Question 1

Power centres are characterized by the ________.

Accepted Answer

Power centers typically feature a collection of big-box retailers, with each store having its own individual entrance, allowing direct access from the parking area to each store.

Question 2

Which term refers to a wholesaler-sponsored group of independent retailers that engages in group buying and common merchandising?

Accepted Answer

A voluntary chain is a wholesaler-sponsored group of independent retailers that engages in group buying and common merchandising. This allows small independent retailers to compete with larger chain stores by pooling their resources and buying power. The retailers retain their independence while benefiting from the marketing and purchasing support provided by the wholesaler.

Question 3

Dina loves branded apparel and accessories but cannot afford to buy them too often. Fortunately, Dina lives close to an off-price retail store that is owned and operated by a famous brand. The company utilizes this store to sell its surplus, discontinued, or irregular goods at significantly lower costs. The retail store is best referred to as a ________.

Accepted Answer

The off-price retail store that sells surplus, discontinued, or irregular goods of a famous brand at significantly lower costs is called a factory outlet. This type of store is owned and operated by the company itself and offers discounted prices to attract price-sensitive consumers who want to purchase branded goods at affordable prices.

Question 4

Barry's is a chain of retail stores that stocks a large variety of goods and practices high-low pricing. This means that Barry's is likely to ________.

Accepted Answer

High-low pricing involves offering frequent sales or discounts, so option C is the most appropriate answer. Option A is unlikely as low volume and low markups would not support high-low pricing. Option B is incorrect as high-low pricing involves alternating between high and low prices, rather than consistently charging low prices. Option D may not be true as Barry's may compete on product or service quality as well as pricing. Option E is not relevant as there is no mention of predatory pricing in the scenario.

Question 5

________ refer to two or more outlets that are commonly owned and controlled.

Accepted Answer

Corporate chains are a group of two or more retail outlets that are under common ownership and control. They can have the same or similar names, layouts, and merchandise across multiple locations. Warehouse clubs can also be considered a form of corporate chain, but the term typically refers to retail stores rather than membership-based wholesale clubs. Factory stores, specialty stores, and designer shops may have multiple locations or franchises, but they are not necessarily owned and controlled by the same entity.

Question 6

What is most likely the first major marketing decision that a retailer must take?

Accepted Answer

Segmentation is the first major marketing decision that a retailer must take as it involves identifying and dividing the market into different segments of consumers with similar needs and characteristics. By doing so, the retailer can tailor their marketing mix to each segment, which can improve their chances of success in the market. Targeting, positioning, differentiation, and promoting all come after segmentation in the marketing process.

Question 7

Retail convergence most likely leads to ________.

Accepted Answer

Retail convergence refers to the process of various retailers offering similar products and services, thereby reducing the differentiation between them. As a result, customers are more likely to choose a retailer based on price or convenience rather than product differentiation. This can lead to reduced profit margins and increased competition as retailers try to attract customers with lower prices, promotions, and discounts. However, it may also result in increased sales due to the improved convenience and accessibility of products and reduced advertising costs due to increased cooperation among retailers.

Question 8

Rhonda recently entered into a contractual agreement with StellarCutz, a national chain of affordable, walk-in hair salons. Under the agreement, Rhonda uses the StellarCutz trade name and receives support from StellarCutz in terms of business methods and processes. Rhonda paid a start-up fee to StellarCutz and will pay annual licensing fees for the use of the StellarCutz brand. Which of the following best describes Rhonda's business?

Accepted Answer

Rhonda's business is a franchise, as she has entered into a contractual agreement with StellarCutz for the use of their brand and business methods in exchange for a start-up fee and ongoing licensing fees.

Question 9

McPherson's, an ice cream retailer, recently entered into an agreement that allows independent businesspeople at select stores and locations across the country to sell its famous ice creams and milk shakes for a monetary consideration. Which type of contractual retail association is described in the above example?

Accepted Answer

The scenario is describing a franchise organization, which allows independent businesspeople to sell the products for a monetary consideration. In this case, McPherson's is the franchisor and the independent businesspeople are the franchisees.

Question 10

Which contractual system is distinguished by the fact that it is normally based on some unique product or service?

Accepted Answer

Franchise agreements are typically based on a unique product or service that is proprietary to the franchisor. The franchisee is granted the right to use the franchisor's trademark, trade name, and other proprietary business methods, along with ongoing support such as training, marketing, and operational assistance. Voluntary chains, retailer cooperatives, corporate chains, and warehouse clubs do not necessarily rely on a unique product or service.

Question 11

A ________ refers to a group of retail businesses built on a site that is planned, developed, owned, and managed as a unit.

Accepted Answer

A shopping centre is a group of retail businesses built on a site that is planned, developed, owned, and managed as a unit. The other options do not fit this definition; a pop-up store is a temporary retail space, a warehouse is used for storage, a category killer is a large specialty store that dominates its category, and a convenience store is a small store that carries everyday items for quick purchases.

Question 12

________ are off-price retailers that operate in huge facilities offering few frills but ultra-low prices and surprise deals on selected branded merchandise.

Accepted Answer

The description fits warehouse clubs, which are known for their large facilities, minimal frills, and low prices on branded merchandise. Department stores, convenience stores, specialty stores, and superstores don't necessarily offer as many surprise deals on branded merchandise as warehouse clubs do.

Question 13

Which of the following statements is true of shopping centres?

Accepted Answer

Shopping centres are defined as groups of retail businesses built on a site that is planned, developed, owned, and managed as a unit. The other statements are not necessarily true of all shopping centres.

Question 14

A ________ contains between 15 and 50 retail stores, including a department or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank.

Accepted Answer

A community shopping centre typically includes a wide range of retail stores, including a department or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank, fitting the description provided.

Question 15

An off-price retailing operation that is owned and operated by a manufacturer and normally carries the manufacturer's surplus, discontinued, or irregular goods is called a ________.

Accepted Answer

Factory outlet stores are owned and operated by manufacturers and generally sell the manufacturer's discontinued or overstocked merchandise at a discounted price.

Question 16

The Toby's chain of first-class department stores carries a wide range of product lines, including clothing, jewellery, kitchenware, and home furnishings. Toby's typically charge higher prices on an everyday basis and then holds frequent sales and price promotions to increase store traffic. Toby's most likely uses ________.

Accepted Answer

Toby's uses the high-low pricing strategy, which involves setting high prices initially and then offering frequent sales and promotions to attract customers. This approach allows them to maintain their image as a high-end retailer while still offering customers opportunities to purchase products at a discount.

Question 17

A ________ is a small open-air mall with upscale stores, convenient locations, and nonretail activities such as a playground, dining establishments, and a movie theater.

Accepted Answer

A lifestyle center is a type of shopping center that emphasizes an outdoor streetscape atmosphere and upscale amenities. It features high-end specialty stores, restaurants, and entertainment options like movie theaters, and often includes non-retail elements like playgrounds and gathering spaces. Regional shopping centers are larger and contain more department stores, while community shopping centers are smaller and have a more limited selection of stores. Power centers typically have large anchor stores like discount department stores, and warehouse clubs are large, low-cost retailers that require memberships.

Question 18

Which of the following is most likely the greatest factor in the increasingly short life cycle of new retail forms?

Accepted Answer

Changes in technology have led to advancements in online retailing, mobile commerce, and other channels that have disrupted traditional brick-and-mortar retail formats. As a result, retailers must continually adapt and innovate to keep pace with evolving consumer needs and preferences, leading to increasingly shorter life cycles for new retail forms. Economic swings, import/export regulations, and retail convergence may contribute to this trend, but are not as significant as technological change. Additionally, global expansion may actually extend the life cycle of a retail format by opening up new markets and opportunities.

Question 19

Carleese, a leading fashion brand, sets up small temporary boutiques across numerous locations during its year-end sale, promoting its outdated products at half the price. These temporary boutiques are referred to as ________.

Accepted Answer

The term "pop-up stores" refers to small temporary boutiques that are set up for a limited time period to promote and sell products. This is exactly what Carleese is doing during its year-end sale, making D the correct answer. A, B, E are all incorrect because none of these terms accurately describe the situation described in the scenario.

Question 20

Venture Zone, a hiking and climbing equipment retailer, has a rock climbing wall inside the store so that consumers can test products prior to purchase. Venture Zone most likely differentiates itself from its competitors through ________.

Accepted Answer

Venture Zone is differentiating itself through experiential retailing by offering customers an opportunity to test products before purchase. This strategy is likely to be more engaging and create a better shopping experience compared to competitors who may only offer everyday low pricing or self-service retailing.

Quiz 12: Retailing and Wholesaling