooperative is:

A) an organization that provides more services than a voluntary chain.
B) a group of independent retailers who get together to form their own wholesale warehouse.
C) not found in the grocery business.
D) sponsored by a wholesaler.
E) virtually identical to a corporate chain.

Question 38

A(n) _____ is formed by a group of retailers who agree to establish and operate a wholesale warehouse.

A) retailer cooperative
B) voluntary chain
C) consumer cooperative
D) independent chain
E) retailer-sponsored franchise

Question 39

Which of the following types of retailers are most likely to be involved in a voluntary chain?

A) appliance stores
B) bookstores
C) small grocery stores
D) stores that sells antique reproductions
E) clothing stores

Question 40

Why were the first retailer cooperatives and voluntary chains initiated?

A) to enable independents to improve the level of cooperation, which is sometimes called collusion, among individual stores
B) to counter the financial disaster of the Great Depression
C) in response to federal antitrust legislation
D) to enable independents to compete against corporate chains
E) to allow the stores access to shopping center locations

Question 41

Which of the following types of retailers are most likely to be involved in a retailer cooperative?

A) hardware stores
B) toy stores
C) video rental stores
D) gourmet stores featuring Asian cuisine
E) fruit and vegetable stands

Question 42

Which of the following is an example of a contractual vertical marketing system?

A) a product and trade name franchise like Texaco
B) a retailer cooperative like Certified Grocers
C) a wholesaler-sponsored voluntary chain like Supervalu
D) a business format franchise like Midas
E) all of the above

Question 43

Which of the following statements about franchising is True?

A) Franchising is a type of contractual vertical marketing system.
B) The franchise parent company is called the franchisee.
C) The owner of the franchise unit is called the franchisor.
D) The two kinds of franchise formats are business formats and customer formats.
E) All of the above statements about franchising are True.

Question 44

A Saturn automobile dealership and a Shell service station are both examples of _____ franchises.

A) services
B) business format
C) product and trade name
D) retailer cooperative
E) voluntary chain

Question 45

The focus of product and trade name franchising is on:

A) the type of ownership.
B) what is sold.
C) where the store is located.
D) store design and layout.
E) how the business is run.

Question 46

Which of the following is the BEST example of a product and trade name franchise?

A) a Honda automobile dealership
B) a Dunkin' Donuts
C) an Arthur Murray School of Dance
D) Decorating Den
E) a 7-Eleven convenience store

Question 47

The focus of business format franchising is on:

A) the type of ownership.
B) what is sold.
C) where the store is located.
D) store design and layout.
E) how the business is run.

Question 48

The two kinds of franchising can be distinguished according to:

A) size of target markets.
B) what is sold and who owns the franchise.
C) what is sold and how the business is run.
D) where and how a product is sold.
E) location and size of the operation.

Question 49

Which of the following statements about franchising is True?

A) Franchisees seldom provide any marketing assistance.
B) Interest in franchising is declining.
C) In business format franchising, the franchisor, by definition, is always a manufacturer.
D) Franchising is a form of horizontal integration.
E) None of the above statements is True.

Question 50

How does a businessperson benefit when he or she buys a franchise?

A) The franchisee can modify the franchisor's proven format.
B) The franchisee relies on his or her own common sense in making strategic decisions.
C) The franchisee is required to make no initial investment.
D) The franchisor provides assistance in deciding on site location, layout, and promotions.
E) Franchisors often predict high revenues and profits.

Question 51

Various forms of management assistance are provided to franchisees prior to as well as after opening the business. Which of the following is an example of typical management assistance provided by franchisors?

A) site selection
B) store layout guidance
C) technical and management training
D) inventory control systems
E) all of the above

Question 52

A number of franchisees have criticized franchisors for:

A) enticing them through unrealistic profit predictions.
B) not providing them with the promised level of service.
C) locating too many of the company's outlets in the same market.
D) unjustifiably terminating or not renewing a franchise agreement.
E) doing all of the above

Question 53

Which of the following types of retail stores almost always avoids price competition?

A) specialty store
B) off-price retailer
C) supermarket
D) category-killer store
E) warehouse club

Question 54

Which of the following types of retail stores typically offers a narrow and very deep product assortment?

A) discount store
B) category-killer store
C) supermarket
D) convenience store
E) department store

Question 55

Which of the following types of retail stores typically offers the most customer service?

A) supermarket
B) category-killer store
C) limited-line store
D) department store
E) warehouse club

Question 56

Traditional department stores:

A) offer relatively few customer services.
B) have considerably lower operating costs than most other retailers.
C) typically compete on the basis of price.
D) offer a very broad and deep product assortment.
E) never carry furniture and appliances.

Question 57

Traditional department stores:

A) have a very broad and deep product assortment.
B) try not to compete on the basis of price.
C) typically have prime and expensive locations.
D) provide a wide array of customer services.
E) are accurately described by all of the above.

Question 58

Which of the following factors has adversely affected the competitive position of some department stores?

A) intense horizontal competition
B) the high cost of advertising on network TV
C) intense vertical competition
D) their low operating expenses
E) all of the above

Question 59

In 1986, department stores accounted for more than 60 percent of the general merchandise sold in retail stores. Today, department stores sell less than 30 percent of this amount. One reason for this decline in sales is due to:

A) the absence of customer service in many department stores.
B) poor locations.
C) wider availability of producers' brands.
D) more private brands.
E) the decrease in the number of catalog retailers.

Question 60

KarstadtQuelle, a German company, is the world's largest department store operator. The company has recently expanded into tourism and the mail-order business as profits from its traditional department stores has declined. Which of the following would help to explain why profits at KarstadtQuelle department stores are declining?

A) The worldwide economy is in the prosperity cycle.
B) Department stores are in the growth stage of the product life cycle.
C) Operating costs at department stores are considerably higher than other types of retail operation.
D) Department stores do not carry middlemen's brands.
E) Other types of retailers with lower prices offer more services than department stores can.

Question 61

Which of the following factors has adversely affected the competitive position of some department stores?

A) inability to find knowledgeable salespeople
B) high operating costs
C) intense horizontal competition
D) abandonment of exclusive distribution to department stores by many producers
E) all of the above

Question 62

Which of the following statements about department stores is True?

A) Department stores always strive to charge discount prices.
B) By definition, department stores can never be price-competitive.
C) Many producers' brands that used to be available exclusively at department stores are now widely distributed.
D) The operating expenses for department stores are considerably less than those for other retail stores.
E) Intense vertical competition is hurting the profitability of department stores.

Question 63

KarstadtQuelle, a German company, is the world's largest department store operator. Its major competition in Germany is Metro, which is a retail chain that created a differential advantage through its low pricing. Metro is one of the reasons that KarstadtQuelle has lost money over the last several quarters. Given the effect the Metro chain has had on KarstadtQuelle's operations, Metro is probably a(n):

A) a specialty department store.
B) convenience store.
C) full-line store.
D) supercenter.
E) discount store.

Question 64

_____ are characterized by comparatively low prices and reduced costs of doing business.

A) Department stores
B) Discount retailers
C) Independent retailers
D) Specialty stores
E) Convenience stores

Question 65

When Rebecca goes to Target to buy maternity and baby clothes, she is buying:

A) commodities.
B) representative brands.
C) soft goods.
D) generic brands.
E) hard goods.

Question 66

When Asa goes to Wal-Mart and buys two bookcases, a small table, and a VCR, she has purchased:

A) commodities.
B) representative brands.
C) soft goods.
D) generic brands.
E) hard goods.

Question 67

Suits, shorts, swimsuits, and underwear are classified as ______, while refrigerators, televisions, and sofas are classified as _____.

A) soft goods; hard goods
B) low-margin; high margin
C) low ROI; high ROI
D) hard goods; soft goods
E) high margin; low margin

Question 68

The major selling point of discount stores is:

A) low price.
B) narrow target market.
C) product depth.
D) location.
E) advertising.

Question 69

Don Quijote is a leading Japanese discount retailer. As a discount retailer, Don Quijote would probably:

A) only sell wearing apparel.
B) be unable to successfully compete against department stores.
C) have a very narrow product assortment.
D) offer relatively few customer services.
E) have a very deep product mix.

Question 70

Which of the following statements about discount stores is True?

A) Discount stores use higher markups on big-ticket items than do other types of retailers.
B) Once a store becomes a discount retailer, it will always be considered a discount store.
C) Discount stores have a broad, deep product assortment.
D) Discount stores typically offer a wide variety of customer services.
E) Discount stores advertise extensively.

Question 71

Discount stores typically:

A) advertise extensively.
B) provide customers with relatively few services.
C) offer a broad, shallow product assortment.
D) carry both hard and soft goods.
E) do all of the above.

Question 72

Y100 is the Japanese version of the Dollar Tree stores in the United States. The Japanese retail chain sells all merchandise for 100 yen (about $.80). Y100 would be classified as a:

A) supercenter.
B) limited-line store.
C) specialty store.
D) discount store.
E) category-killer.

Question 73

A supercenter is a:

A) shopping center that contains at least four major department stores and 100 specialty stores.
B) combination supermarket and department store.
C) store with a narrow but very deep product assortment.
D) name often given to community shopping centers.
E) combination discount store and complete grocery store.

Question 74

Basically, a _____ is a combined discount store and grocery store.

A) supercenter.
B) limited-line store.
C) specialty store.
D) factory outlet.
E) category-killer.

Question 75

If Kenneth wanted to go to one store to buy new underwear, the newest CD by LoneStar, a gallon of milk, a pound of salami, a loaf of bread, and a new bed pillow he would most likely find all these items at a:

A) supercenter.
B) limited-line store.
C) specialty store.
D) factory outlet.
E) category-killer.

Question 76

Retail analysts predict by 2011, department stores will have only 17 percent of the retail market, whereas _____ that combine a complete grocery store with a discount store will have 40 percent of the retail market.

A) category-killer stores
B) warehouse clubs
C) supercenters
D) department stores
E) limited-line stores

Question 77

How do supercenters differ from the more traditional discount stores?

A) Supercenters look more like warehouses.
B) Supercenters have lower markups.
C) Supercenters have lower operating costs.
D) Supercenters have lower gross margins.
E) Supercenters offer a broader assortment of merchandise.

Question 78

_____ have a narrow but deep product assortment. Traditionally, they have charged full (or nondiscounted) prices.

A) Category-killer stores
B) Warehouse clubs
C) Supercenters
D) Department stores
E) Limited-line stores

Question 79

Hootin Annies sells dolls, doll kits, patterns for dolls clothes all in the primitive style. This is all the store sells, it sells these at manufacturers' suggested retail prices. After you make a selection, the customer service oriented salespeople at Hootin Annies will help you create your doll's personality by suggesting outfits or showing you how to make your own. In which category of retail stores does Hootin Annies belong?

A) category-killer store
B) limited-line store
C) warehouse club
D) factory outlet
E) convenience store

Question 80

Aunt Tuti's Herbal Shoppe sells herbs for cooking and for medicinal purposes. It also sells books on how to grow herbs, how to use herbs, and the history of herbs. Every Saturday morning, the store has classes for those who wish to learn more about herbs. Every item sold in the store is sold at nondiscounted prices. In which category of retail stores does Aunt Tuti's Herbal Shoppe belong?

A) category-killer store
B) limited-line store
C) warehouse club
D) factory outlet
E) convenience store