general business data bank

Chapter 16: Managing Retailing, Wholesaling, and Logistics

GENERAL CONCEPT QUESTIONS

Multiple Choice

1. Intermediaries include retailers, ________, and logistical organizations.

a. Internet companies

b. wholesalers

c. competitors

d. box stores

e. none of the above

2. Some intermediaries use strategic planning, advanced information systems, sophisticated marketing tools, measure performance on a return-on-investment basis, segment their markets, improve their target marketing and positioning, and ________.

a. contend with dwindling customer bases

b. aggressively “squeeze” manufacturer margins

c. aggressively pursue takeover strategies

d. dominant the manufacturers they do business with

e. aggressively pursue market expansion and diversification strategies

3. ________ is the cornerstone of all discount operations.

a. Self-service

b. Self-selection

c. Limited service

d. Full service

e. Custom service

4. Major retailer types include the following EXCEPT ________.

a. specialty store

b. discount store

c. catalog showroom

d. the Internet

e. superstore

5. High staffing costs, along with a higher proportion of specialty goods and slower-moving items and many services, result in the high cost structure of ________ retailing.

a. self-service

b. self-selection

c. limited service

d. full service

e. custom service

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6. Retailers can position themselves as offering one of four service levels. Which of the following is NOTone of these levels?

a. Self-selection

b. Self-service

c. Limited service

d. Direct service

e. Full service

7. Nonstore retailing falls into four major categories. Which of the following is NOTone of the four nonstore retailing categories?

a. Buying service

b. Internet sales

c. Automatic vending

d. Direct marketing

e. Direct se

8. A ________ is a storeless retailer serving a specific clientele—usually employees of large organizations—who are authorized to buy from a list of retailers that have agreed to give discounts in return for inclusion on the list.

a. direct-selling vendor

b. direct marketing vendor

c. buying service

d. automatic vendor

e. corporate retailer

9. One of the advantages of corporate retailing is that corporate retail organizations achieve economies of scale, greater purchasing power, and ________.

a. wider brand recognition

b. more locations

c. branded merchandise

d. “fresh” merchandise

e. more advertising

10. An independent retailer using a central buying organization and joint promotion efforts is known as a ________.

a. corporate chain store

b. voluntary chain

c. retailer cooperative

d. merchandising conglomerate

e. franchise organization

11. In a franchising system, individual franchisees are ________.

a. a tightly knit group of enterprises whose systematic operations are planned, directed, and controlled by the franchisor

b. regional managers of corporately owned facilities

c. employees working in front-line service roles for the entrepreneur

d. independent businesspeople who have the freedom to develop their own processes, brands, and images, facilitated by a retailing cooperative

e. none of the above

12. Franchising accounts for more than $1 trillion of annual U.S. sales and nearly one-third of all retail transactions. Franchises are distinguished by three characteristics, which are: (1) The franchisee pays for the right to be part of the system: (2) the franchisor provides its franchisees with a system for doing business; and (3) ________.

a. the franchisor controls all actions of the franchisee including hiring and marketing decisions

b. the franchisee has unlimited freedom to change the operation once he/she pays the upfront charges

c. the franchisor owns a trade or service mark and licenses it to franchisees in return for royalty payments

d. the franchisor receives a percentage of sales from the franchisee for the right to belong

e. none of the above

13. In the face of increased competition from discount houses and specialty stores, department stores are waging a comeback war. Two models for department stores’ success seems to be emerging. The first is a store that has a strong retail brand approach, as demonstrated by Kohl’s in the United States. The second model is the ________, typified by Galeries Lafayette in Paris.

a. tourist area store

b. single brand store

c. limited variety store

d. specialty store

e. showcase store

14. Recent trends in retailing includes which of the following?

a. Reduction in the level of global competition

b. Decline in the “shop at home” markets

c. Growth of the “smaller” boutique-type stores

d. Competition between Internet selling and store-based retailing

e. Competition between store-based and non-store-based retailing

15. Retailers must make marketing decisions in the areas of product assortment and procurement, services and store atmosphere, prices, communications, locations, and ________.

a. niche

b. style

c. shoppers

d. target market

e. procedures

16. The retailer must decide on product-assortment breadth and ________.

a. store location

b. layout

c. prices

d. selection

e. depth

17. After deciding on the product-assortment strategy, the retailer must establish merchandise sources, ________, and practices.

a. vendors

b. suppliers

c. lead times

d. policies

e. buyers

18. The first step to retail category management is to ________, which means deciding where to draw the line between product categories.

a. set goals

b. choose the audience

c. figure out tactics

d. define the category

e. figure out the category’s role

19. Retailers are rapidly improving their skills in demand forecasting, merchandise selection, stock control, space allocation, and ________.

a. advertising

b. display

c. choosing the media mix

d. selecting the marketing channels

e. none of the above

20. According to A.C. Nielsen Company, when considering whether to stock a new product, store mangers are most influenced by ________.

a. generous financial incentives to the trade

b. a well-designed advertising and sales promotion plan

c. attractive packaging that will catch consumers’ attention

d. strong evidence of customer acceptance

e. none of the above

21. When retailers study the economics of buying and selling individual products, they typically find that ________ of their square footage is tied up in products that don’t make an economic profit for them.

a. half

b. a quarter

c. almost all

d. none

e. a third

22. ________ measures a product’s handling costs from the time the product reaches the warehouse until a customer buys it in the retail store.

a. Brand management

b. Shelf management

c. Profitability analysis

d. Direct product profitability analysis

e. Direct product performance analysis

23. The three elements of the services mix for retailers includes ________.

a. target marketing

b. breath and depth

c. transition zone

d. direct product profitability

e. ancillary services

24. Most retailers will put low prices on some items to serve as traffic builders or _____________.

a. loss leaders

b. profit leaders

c. traffic leaders

d. ad items

e. none of the above

25. Fine specialty retailers most likely fall into the ________ group with respect to margins and volume.

a. mixed markup, high-volume

b. low-volume, mixed markup

c. low-volume, low-markup

d. high-volume, high-markup

e. high-markup, lower-volume

26. ________ is(are) a key positioning factor for retailers and must be decided in relation to the target market, the product-and-service assortment mix, and the competition.

a. Hours of operation

b. Advertisement

c. Locations

d. Prices

e. Assortment

27. Every store has a “look” and a physical layout that makes it hard or easy to move around. These elements constitute a store’s ________.

a. layout

b. transition zone

c. atmosphere

d. brands

e. none of the above

28. In the pursuit of higher sales volume, retailers are studying their store environments for ways to improve the shopper’s experience. According to Paco Underhill, one of his suggestions for fine-tuning retail space is to ________.

a. make the store “fun” and “interesting” but move the shoppers through it quickly

b. honor the “transition zone” and allow the shopper time to “sort out” the stimuli

c. place the checkouts in the rear of the store

d. make the store more receptive to “men” shoppers

e. make them “hunt” for it

29. Traditional brick-and-mortar retailers are responding to the growth of e-commerce by providing and emphasizing ________ as a strong differentiator.

a. celebrities on the premises

b. the shopping experience

c. expert advice in selecting merchandise

d. a wider selection of merchandise

e. the reputation of the retailer

30. Retailers can locate their stores in the central business district, a regional shopping center, ________, a shopping strip, or within a larger store.

a. suburbia

b. town centers

c. strip malls

d. a freestanding location

e. a community shopping center

31. Retailers can assess a particular store’s sales effectiveness by looking at (1) the number of people passing by on an average day; (2) the _________; (3) the percentage of those entering who buy; and (4) the average amount spent per sale.

a. percentage of customers who bought merchandise on “sale”

b. total units sold per day

c. total dollar sales per day

d. percentage of those who buy full-price merchandise

e. percentage who enter the store

32. A brand developed by a retailer and/or wholesaler that is available only in selected retail outlets is called a _________ brand.

a. national

b. household

c. premium

d. selective

e. private-label

33. Intermediaries sponsor their own brands because ________.

a. private-label brands sell at higher volumes

b. private-label brands are recognizable to the consumer as being widely available from many different retailers

c. private-label brands are always of better quality than national brands

d. private-label brands can be sold at lower prices yet generate a higher profit margin because of their lower cost structure

e. all of the above

________ are unbranded, plainly packaged, less expensive versions of common products such as spaghetti, paper towels, and canned peaches.

f. Slotting fees

g. National products

h. Generics

i. Private labels

j. Shopping strips

34. Because shelf space is scarce, many supermarkets now charge a ________ for accepting a new brand, to cover the cost of listing and stocking it.

a. generic

b. slotting fee

c. shopping strip

d. promotion allowance

e. none of the above

35. Besides the growing power of store brands, other factors weakening national brands include the fact that ________.

a. national brands’ quality is superior to store brands

b. national manufacturers have increased advertising support for their brands

c. national brands have quality control problems not found in store brands

d. consumers are more price sensitive

e. consumers are more selective on purchases of national brands

36. The functions that wholesalers perform include all of the following EXCEPT ________.

a. bulk breaking

b. buying and assortment building

c. financing

d. producing

e. market information

37. ________ refers to buying large carload lots and dividing them into smaller units before shipping them out to consumers.

a. Bulk breaking

b. Containerization

c. Wholesaling

d. Warehousing

e. Market logistics
Distributors differ from retailers in a number of ways. One of these ways is that distributor transactions are usually ________ than retail transactions.

f. more concise

g. larger

h. more complicated

i. more involved

j. more limi

38. Major wholesaler types include all of the following EXCEPT ________.

a. full-service wholesalers

b. specialized wholesalers

c. cash and carry wholesalers

d. merchant wholesalers

e. direct-to-consumer wholesalers

39. ________ are independently owned businesses that take title to the merchandise they handle. They are full-service and limited-service jobbers, distributors, and mill supply houses.

a. Brokers

b. Agents

c. Merchant wholesalers

d. Specialized wholesalers

e. Retailers’ branches

40. Wholesaler-distributors have faced mounting pressure in recent years. They have had to develop appropriate strategic responses. One major drive has been to increase ________ productivity by managing their inventories and receivables better.

a. product assortment

b. buying practices

c. personnel

d. asset

e. products

41. Supply chain management (SCM) starts before physical distribution. It involves procuring the right inputs, _____ them efficiently into finished products, and then distributing them to the right customers.

a. using

b. converting

c. delivering

d. labeling

e. procuring

________ involves planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from points of origin to points of use, to meet customer requirements at a profit.

f. Market logistics

g. Supply chain management

h. SCM

i. Integrated logistics systems

j. None of the above

42. Integrated logistics systems (ILS) involves materials management, ________, and physical distribution, aided by information technology.

a. information flow systems

b. material flow systems

c. cash flow systems

d. product management systems

e. none of the above

43. Maximum customer service implies larger inventories, premium transportation, and multiple warehouses, all of which raise market-logistics costs. Market-logistics costs interact with marketing strategy and are often ________ related.

a. disproportionately

b. positively

c. negatively

d. complementarily

e. none of the above

44. When considering competitors’ service standards, companies normally want to match or exceed the competitors’ service level while simultaneously maximizing ________.

a. profit

b. revenue

c. sales

d. costs

e. all of the above

45. Four major decisions must be made with regard to market logistics: order processing, warehousing, inventory, and ________.

a. transportation

b. purchases

c. pricing

d. information

e. none of the above

46. The elapsed time between an order’s receipt, delivery, and payment is called the ________.

a. variable-costs-to-payment cycle

b. product-to-payment cycle

c. inventory-to-sale cycle

d. order cycle

e. order-to-payment cycle

47. ________ cost increases at an accelerating rate as the customer-service level approaches 100%.

a. Delivery

b. Promotion

c. Inventory

d. Merchandising

e. Storage

48. At some stock level point, management must reorder product to refill the inventory to an acceptable level. This point is called the ________.

a. order (reorder) point

b. inventory

c. minimum inventory level

d. inventory carrying costs

e. none of the above

49. ________ warehouses store goods for moderate to long periods of time.

a. Distribution

b. Automated

c. Storage

d. Company-owned

e. Local

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50. Inventory-carrying costs represent substantial dollars for manufacturers. These inventory-carrying costs include storage charges, cost of capital, taxes and insurance, and depreciation and obsolescence. Carrying costs might run as high as ________ of the value of the inventory.

a. 70%

b. 40%

c. 25%

d. 30%

e. 50%