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Chapter 14 - Retailing, Direct Marketing, and Wholesaling 1. In what ways do retailers add value to products? Answer: Retailers add value for customers by providing services and assisting in making product selections. They can also enhance consumers’ perception of the value of products by making buyers’ shopping experiences easier or more convenient, such as providing free delivery or offering an online shopping option. Retailers can facilitate comparison shopping to allow customers to evaluate different options. For example, car dealerships often cluster in the same general vicinity, as do furniture stores. Product value is also enhanced when retailers offer services, such as technical advice, delivery, credit, and repair. Finally, retail sales personnel are trained to be able to demonstrate to customers how products can satisfy their needs or solve problems. Retailers can add significant value to the supply chain, representing a critical link between producers and ultimate consumers by providing the environment in which exchanges occur. Retailers play a major role in creating time, place, and possession utility and, in some cases, form utility. Retailers perform marketing functions that benefit ultimate consumers by making available broad arrays of products that can satisfy their needs. 2. What are the two categories of retail stores based on breadth of products offered, and what are the types of stores in each category? Answer: Many types of retail stores exist. One way to classify them is by the breadth of products they offer. Two general categories include general-merchandise retailers and specialty retailers. A retail establishment that offers a variety of product lines that are stocked in considerable depth is referred to as a general-merchandise retailer. The types of product offerings, mixes of customer services, and operating styles of retailers in this category vary considerably. The primary types of general-merchandise retailers are department stores, discount stores, convenience stores, supermarkets, superstores, hypermarkets, warehouse clubs, and warehouse showrooms. In contrast to general-merchandise retailers with their broad product mixes, specialty retailers emphasize narrow and deep assortments. Despite their name, specialty retailers do not sell specialty items (except when specialty goods complement the overall product mix). Instead, they offer substantial assortments in a few product lines. There are three types of specialty retailers: traditional specialty retailers, category killers, and off-price retailers. 3. Compare and contrast department stores and discount stores. Answer: Department stores are large retail organizations characterized by wide product mixes with at least 25 employees. To facilitate marketing efforts and internal management, related product lines are organized into separate departments such as cosmetics, housewares, apparel, home furnishings, and appliances. This arrangement facilitates marketing and internal management. Department stores are distinctly service-oriented. Their total product may include credit, delivery, personal assistance, merchandise returns, and a pleasant atmosphere. Along with large discount stores, department stores are often considered retailing leaders in a community and are generally found in areas with populations of more than 50,000. Discount stores are self-service, general-merchandise outlets that regularly offer brand-name and private-brand products at low prices. Discounters accept lower profit margins than conventional retailers in exchange for high sales volume. To keep inventory turnover high, they carry a wide, but carefully-selected, assortment of products, from appliances to housewares to clothing. Major discount establishments also offer food products, toys, automotive services, garden supplies, and sports equipment. Most discount stores operate in large (50,000 to 80,000 square feet), no-frills facilities. They usually offer everyday low prices, rather than relying on sales events. 4. What are superstores? How do they differ from supermarkets? Answer: Superstores are giant retail outlets that carry not only the food and nonfood products ordinarily found in supermarkets, but routinely-purchased consumer products such as housewares, hardware, small appliances, clothing, and personal-care products. Superstores combine features of discount stores and supermarkets and generally carry about four times as many items as supermarkets. Superstores also offer additional services, including dry cleaning, automotive repair, check cashing, and bill paying. Examples include Walmart Supercentres, some Kroger stores, Super Target stores, and Super Kmart Centres. To cut handling and inventory costs, superstores use sophisticated operating techniques and often have tall shelving that displays entire assortments of products. Superstores can have an area of as much as 200,000 square feet (compared with 20,000 square feet in traditional supermarkets). Sales volume is typically two to three times that of supermarkets, partly because locations near good transportation networks help generate the in-store traffic needed for profitability. 5. Identify and describe the three kinds of specialty stores. Answer: Specialty retailers are of three types: traditional specialty retailers, category killers, and off-price retailers. Traditional specialty retailers are stores that carry a narrow product mix with deep product lines. Specialty retailers commonly sell such shopping products as apparel, jewelry, sporting goods, fabrics, computers, and pet supplies. The Limited, Gap, and Foot Locker are examples of retailers offering limited product lines but great depth within those lines. Category killers are very large specialty stores that concentrate on a major product category and compete on the basis of low prices and broad product availability. These stores expand rapidly and gain sizable market shares, taking business away from smaller, higher-cost retail outlets. Examples of category killers include Home Depot (home improvement chain), Staples (office-supply chain), and PetSmart (pet supply chain). Off-price retailers are stores that buy manufacturers’ seconds, overruns, returns, and off-season production runs at below-wholesale prices for resale to consumers at deep discounts. They offer limited lines of national-brand and designer merchandise, usually clothing, shoes, or housewares. Examples of category killers include T.J.Maxx, Marshalls, Stein Mart, and Burlington Coat Factory. Off-price stores charge 20 to 50 percent less than department stores for comparable merchandise, but offer few customer services. 6. What type of situation would provoke a conflict between department stores and manufacturers? Answer: To ensure a regular flow of merchandise into their stores, off-price retailers establish long-term relationships with suppliers that can provide large quantities of goods at reduced prices. Manufacturers may approach retailers with samples, discontinued products, or items that have not sold well. Also, off-price retailers may seek out manufacturers, offering to pay cash for goods produced during the manufacturers’ off­season. Although manufacturers benefit from such arrangements, they also risk alienating their specialty and department store customers. Department stores tolerate off-price stores as long as they do not advertise brand names, limit merchandise to last season’s or lower­quality items, and are located away from the department stores. When off-price retailers sell stocks of in-season, top-quality merchandise, tension builds between department stores and manufacturers. 7. Why would any specific retail store, such as PetSmart, be considered a category killer? Answer: Category killers such as PetSmart are a more recent kind of specialty retailers. A category killer is a very large specialty store that concentrates on a major product category and competes on the basis of low prices and broad product availability. These stores are referred to as category killers because they expand rapidly and gain sizable market shares, taking business away from smaller, higher-cost retail outlets. 8. What are the three types of nonstore retailing? Give examples of each. Answer: Direct marketing, direct selling, and vending are the three types of nonstore retailing. Direct marketing is the use of telephone, Internet, and nonpersonal media to communicate product and organizational information to customers, who can purchase products via mail, telephone, or the Internet. Direct marketing can occur through catalog marketing, direct-response marketing, telemarketing, television home shopping, and online retailing. Companies such as Land’s End, Pottery Barn, and Crate & Barrel, sell via catalogs, online, and through retail stores. The Home Shopping Network originated and popularized the television home shopping format. Direct selling is the marketing of products to ultimate consumers through face-toface sales presentations at home or in the workplace. The top five global direct selling companies are Avon, Amway, Herbalife, Natura Cosmeticos, and Vorwerk & Co. Product categories that have been highly successful for direct selling include cosmetics and personal-care products, health products, jewelry, accessories, and household products. Automatic vending is the use of machines to dispense products. It is one of the most impersonal forms of retailing and accounts for a small minority of all retail sales. InstyMeds vending machines dispense prescription medications to customers, and fishermen in Pennsylvania can even buy live bait via PA Live Bait Vending. 9. What is a "party plan" with respect to nonstore retailing? Answer: A "party plan" is a form of direct selling. With a party plan, a consumer acts as a host and invites friends and associates to view merchandise in a group setting, where a salesperson demonstrates products. The informal atmosphere helps salespeople to overcome customers’ reluctance and encourages them to buy. Tupperware and Mary Kay were the pioneers of this selling technique and remain global leaders. 10. Discuss the advantages and disadvantages of catalog marketing. Answer: In catalog marketing, an organization provides a catalog from which customers make selections and place orders by mail, telephone, or the Internet. Companies, such as Land’s End, Pottery Barn, and Crate & Barrel, sell via catalogs, online, and through retail stores in major metropolitan areas. These retailers generally offer considerable product depth for just a few lines of products. Still other catalog companies specialize in products from a single product line. The advantages of catalog retailing include efficiency and convenience for customers because they do not have to visit a store. The retailer benefits by being able to locate in remote, low-cost areas, save on expensive store fixtures, and reduce both personal selling and store operating expenses. On the other hand, catalog retailing is inflexible, provides limited service, and is most effective for a selected set of products. 11. What are the primary advantages and disadvantages of a franchise arrangement for a franchisee? Answer: Franchising offers several advantages to a franchisee. It enables a franchisee to start a business with limited capital and benefit from the business experience of others. Franchised outlets are generally more successful than independently-owned businesses. Generally speaking, franchises have lower failure rates than independent retail establishments. However, franchise failure rates vary greatly depending on a particular franchise. If business problems arise, a franchisee can obtain guidance and advice from a franchiser at little or no cost. Also, a franchisee receives materials to use in local advertising and can benefit from national promotional campaigns sponsored by the franchiser. Franchise arrangements also have several drawbacks. Franchisees must pay to use a franchiser’s name, products, and assistance. Usually, there is a one­time franchise fee and continuing royalty and advertising fees, often collected as a percentage of sales. Franchisees often must work very hard, putting in 10- to 12-hour days six or seven days a week. In some cases, franchise agreements are not uniform, meaning one franchisee may pay more than another for the same services. 12. Why is a store's location one of the most important strategic retailing decisions? Answer: Making good location decisions are important because, once decided, it is the least flexible variable of the marketing mix. Location dictates the limited geographic trading area from which a store draws its customers. Retailers consider various factors when evaluating potential locations, including location of a firm’s target market within the trading area, kinds of products being sold, availability of public transportation, customer characteristics, and competitors’ locations. In choosing a location, retailers evaluate the relative ease of movement to and from the site, including factors such as pedestrian and vehicular traffic, parking, and transportation. They research the types of stores in the area and the size, shape, and visibility of the lot or building under consideration. In addition, they must scrutinize the rental, leasing, or ownership terms. Retailers should look for compatibility with nearby retailers, because stores that complement one another draw more customers with similar product needs for everyone. Some retailers, including Toys”R”Us, Walmart, Home Depot, and many fast­food restaurants, opt for freestanding structures that are not connected to other buildings, but may be located within planned shopping centers. Sometimes, retailers choose to locate in less orthodox settings where competition will be lower and where consumers have limited other options. 13. What is a store's image, and how does it affect retailing strategy decisions? Answer: Atmospherics, the physical elements in a store’s design that appeal to consumers’ emotions and encourage buying, help to create an image and position a retailer. Exterior atmospheric elements include the appearance of the storefront, display windows, store entrances, and degree of traffic congestion. These are particularly important to new customers, who tend to judge an unfamiliar store by its outside appearance. Interior atmospheric elements include aesthetic considerations, such as lighting, wall and floor coverings, dressing facilities, and store fixtures. Color can attract shoppers to a retail display. Many fast-food restaurants use bright colors, such as red and yellow, because these have been shown to make customers feel hungrier and eat faster, which increases turnover. Sound is another important sensory component of atmosphere. A low-end, family dining restaurant might play fast pop music to encourage customers to eat quickly and leave, increasing turnover and sales. A high-end restaurant, on the other hand, will opt to play classical music to enhance the dining experience and encourage patrons to indulge in multiple courses. Many retailers employ scent, especially food aromas, to attract customers. Most consumers expect the scent of a store to be congruent with the products that are sold there. 14. What role does wholesaling play in the marketing channel? Is this role necessary? Answer: Wholesaling refers to all transactions in which products are bought for resale, making other products, or in general business operations. It does not include exchanges with ultimate consumers. Wholesalers provide essential services to both producers and retailers. By initiating sales contacts with a producer and selling diverse products to retailers, wholesalers serve as an extension of the producer’s sales force. Wholesalers keep producers up­to­date on market developments and pass along manufacturers’ promotional plans to other intermediaries. Using wholesalers gives producers a distinct advantage because the specialized services wholesalers perform allow producers to concentrate on developing and manufacturing products that match customers’ needs and wants. Wholesalers support retailers by assisting with marketing strategy, especially the distribution component. Wholesalers also help retailers select inventory. They are often specialists on market conditions and experts at negotiating final purchases. Effective wholesalers make an effort to understand the businesses of their customers. They can reduce a retailer’s burden of looking for and coordinating supply sources. Furthermore, whereas a manufacturer’s salesperson offers retailers only a few products at a time, independent wholesalers always have a wide range of products available. Thus, through partnerships, wholesalers and retailers can forge successful relationships for the benefit of customers. 15. Compare the services wholesalers provide to producers with the services they provide to retailers. Answer: Wholesalers provide essential services to both producers and retailers. By initiating sales contacts with a producer and selling diverse products to retailers, wholesalers serve as an extension of producer’s sales force. Wholesalers also provide financial assistance. They often pay for transporting goods, reduce a producer’s warehousing expenses and inventory investment by holding goods in inventory, extend credit and assume losses from buyers who turn out to be poor credit risks, and can be a source of working capital when they buy a producer’s output in cash. Wholesalers keep producers up­to­date on market developments and pass along manufacturers’ promotional plans to other intermediaries. Using wholesalers gives producers a distinct advantage because the specialized services wholesalers perform allow producers to concentrate on developing and manufacturing products that match customers’ needs and wants. Wholesalers support retailers by assisting with marketing strategy, especially the distribution component. Wholesalers also help retailers select inventory. They are often specialists on market conditions and experts at negotiating final purchases. Effective wholesalers can reduce a retailer’s burden of looking for and coordinating supply sources. Independent wholesalers always have a wide range of products available. Thus, through partnerships, wholesalers and retailers can forge successful relationships for the benefit of customers. 16. Discuss the role of merchant wholesalers. When is a producer most likely to use them? Answer: Merchant wholesalers are independently-owned businesses that take title to goods, assume risks associated with ownership, and generally buy and resell products to other wholesalers, business customers, or retailers. A producer is likely to rely on merchant wholesalers as selling directly to customers would be economically unfeasible. Merchant wholesalers are also useful for providing market coverage, making sales contacts, storing inventory, handling orders, collecting market information, and furnishing customer support. Some merchant wholesalers are even involved in packaging and developing private brands. Merchant wholesalers go by various names, including wholesaler, jobber, distributor, assembler, exporter, and importer. They fall into two broad categories: full service and limited service. 17. Discuss some of the functions that full-service wholesalers provide. How do these differ from those that limitedservice wholesalers provide? Answer: Full-service wholesalers perform the widest possible range of wholesaling functions. Customers rely on them for product availability, suitable product assortments, breaking large shipments into smaller ones, financial assistance, and technical advice and service. Full-service wholesalers handle either consumer or business products and provide numerous marketing services to their customers. Although full-service wholesalers often earn higher gross margins than other wholesalers, their operating expenses are also higher because they perform a wider range of functions. Limited-service wholesalers provide fewer marketing services than do full-service wholesalers and specialize in just a few functions. Producers perform the remaining functions or pass them on to customers or other intermediaries. Limited-service wholesalers take title to merchandise, but often do not deliver the merchandise, grant credit, provide marketing information, store inventory, or plan ahead for customers’ future needs. Because they offer restricted services, limited­service wholesalers charge lower rates and have smaller profit margins than do full-service wholesalers. Although limited-service wholesalers are less common than other types, they are important in the distribution of products like specialty foods, perishable items, construction materials, and coal. Limited-service wholesalers are categorized as cash-and-carry wholesalers, truck wholesalers, drop shippers, and mail-order wholesalers. 18. What are the wholesaling activities performed by selling agents and brokers? Answer: Selling agents market either all of a specified product line or a manufacturer’s entire output. They perform every wholesaling activity except taking title to products. Selling agents usually assume the sales function for several producers simultaneously and some firms may use them in place of a marketing department. They are used most often by small producers or by manufacturers that have difficulty maintaining a marketing department because of such factors as seasonal production. Selling agents generally have no territorial limits and have complete authority over prices, promotion, and distribution. To avoid conflicts of interest, selling agents represent noncompeting product lines. They play a key role in advertising, marketing research, and credit policies of the sellers they represent, at times even advising on product development and packaging. A broker’s primary purpose is to bring buyers and sellers together. Thus, brokers perform fewer functions than other intermediaries. They are not involved in financing or physical possession, have no authority to set prices, and assume almost no risks. Instead, they offer customers specialized knowledge of a particular commodity and a network of established contacts. Brokers are especially useful to sellers of products such as supermarket goods and real estate. 19. What situations would benefit from using a selling agent? Answer: Selling agents market either all of a specified product line or a manufacturer’s entire output. They perform every wholesaling activity except taking title to products. Selling agents usually assume the sales function for several producers simultaneously and some firms may use them in place of a marketing department. In fact, selling agents are used most often by small producers or by manufacturers that have difficulty maintaining a marketing department because of such factors as seasonal production. In contrast to manufacturers’ agents, selling agents generally have no territorial limits and have complete authority over prices, promotion, and distribution. To avoid conflicts of interest, selling agents represent noncompeting product lines. They play a key role in advertising, marketing research, and credit policies of the sellers they represent, at times even advising on product development and packaging. 20. Kate owns a refreshment-stand business at the community ballpark. She goes to a warehouse store like Sam’s and purchases snacks and canned soda that she will sell at her refreshment stand. Kate is considered a(n) ________. A. wholesaler B. broker C. retailer D. intermediary E. agent Answer: C 21. Walmart, Macy's, Nordstrom, and Toys "R" Us are examples of ________. A. manufacturers B. merchant wholesalers C. end-users D. agents E. retailers Answer: E 22. Direct selling, direct marketing, and vending machines are all examples of ________. A. producing B. advertising C. promoting D. retailing E. wholesaling Answer: D 23. Retailing is best characterized as: A. large organizations that carry wide and deep product mixes. B. transactions in which a buyer intends to consume a product through personal, family, or household use. C. arrangements whereby a supplier grants a dealer the right to sell its products. D. the use of telephone, Internet, and nonpersonal media to communicate product and organizational information to customers. E. exchanges that take place only in a store or service establishment. Answer: B 24. Taylor works for a company that buys snacks such as chips, cookies, and candy in bulk from manufacturers. Taylor’s company then repackages them and sells them to vending companies who have vending machines at government institutions. Taylor most likely works for a wholesaler, and the vending machine company is a(n) ________. A. retailer B. broker C. wholesaler D. agent E. franchisee Answer: A 25. A retailer is an organization that purchases products for the purpose of reselling them to ________. A. other retail organizations. B. the government. C. the ultimate consumers. D. the wholesalers. E. nonprofit organizations. Answer: C 26. By locating in the same general vicinity as other car dealerships, Hartfield Honda can A. facilitate comparison shopping. B. create form utility. C. facilitate wholesale exchanges. D. create possession utility. E. create exchange utility. Answer: A 27. A general merchandise retailer offers: A. a single product line that is stocked in depth. B. few product lines with deep assortments of these lines. C. few choices of a large variety of product lines. D. products through the Internet and catalogs only. E. a variety of product lines that are stocked in depth. Answer: E 28. Supermarkets, discount stores, and hypermarkets can all be classified as ________. A. superstores B. general merchandise retailers C. department stores D. specialty retailers E. off-price retailers Answer: B 29. Compared with other types of retailers, department stores compete mainly on the basis of: A. customer services. B. low prices. C. a very deep assortment of a few specific products. D. high sales volume. E. catalog sales. Answer: A 30. Nordstrom's, Macy's, and JC Penney's are all considered as: A. department stores. B. discount stores. C. off-price retailers. D. specialty retailers. E. category killers. Answer: A 31. If a store has areas for men's apparel, women's apparel, housewares, cosmetics, and jewelry and competes mostly on the basis of service, it is most likely a(n) ________. A. niche retailer B. department store C. off-price retailer D. superstore E. category killer Answer: B 32. Which type of retailer generally accepts lower margins than traditional retailers in exchange for higher sales volume? A. Department stores B. Traditional specialty retailers C. Warehouse showrooms D. Direct marketers E. Discount stores Answer: E 33. Self-service, general-merchandise outlets that regularly offer brand-name and private-brand products at low prices are known as ________. A. discount stores B. warehouse showrooms C. catalog showrooms D. superstores E. specialty retailers Answer: A 34. Cash and Carry is a store that carries food, clothing, and household goods at lower price margins than other nearby stores. There is little service provided and customers have to bag their own purchases. Cash and Carry is most likely an example of a ________. A. department store B. category killer C. discount store D. supermarket E. warehouse showroom Answer: C 35. Ollies' is a regional self-service retail store that sells name-brand electronics, tools, housewares, and sporting goods at low prices. Ollies' is an example of a ________. A. department store B. discount store C. warehouse showroom D. specialty store E. superstore Answer: B 36. As discount stores improve their services and atmosphere as well as raise their prices, the distinction between discount stores and ________ is becoming blurred. A. superstores B. supermarkets C. specialty stores D. department stores E. category killers Answer: D 37. A ________ is a small, self-service store that is open long hours and carries a narrow assortment of products, usually items such as soft drinks and other beverages, snacks, news-papers, tobacco, and gasoline, as well as services such as ATMs. A. discount store B. department store C. convenience store D. supermarket E. category killer Answer: C 38. Which of the following was developed in 1927 to supply milk, eggs, and other products for customers replenishing their supplies? A. Supermarkets B. Convenience stores C. Discount stores D. Department stores E. Specialty stores Answer: B 39. Jack gets a shopping list from his wife. On the list are a potted plant, aspirin, fresh salmon, motor oil, bread, milk, and a birthday cake. To make just one stop to save time, Jack should go to a ________. A. discount store B. category killer C. specialty store D. specialty retailer E. supermarket Answer: E 40. Aidan is getting ready to move to campus for his freshman year of college. To get the products he needs for his dorm room, he goes to a store that sells household goods such as plastic containers, sheets, and towels. The store also sells items such as shampoo, deodorant, and toothpaste. Aidan has most likely gone to a ________. A. discount store B. superstore C. wholesaler D. department store E. warehouse club Answer: B 41. Kroger, Safeway, and Publix are all considered: A. superstores. B. groceries. C. department stores. D. supermarkets. E. food stores. Answer: D 42. Which type of retail outlet can have up to 200,000 square feet? A. Superstores B. Supermarkets C. Discount stores D. Department stores E. Category killers Answer: A 43. Laura goes to a Walmart store and buys some clothing, a DVD, light bulbs, and all the groceries she needs for her family. What type of retailer is this particular Walmart outlet? A. Supermarket B. Superstore C. Hypermarket D. Discount store E. Department store Answer: B 44. A large retailer selling food and most routinely purchased consumer products is a ________. A. hypermarket B. supermarket C. discount store D. warehouse club E. superstore Answer: E 45. What is the primary distinction between superstores and hypermarkets? A. Superstores offer a wider variety of products than hypermarkets. B. Superstores offer low prices, while hypermarkets have moderate to high prices. C. Hypermarkets have fewer departments but deeper product lines than superstores. D. Hypermarkets are larger and have more types of products than superstores. E. These two types of retailers carry very different types of products. Answer: D 46. After shopping in the same store for nearly two hours, Chelsea goes to Burger King for a Whopper, while Cynthia goes to the optical shop to see if her contacts are ready. They engage in these activities without leaving the store in which they have been shopping. They are most likely in a ________. A. superstore B. hypermarket C. department store D. warehouse club E. discount store Answer: B 47. Which of the following is a large-scale, members-only, retailer that combines cash-and-carry wholesaling with discount retailing? A. Warehouse showroom B. Warehouse club C. Catalog showroom D. Category killer E. Hypermarket Answer: B 48. Retailers that sell only to members and feature discount retailing combined with cash-and-carry wholesaling are called ________. A. hypermarkets B. retail groups C. warehouse showrooms D. discount stores E. warehouse clubs Answer: E 49. Which of the following is not a common feature of a warehouse club? A. Concrete floors B. Wide aisles C. Good customer service D. Large packages E. Low price per unit Answer: C 50. Sam's and Costco are examples of: A. discounters. B. warehouse clubs. C. warehouse showrooms. D. discount clubs. E. wholesalers. Answer: B 51. Retail facilities located in big, low-cost buildings with large on-premise inventories and minimal services are called ________. A. catalog showrooms B. category killers C. warehouse showrooms D. warehouse clubs E. display outlets Answer: C 52. Levitz Furniture locates in huge, low-cost buildings, maintains large, on-premises inventories, and offers minimum service. Levitz is a ________. A. warehouse showroom B. catalog showroom C. superstore D. warehouse club E. department store Answer: A 53. A narrow product mix with a deep product line would most likely be carried by ________. A. mass merchandisers B. supermarkets C. discount stores D. specialty retailers E. warehouse showrooms Answer: D 54. A store that offers a wide variety of shoes for men, women, and children would most likely be considered a(n) ________. A. department store B. traditional specialty retailer C. category killer D. off-price retailer E. warehouse showroom Answer: B 55. Matt's girlfriend tells him she wants a cashmere sweater for Christmas. Matt decides to go to a store that provides the best possible selection of sweaters. His best choice would be to shop at a ________ store. A. department B. catalog C. discount D. traditional specialty E. convenience Answer: D 56. Off-price retailers and category killers are both: A. specialty retailers. B. discount stores. C. showrooms. D. general merchandisers. E. department stores. Answer: A 57. Specialty stores offer ________ than department stores. A. greater varieties of product lines and higher prices B. lower prices and higher quality C. more product lines and less customer service D. more sales expertise and better selections E. more frequent price discounts and less selection Answer: D 58. Which type of retailers are the primary competitors for specialty retailers? A. Discount stores B. Category killers C. Catalog marketers D. Department stores E. Superstores Answer: D 59. Off-price retailers feature: A. deep discounts, few customer services, and central checkouts. B. sales expertise, wide selections, and low prices. C. overstocks, private-brand products, and moderate prices. D. a narrow product range and enormous product availability. E. cash only sales and few customer services. Answer: A 60. Stores that buy manufacturers' seconds, overruns, returns, and off-season production runs at below wholesale prices and resell this merchandise to consumers at deep discounts are known as ________. A. category killers B. off-price retailers C. specialty retailers D. hypermarkets E. discount retailers Answer: B 61. When off-price retailers obtain too much in-season, high-quality merchandise, tension between manufacturers and ________ builds. A. discount stores B. category killers C. specialty retailers D. warehouse clubs E. department stores Answer: E 62. Stores that are in a factory outlet mall, such as Ralph Lauren, Tommy Hilfiger, Clarks’ Shoes, and Samsonite Luggage are most appropriately classified as a(n) ________. A. discounter B. specialty retailer C. off-price retailer D. category killer E. department store Answer: C 63. Category killers compete primarily on the basis of: A. enormous product selection and sales expertise. B. low prices and enormous product availability. C. convenient locations and customer services. D. rock-bottom prices and moderate selections. E. one-stop shopping and product availability. Answer: B 64. Which of the following is an example of a category killer? A. J.C. Penney B. Walmart C. Marshalls D. Sams E. Toys "R" Us Answer: E 65. Michael's, PetSmart, and Staples are all examples of: A. discount stores. B. off-price retailers. C. category killers. D. traditional specialty retailers. E. superstores. Answer: C 66. In contrast to business purchases, consumer purchases are likely to be influenced by ________. A. economic planning B. necessity C. prior planning D. social influences E. rational needs Answer: D 67. The kinds of products being sold and the availability of public transportation are both factors that influence a retailer's decision about ________. A. store atmosphere B. store location C. retail positioning D. store image E. the wheel of retailing Answer: B 68. Alex is preparing a new strategic plan for a large retailer. Several aspects of the retailer are to be evaluated in order to make plans and set goals. Of all the issues that Alex can select in developing the new strategic plan, which of the following is the least flexible? A. Store atmosphere B. Scrambled merchandising C. Retail positioning D. Store image E. Retail store location Answer: E 69. Location is important to a retailer because: A. suppliers charge more to service stores in certain trading areas. B. a desirable location appeals to consumers' emotions. C. location is the major determinant of store image which attracts a certain category of consumers. D. location determines the trading area from which a store must draw its customers. E. convenient location is an essential customer service element. Answer: D 70. Ariana is planning to open an upscale dress boutique. She is evaluating ease of movement to and from sites, vehicular traffic, types of stores in the area, and transportation networks. At the moment, which of the following strategic retailing issues is Ariana concerned with? A. Store location B. Production depth C. Product mix D. Scrambled merchandising E. Retail positioning Answer: A 71. Greg chooses to have his hunting equipment store in a location away from the main part of town so that he can have a large parking lot and an outdoor range for customers to test out his merchandise. Greg's store is: A. in a traditional business district. B. a rural shopping center. C. in a neighborhood shopping center. D. a non-traditional shopping center. E. a freestanding structure. Answer: E 72. Colin brags to his friend Reid that his new bike shop has lots of parking and great visibility from Harper Avenue, and his nearest business neighbors are several hundred feet away. Colin has selected a ________ site for his retail business. A. freestanding B. traditional business district C. neighborhood shopping center D. community shopping center E. regional shopping center Answer: A 73. Which of the following represents the different types of shopping centers that exist? A. Neighborhood, regional, superregional, power, and strip malls B. Community, rural, urban, and traditional business districts C. Outlet, power, lifestyle, superregional, regional, neighborhood, and community D. Outlet malls, lifestyle, strip malls, and shopping malls E. Freestanding, convenience, traditional, and regional Answer: C 74. Which of the following types of shopping centers usually consists of several small convenience and specialty stores? A. Specialty B. Regional C. Neighborhood D. Convenience E. Community Answer: C 75. In Cara's hometown, there is a mall with a small Sears store, a Macy's department store, a couple of fast food restaurants, a few specialty shops, and some convenience stores. The mall features seasonal sidewalks sales and boat shows. This mall is most likely a ________ shopping center. A. neighborhood B. national C. regional D. community E. city Answer: D 76. Hickory Village Shopping Center has two department stores and some specialty and convenience stores. It serves a large geographic area and holds special events to stimulate consumer traffic. Hickory is a ________ shopping center. A. community B. regional C. nontraditional D. neighborhood E. power Answer: A 77. The target market of a regional shopping center typically includes at least ________ people. A. 25,000 B. 50,000 C. 100,000 D. 150,000 E. 250,000 Answer: D 78. Dawn is concerned that there are not enough buyers in Centerville to support her Quilts Unlimited store. Her business adviser suggests that she should not limit her promotion to the Centerville population but also consider out shoppers. This approach is most likely to work if her store is located in a: A. freestanding location. B. traditional business district. C. strip center. D. community shopping center. E. regional shopping center. Answer: E 79. A shopping center containing a Macy's, Sears, and J.C. Penney as well as dozens of specialty shops, restaurants, and entertainment is most likely a: A. superregional shopping center. B. neighborhood shopping center. C. community shopping center. D. complete business district. E. lifestyle shopping center. Answer: A 80. Which of the following offers the widest product mixes and the deepest product lines? A. Category killer B. Outlet mall C. Traditional business district D. Community shopping center E. Superregional shopping center Answer: E 81. Which of the following may include special attractions such as amusement parks or skating rinks? A. Convenience shopping centers B. Neighborhood shopping centers C. Community shopping centers D. Regional shopping centers E. Superregional shopping centers Answer: E 82. An open-air shopping center that features upscale specialty, dining, and entertainment stores, usually owned by national chains, is generally called a(n): A. regional shopping center. B. neighborhood shopping center. C. community shopping center. D. lifestyle shopping center. E. outlet shopping center. Answer: D 83. An example of an emerging type of power shopping center might contain: A. J.C. Penney, Sears, some specialty shops, McDonald's, and Dairy Queen. B. Michael's, Office Depot, T.J. Maxx, and Circuit City. C. Liz Claiborne, Van Heusen, Corning Ware, and Mikasa outlets. D. Safeway, CVS, and Subway. E. a Supercenter Walmart. Answer: B 84. A shopping center that contains stores owned by manufacturers who make a special effort not to conflict with traditional retailers is a(n) ________. A. strip mall B. neighborhood shopping center C. off-price mall D. manufacturer shopping center E. factory outlet mall Answer: E 85. ________ have been successful because consumers are willing to drive significant distances to save money buying manufacturers' closeouts and irregulars. A. Off-price shopping centers B. Outlet shopping centers C. Regional shopping centers D. Upscale shopping centers E. Specialty shopping centers Answer: B 86. Identifying an unserved or underserved market segment and serving it through a strategy that distinguishes a retailer in the mind of a consumer is called ________. A. the marketing concept B. the wheel of retailing C. retail positioning D. targeted retailing E. scrambled merchandising Answer: C 87. Josh tells the loan officer at First Bank and Trust that Clarksville really needs a store that offers high-quality fishing gear to enthusiasts and provides the service and advice that many people want. No other store in the area seems to provide this combination. Josh is trying to use ________ to support his request for a loan to start such a retail operation. A. scrambled merchandising B. location analysis C. the wheel of retailing D. product mix width E. retail positioning Answer: E 88. Norah operates an upscale shop that does both pet grooming and human manicures and pedicures. She is reaching a market segment with people who place great value on their dogs and are concerned with their own appearance, yet pressed for time. No other businesses meet the needs of these consumers. Which strategic issue in retailing does Norah appear to have addressed? A. Store image B. Location C. The wheel of retailing D. Retail positioning E. Scrambled merchandising Answer: D 89. Brianna owns and operates a gift and interior store called The Gingerbread House. She works hard to put together beautiful arrangements and displays throughout the store and always features a burning scented candle and light music. She hopes these efforts will encourage her customers to buy more. Brianna is focusing on ________. A. atmospherics B. retail positioning C. location D. scrambled merchandising E. value-pricing Answer: A 90. Exterior and interior characteristics such as layout, displays, color, and lighting are all elements of a store's ________. A. services B. atmospherics C. location D. specialty E. quality Answer: B 91. A functional and psychological picture in a consumer's mind of a retail store is called: A. retail positioning. B. store quality. C. store image. D. interior location. E. retail persona. Answer: C 92. Which of the following retail stores invests the most in atmospherics? A. Target B. Sears C. Neiman Marcus D. Macy’s E. Dick’s Sporting Goods Answer: C 93. A retail strategy of managing groups of similar, often substitutable products produced by different manufacturers is called ________. A. category management B. scrambled merchandising C. line extensions D. aggregate management E. wheel of retailing Answer: A 94. The use of telephone and other nonpersonal media to introduce products to consumers, who then can purchase the products through mail, telephone, or the Internet, is known as ________. A. direct marketing B. wholesaling C. remote purchasing D. automatic vending E. direct selling Answer: A 95. The selling of merchandise outside the confines of actual retail facilities is generally called ________. A. nonstore retailing B. loyalty marketing C. persuasive selling D. flash retailing E. store-front sales. Answer: A 96. The three major types of nonstore retailing are: A. direct marketing, direct selling, and automatic vending. B. direct selling, automatic vending, and catalog retailing. C. direct marketing, direct selling, and mail-order. D. automatic vending, direct selling, and telemarketing. E. telemarketing, door-to-door sales, and mail-order. Answer: A 97. Lucas is planning a distribution strategy for his business. He is considering using direct marketing, direct selling, and automatic vending which are all examples of ________ retailing. A. off-premise B. portfolio C. nonstore D. off-price E. direct Answer: C 98. Chadwick's sends its customers booklets containing its product offerings and allows them to place orders on telephone, through mail, or online. Chadwick's is primarily a(n) ________. A. online retailer B. direct seller C. catalog marketer D. direct-response marketer E. specialty retailer Answer: C 99. Which of the following types of retailing began with Montgomery Ward in the late 1800s? A. Catalog marketing B. Department stores C. Direct selling D. Discount retailing E. Franchising Answer: A 100. All of the following are types of direct marketing except: A. catalog marketing. B. direct-response marketing. C. direct selling. D. television home shopping. E. online retailing. Answer: C 101. When a retailer advertises a product and makes it available for purchase through telephone or mail orders, the retailer is using ________. A. direct selling B. television home shopping C. telemarketing D. automatic vending E. direct-response marketing Answer: E 102. Advo Systems is an organization that mails product brochures and coupons to potential consumers who can then purchase these products by mail or by phone. Which of the following methods of selling retail products is illustrated by Advo Systems? A. Direct-response marketing B. Party plan C. Telemarketing D. Specialty retailing E. Direct selling Answer: A 103. In order to justify direct-response marketing, a product really needs to be priced above ________. A. $50 B. $10 C. $5 D. $20 E. $100 Answer: D 104. In the Sunday paper, Caitlin sees a flyer for a collector's edition nativity set that is available to purchase by filling out and mailing in a form or by calling a 1-800 number. This is an example of: A. telemarketing. B. direct-response marketing. C. television home shopping. D. direct selling. E. catalog marketing. Answer: B 105. Sophia is the new marketing manager for a new line of laptop, MP3, and smartphone accessories made by the company, Skull Candy. These accessories are trendy, colorful, and more expensive than others on the market. After considering the target market for the products, Sophia has decided not to use marketing-related activities conducted through telemarketing, and instead use vending, a type of ________. A. e-marketing B. direct-response marketing C. nonstore retailing D. online retailing E. specialty marketing Answer: C 106. When products are presented to television viewers, who can purchase them by calling a toll-free number and paying with a credit card, ________ is being used. A. telemarketing B. catalog marketing C. direct-response marketing D. e-marketing E. television home shopping Answer: E 107. A retailer engaged in direct marketing would probably select television home shopping over online retailing to sell a new kitchen device because of: A. lower costs of selling. B. easier financial transactions. C. a superior ability to demonstrate the product. D. a superior ability to offer the product at a lower price. E. a decreased cycle time. Answer: C 108. Which of the following is the most popular type of product sold through television home shopping? A. Electronics B. Clothing C. Jewelry D. Shoes E. Cosmetics Answer: C 109. Kelly Cramer sees a lovely pair of earrings on a television network and calls a toll-free number to order them, paying with her credit card. This is an example of ________. A. online retailing B. television home shopping C. telemarketing D. direct-response marketing E. catalog marketing Answer: B 110. Brad accesses Overstock.com’s site on the Internet and purchases a business laptop case. This is an example of ________. A. direct-selling B. catalog retailing C. direct-response marketing D. online retailing E. home shopping Answer: D 111. The marketing of products to ultimate consumers through face-to-face sales presentations either at home or the workplace is known as ________. A. direct marketing B. direct-response marketing C. telemarketing D. strategic selling E. direct selling Answer: E 112. Which of the following is a potential disadvantage of direct selling? A. Commissions for salespeople are usually low. B. Some customers view direct selling negatively. C. Personal attention tends to be lacking. D. Product demonstrations are difficult in this type of selling. E. Consumers must go out of their way to purchase the product. Answer: B 113. With respect to retailing, what is the "party plan"? A. A sales representative has a party at her home to demonstrate products to a group of friends and associates. B. A party is set up in a formal setting to demonstrate a product and provides free samples of the product to all in attendance. C. An individual is asked to tell two friends about a product, who are in turn each asked to tell two friends, etc. until a sufficient number of people are reached. D. A store has a special sale that resembles a party, and those who come are asked to buy the featured products. E. A consumer acts as a host and invites friends to view merchandise in a group setting, where a salesperson demonstrates the products. Answer: E 114. Alison asks ten of her friends over to her home to learn about exciting new cosmetic products. A salesperson from Angel Products makes a presentation and takes the women's orders. This is an example of ________. A. a party plan B. telemarketing C. a warehouse club D. direct marketing E. a catalog showroom Answer: A 115. The primary advantage of automatic vending as a form of retailing is that: A. it offers a low-cost, personal method of selling products. B. it provides continuous service to consumers. C. since vending machines must be serviced frequently, the products they sell are always fresh. D. vending machines require very few repairs. E. it eliminates the need for sales personnel. Answer: E 116. Redbox, ProActiv, and Clinique all sell their products through automatic vending, which is: A. a type of nonstore retailing. B. a specialty line retailer. C. not considered a form of retailing. D. a type of direct selling. E. a form of franchising. Answer: A 117. Tupperware, Sarah Coventry, Amway, and Avon sell products outside the confines of retail facilities. They are ________ retailers. A. discount B. traditional C. specialty D. non-store E. pop-up Answer: D 118. While on their family vacation, the Millers realize they left their camera at home. They purchase a disposable camera at an amusement park using their credit card, but never interact with a person. Which type of retailing did this transaction most likely involve? A. Franchising B. Online retailing C. Direct-response marketing D. Automatic vending E. Machine marketing Answer: D 119. An arrangement in which a supplier grants a dealer the right to sell products in exchange for some type of consideration is ________. A. selling products on consignment B. retailing C. wholesaling D. licensing E. franchising Answer: E 120. If Victor decides to buy a franchise, he will most likely have to supply: A. management know-how and equipment. B. buildings and marketing assistance. C. marketing assistance and management know-how. D. equipment and management expertise. E. labor and a percentage of total sales. Answer: E 121. Malcolm Lewis has come up with the idea of a system for picking up people's cars while they are at work, washing and waxing them, and returning them for a fee. Having been a big success in his home city, Malcolm plans to expand his operation into other cities. The service described here seems best suited to ________. A. party-plan retailing B. franchising C. vending D. corporate chain retailing E. off-price retailing Answer: B 122. Kevin is talking with Peter about purchasing a Wendy's franchise. Peter tells Kevin that one of the major advantages of franchising for him to consider is the: A. higher start-up costs. B. greater freedom it provides. C. individuality it offers. D. higher success rate for franchises. E. gross margin it provides. Answer: D 123. Which of the following is not one of the basic types of franchising arrangements? A. A producer franchising a number of stores to sell a particular brand of product B. A wholesaler franchising a number of producers C. A producer franchising a number of wholesalers to sell to retailers D. The franchising of brand names, techniques, procedures, or services E. All of these are basic types of franchising. Answer: B 124. Which of the following is not an advantage of franchising for a franchisee? A. A franchisee can capitalize on the business experience of others. B. When problems arise, a franchisee can obtain guidance and advice from a franchiser. C. Franchised outlets are usually more successful than independently owned businesses with respect to longterm survival. D. A franchisee can participate in national promotional campaigns sponsored by a franchiser. E. A franchisee gains fast and selective product distribution without incurring the high cost of constructing and operating its own outlets. Answer: E 125. In franchising, which of the following is not a benefit that a franchiser gains? A. A franchiser can gain more rapid product distribution. B. A franchiser can acquire capital more quickly for expanding production. C. A franchiser gains more control over how franchisees operate establishments. D. A franchiser benefits from the fact that franchisees tend to be highly motivated to succeed, which in turn leads to higher sales and higher royalties. E. All of these are benefits for a franchiser. Answer: C 126. Which of the following best describes wholesalers? A. Organizations that buy products from producers and sell them to retailers B. Individuals or organizations that purchase products and then resell them to other businesses and consumers C. Organizations or individuals who buy products for resale to government, reseller, producer, and institutional users D. Organizations or entities that buy products from government, reseller, and producers and sell them to customers in bulk E. Companies that make products that have a general appeal and are resold to retailers for a profit Answer: C 127. Which of the following is true about wholesaling? A. Wholesaling activities must be performed during distribution of all goods, whether or not a wholesaling institution is involved. B. Warehouses are necessary in order for the wholesaling function to be completed. C. Only wholesaling establishments can perform wholesaling activities. D. Wholesaling is an inefficient process that should be eliminated from the marketing channel. E. The biggest problem with the wholesaling process is that inefficient wholesalers can thrive, at the expense of consumers. Answer: A 128. The primary function of most wholesalers is to: A. reduce a retailer’s warehousing expenses. B. support manufacturers by assisting with marketing strategy, especially the distribution component. C. provide information system tracking of inventory for the ultimate consumer. D. perform physical distribution of products from manufacturers to retailers. E. understand the businesses of the manufacturers. Answer: D 129. By using Johnson Wholesale Co. for its distribution needs, Apex Production has a distinct competitive advantage because the services performed by Johnson allow Apex to: A. provide quality merchandise to consumers. B. focus on increasing production capacity. C. focus on increasing working capital. D. reduce manufacturing costs to retailers. E. keep track of market developments. Answer: E 130. Which of the following services would a wholesaler least likely provide to a manufacturer? A. Assume the risks of selling to poor credit customers B. Look for and coordinate supply sources C. Pay the costs of transporting goods D. Provide up-to-date information on market developments E. Serve as an extension of the manufacturer's sales force Answer: B 131. Which of the following is not a factor used to classify wholesalers? A. Whether a wholesaler is owned by a producer B. Whether a wholesaler takes title to the products it handles C. The range of services offered by a wholesaler D. The price range of the products carried by a wholesaler E. The breadth and depth of the product lines carried by a wholesaler Answer: D 132. Wholesalers frequently help retailers with developing a marketing strategy, especially as it relates to the ________ component of the marketing mix. A. distribution B. promotion C. product D. price E. channel Answer: A 133. By buying in large quantities and delivering to customers in smaller lots, a wholesaler may perform all of the following physical distribution activities except: A. inventory planning. B. transportation. C. materials handling. D. unit pricing. E. communication. Answer: D 134. With respect to inventory, wholesalers can help retailers with all of the following except ________. A. selection B. storage C. inventory control D. transportation E. production Answer: E 135. A merchant wholesaler: A. performs a limited number of services in exchange for a commission. B. takes title to goods, assumes risk associated with ownership, and buys and resells products. C. takes title and possession of goods and sells only to retailers. D. does not take title or possession of goods but facilitates exchanges between any parties. E. deals exclusively with business products. Answer: B 136. Walmart has its own fleet of trucks and works directly with producers to take care of the ordering, delivery, and handling of goods. In addition, Walmart works directly with suppliers through its advanced system of inventory control and data processing. Walmart is: A. able to eliminate many of the functions typically performed by wholesalers. B. performing many of the critical functions of wholesalers through its own system. C. successfully using wholesalers to run its venerable chain of discount stores. D. using information technology to eliminate the need to perform typical wholesale functions. E. vertically integrated in order to produce and distribute all products itself. Answer: B 137. Sherri McRae wants to establish a fashion wholesaling firm. Because of the risks involved in the rapid obsolescence of high-fashion items, Sherri does not want to establish an organization in which she has title to the garments. Which of the following types of wholesale establishments has she ruled out? A. Merchant wholesaler B. Agent C. Broker D. Functional middleman E. Commission merchant Answer: A 138. Martin owns and operates a wholesale hardware business that supplies small hardware parts to various manufacturers in the area. He takes title to the hardware and assumes all risks associated with ownership. Martin is a ________. A. commission merchant B. merchant wholesaler C. wholesaler agent D. broker E. sales branch Answer: B 139. Merchant wholesalers can be divided into two basic categories: A. general merchandise and general-line. B. rack jobbers and cash-and-carry. C. commission and fee-based. D. goods and services. E. full-service and limited service. Answer: E 140. Cigarette manufacturer Philip Morris uses the services of Universal Corporation, the world's largest buyer and processor of leaf tobacco, which provides financing for its customers. This means that Universal is a ________. A. cash-and-carry wholesaler B. general merchandise wholesaler C. limited-service wholesaler D. rack jobber E. full-service wholesaler Answer: E 141. Customers rely on ________ for product availability, breaking larger quantities into smaller ones, technical advice and service, financial assistance, and suitable assortments. A. full-line retailers B. limited-service wholesalers C. full-service wholesalers D. commission merchants E. cash-and-carry wholesalers Answer: C 142. If a retailer needed help with store design and training sales personnel, it would most likely use the services of a ________. A. full-service wholesaler B. full-price wholesaler C. mail-order wholesaler D. cash-and-carry wholesaler E. technical wholesaler Answer: A 143. A wholesaler that carries a wide product mix but offers only limited depth within product lines is known as a ________. A. specialty-line wholesaler B. limited-service wholesaler C. rack jobber D. general merchandise wholesaler E. general-line wholesaler Answer: D 144. All of the following are examples of full-service wholesalers except: A. general merchandise wholesalers. B. mail-order wholesalers. C. rack jobbers. D. general-line wholesalers. E. specialty-line wholesalers. Answer: B 145. Which of the following is a full-service merchant wholesaler? A. Cash-and-carry wholesaler B. General merchandise wholesaler C. Drop shipper D. Mail-order wholesaler E. Truck wholesaler Answer: B 146. Brad operates a wholesale company that specializes in providing a wide variety of services to its customers, which are all restaurants. He carries a wide assortment of restaurant equipment and cookware. Brad's business is a ________. A. general merchandise wholesaler B. rack jobber C. general-line wholesaler D. specialty-line wholesaler E. limited-service wholesaler Answer: C 147. A general-line wholesaler would be expected to carry a ________ product mix. A. wide and deep B. wide and shallow C. narrow and shallow D. wide E. narrow and deep Answer: E 148. Based on what he has heard regarding the profitability of such items, Paul Goldstein is considering adding a fresh shellfish case in his grocery store. Paul knows very little about this product or the concerns of shoppers who buy shellfish. He is looking for help in display set-up and merchandising ideas. Which of the following types of wholesalers should he contact? A. Cash-and-carry B. Limited-line C. General merchandise D. Rack jobber E. Limited-service Answer: D 149. Fiona is a wholesaler who buys greeting cards from Hallmark Cards Inc. and resells them by maintaining displays of greeting cards in drugstores and discount stores. Her daily activities include straightening the cards, pulling outdated or slow sellers, and installing new cards. Fiona is called a(n) ________. A. specialty-line wholesaler B. full-service stocker C. in-store maintainer D. assembler E. rack jobber Answer: E 150. Angela approaches David Hughes, owner of Hughes Auto Parts, to talk about the possibility of adding a new line of products to his store. Angela tells David that the product is a line of high-quality driving sunglasses. She offers to set up the display, service and restock it weekly, and maintain billing and inventory records. She tells David that all she needs is a couple of square feet of space. Angela is in the business of serving retailers as a ________. A. general-merchandise wholesaler B. specialty-line wholesaler C. rack jobber D. limited-line wholesaler E. cash-and-carry wholesaler Answer: C 151. Lynn Taylor sells Revlon cosmetics on consignment to grocery stores, maintains the display racks, and restocks when necessary. Lynn's job is best described as a ________. A. rack jobber B. drop shipper C. general merchandise wholesaler D. cash-and-carry wholesaler E. truck jobber Answer: A 152. Merchant wholesalers who provide very few marketing services and specialize in just a few functions are known as ________. A. limited-service wholesalers B. wholesale service specialists C. general-line wholesalers D. specialty-line wholesalers E. specialty-service wholesalers Answer: A 153. All of the following are types of limited-service merchant wholesalers except ________. A. cash-and-carry wholesalers B. truck wholesalers C. mail-order wholesalers D. specialty-line wholesalers E. drop shippers Answer: D 154. Laura and Marie own and operate a small restaurant. On a weekly basis, they go to their local Sam's Wholesale Club to purchase the food items and cleaning supplies they need for their business. With the exception of the volume they purchase and the items' intended use, this grocery shopping trip is identical to a weekly trip by their families to a grocery store. Sam's serves as a ________ wholesaler for these entrepreneurs. A. general-line B. specialty-line C. full-service merchant D. Truck E. cash-and-carry Answer: E 155. Which of the following types of wholesalers transports a limited line of products directly to customers for immediate inspection and selection? A. On-site wholesalers B. Cash-and-carry wholesalers C. Rack jobbers D. Truck jobbers E. Drop shippers Answer: D 156. Greg works with a group of farmers who provide him with a regular supply of a variety of fresh vegetables. He picks up their produce and has a regular route of grocers and restaurants that purchase quantities of the items he has on any given day. Which of the following types of wholesalers is Greg? A. A drop shipper B. A general-line wholesaler C. A truck jobber D. A cash-and-carry wholesaler E. A specialty-line wholesaler Answer: C 157. Andrea owns and operates a small novelty store that sells home décor, gifts, jewelry, and gourmet snacks. Because her business is very small, many wholesalers do not deal with her, therefore she relies primarily on ________ for the survival of her business. A. drop shippers B. truck wholesalers C. rack jobbers D. specialty-line wholesalers E. cash-and-carry wholesalers Answer: E 158. Drop shippers: A. take title to but not physical possession of the goods. B. do not take title to or physical possession of the goods. C. take title to and physical possession of the goods. D. do not take title to but take physical possession of the goods. E. are similar to truck wholesalers but provide the extra service of placing products on retailers' shelves. Answer: A 159. Which of the following wholesalers never takes actual possession of goods? A. Drop shippers B. Cash-and-carry wholesalers C. Truck jobbers D. Mail-order wholesalers E. Rack jobbers Answer: A 160. Mark Bradley's company takes orders from its collection of retail customers and arranges the delivery of goods directly from manufacturers or other wholesalers to its customers' businesses. Mark is operating as a ________. A. mail-order wholesaler B. drop shipper C. desk wholesaler D. truck jobber E. specialty-line wholesaler Answer: B 161. Alison lives in a remote area of Montana, where few good roads exist. She runs a small retail store specializing in western attire. Due to her remote location, Alison is most likely to obtain the merchandise for her store from ________. A. rack jobbers B. general-line wholesalers C. mail-order wholesalers D. truck wholesalers E. specialty-line wholesalers Answer: C 162. ________ provide an effective method of selling small items to customers in remote areas that other wholesalers might find unprofitable to serve. A. Desk jobbers B. Specialty-line wholesalers C. Cash-and-carry wholesalers D. Truck wholesalers E. Mail-order wholesalers Answer: E 163. Agents and brokers that facilitate and negotiate purchases but do not actually take title to products are also known as ________. A. contract wholesalers B. commission wholesalers C. hands-off intermediaries D. contract negotiators E. functional middlemen Answer: E 164. What is the primary difference between an agent and a broker? A. An agent gets compensated based on commission, while a broker generally charges fees for his services. B. A broker works only for a seller, whereas an agent can represent a buyer or a seller. C. An agent represents a company on a permanent basis, while a broker is employed temporarily. D. An agent has much more extensive knowledge about the products he deals with than a broker does. E. Brokers have long-term relationships with their customers, while an agent's relationships are generally short-lived. Answer: C 165. Independent intermediaries that represent two or more sellers and usually offer customers complete product lines in a restricted territory are known as ________. A. commission merchants B. manufacturers' agents C. selling agents D. truck wholesalers E. retailers' brokers Answer: B 166. Because Gem Supply's sales have continued to decline, the jewelry manufacturer has found that the costs associated with maintaining its own five-person sales force are prohibitive. The firm's marketing director begins to look for a small company or an individual willing to perform the sales function for Gem Supply in its least productive region, the Far West. The ideal entity would carry complementary but non-competing lines. Such a firm or an individual would be classified as a ________. A. rack jobber B. manufacturers' agent C. specialty-line wholesaler D. desk jobber E. commission merchant Answer: B 167. Karen has been a buyer for Ocean Mist, a large cranberry processor, for several years. Believing that she knows a great deal about cranberries, their growers, and processors, she decides to go into business by herself. Karen wants to assume no risks of spoilage or price fluctuations. She sees herself as simply bringing the growers and processors together. Her new company would be a ________. A. sales agent B. commission merchant C. broker D. sales branch E. sales office Answer: C 168. A difference between manufacturers' agents and selling agents is that: A. selling agents have little control over the marketing mix of the manufacturers they represent. B. selling agents represent retailers. C. selling agents do not offer retailers aid in advertising or promotional material. D. selling agents do not have the territorial restrictions that manufacturers' agents do. E. selling agents represent wholesalers. Answer: D 169. Selling agents perform every wholesaling activity except ________. A. transporting goods B. setting prices C. financing products D. taking title to products E. inventory control Answer: D 170. A channel member that markets all of a manufacturer's goods, has authority over price, promotion, and distribution, but does not take title to a product is known as a ________. A. general-line wholesaler B. selling agent C. commission merchant D. manufacturers' agent E. broker Answer: B 171. Manufacturers' agents offer products that are both: A. noncompeting and complementary. B. competing and specialized. C. unrelated and noncompeting. D. complementary and competing. E. unrelated and competing. Answer: A 172. Thad works for a company that markets all of Celetron's products. Thad's company acts as the marketing department for Celetron, performing all marketing functions without actually taking title to the goods. Thad's company is a ________. A. commission merchant B. manufacturers' agent C. sales branch D. selling agent E. full-service wholesaler Answer: D 173. An agent that receives goods on consignment from local sellers and negotiates sales in large, central markets is known as a ________. A. commission merchant B. sales branch agent C. selling agent D. manufacturers' agent E. broker-agent Answer: A 174. Calhoun Produce, a ________, takes possession of truckloads of tomatoes, arranges for storage, and transports them to auctions to be sold. A. manufacturer's agent B. selling agent C. commission broker D. commission merchant E. selling broker Answer: D 175. The primary purpose of a(n) ________ is to bring buyers and sellers together. A. commission merchant B. selling agent C. manufacturers' agent D. intermediary E. broker Answer: E 176. Chandra has extensive contacts in the real estate business and brings together buyers and sellers. Although she assumes no risks, she can offer specialized knowledge about real estate. Chandra is a ________. A. commission merchant B. selling agent C. broker D. specialty salesperson E. sales branch agent Answer: C 177. Intermediaries owned by manufacturers that sell products and provide support services to the manufacturers' sales forces are known as ________. A. manufacturers' agents B. sales branches C. selling agents D. sales offices E. commission merchants Answer: B 178. The management at Kohler Inc., a manufacturer of sinks, tubs, and other plumbing products, thinks that there will soon be a major growth in home remodelling due to rising interest rates. The management decides to use ________ in several key cities to provide support services for its sales force in those areas, carry inventory, and offer credit and other services to its retail plumbing customers. A. sales agents B. commission merchants C. broker offices D. sales branches E. facilitating agencies Answer: D 179. A manufacturer-owned operation that provides services usually associated with agents is a ________. A. facilitating agency B. wholesaler C. sales office D. sales branch E. public warehouse Answer: C 180. Veronica Montez works for Bicardi at a location away from the manufacturing plants. She provides wholesale services to wholesale and retail customers, but her facility does not carry inventory. Veronica works at a ________. A. sales branch B. manufacturers' agency C. sales office D. retail outlet E. commission brokerage Answer: C Scenario 14.1 Use the following to answer the questions. Landry Restaurants Inc. owns a number of different franchised restaurants, including the Rain Forest Cafe and their recent addition, the T-Rex Cafe. Both the Rain Forest and T-Rex restaurants differentiate themselves from their competitors by offering a unique dining experience. At the Rain Forest Cafe, you can dine under a ceiling of lush tropical forest plants, while you are viewing the enormous aquarium with exotic fish. Periodically, the rain forest explodes with the sound of waterfalls and birds. Giant stuffed monkeys, parrots, and other jungle creatures are planted within the landscape. The Rain Forest Cafe also contains a gift shop, where customers can purchase tshirts, hats, and other items emblazoned with the Rain Forest logo. The newer T-Rex Cafe has a similar approach to the uniqueness of the dining experience. The T-Rex Cafe offers guests a hands-on prehistoric experience, including educational, interactive computer screens. Customers can also pan for precious gems and fossils in Discovery Creek or feast on food from the Kitchen of Fire. The T-Rex Cafe also has a gift shop, where customers can purchase items with the T-Rex logo or build their very own stuffed dinosaur, through "Build-a-Dino" by the "Build-a-Bear" franchise. 181. Refer to Scenario 14.1. The unique dining experiences offered by the Rain Forest Cafe and T-Rex Cafe represent the strategic issue of ________ addressed by the restaurants. A. retail location B. product mix C. retail positioning D. the wheel of retailing E. customer segmentation Answer: C 182. Refer to Scenario 14.1. The lush tropical plants and aquarium represent the ________ of the Rain Forest Cafe. A. atmospherics B. retail positioning C. scrambled merchandising D. location E. category management Answer: D 183. Refer to Scenario 14.1. The Rain Forest Cafe and T-Rex Cafe are usually located in tourist-dense areas or large shopping malls. Since the restaurants' primary focus is to obtain customers who are walking by, they would definitely not want ________ as their locations. A. strip centers B. free-standing buildings C. regional shopping centers D. the Mall of America E. a traditional business district Answer: B Scenario 14.2 Use the following to answer the questions. Lands' End offers clothing and accessories for all members of a typical household. For many years, the products were sold only through catalogs. Later, they were available through the company on its Internet website. In the past few years, Lands' End has partnered with Sears to offer selected Lands' End products inside the Sears’ retail stores. This move by Lands' End has been criticized by some marketers because it was thought that the Lands' End products were superior in quality to those that are available in Sears’ stores. Additionally, the products available in Sears’ stores include craftsman tools, lawn care equipment, and household appliances, which are not Lands' End types of product lines. This may create mixed messages about Lands' End to prospective customers. 184. Refer to Scenario 14.2. When Lands' End sells its products through a catalog or the Internet, it is most likely a retailer selling through ________. A. off-price retailers B. mass merchandisers C. direct marketing D. retail outlets E. category killers Answer: C 185. Refer to Scenario 14.2. In comparison to Lands' End, Sears has a product mix that is most likely A. wider but not deeper. B. deeper but not wider. C. wider and deeper. D. narrower and deeper. E. narrower, but not deeper. Answer: C 186. Refer to Scenario 14.2. The move to sell Land's End products inside the Sears' stores may lead to potential problems with customers’ perception of Lands' End quality, in part due to the functional and psychological picture in the consumers’ mind of Sears' stores. This picture is called the ________ of Sears. A. store location B. atmospherics C. product depth D. store image E. interior persona Answer: D 187. Refer to Scenario 14.2. By locating in the Sears' stores, Lands' End can do all of the following, except: A. facilitate comparison shopping. B. facilitate wholesale exchanges. C. create place utility. D. create time utility. E. facilitate consumer exchanges. Answer: B 188. A retailer is an organization that purchases products for the purpose of reselling them to ultimate consumers. A. True B. False Answer: True 189. Manufacturers can facilitate comparison shopping to allow customers to evaluate different options. A. True B. False Answer: False 190. Wholesalers play a major role in creating time, place, and possession utility and, in some cases, form utility. A. True B. False Answer: False 191. Department stores are distinctly service-oriented. A. True B. False Answer: True 192. Convenience stores are self-service, general-merchandise outlets that regularly offer brand-name and private-brand products at low prices. A. True B. False Answer: False 193. Consumers make the majority of all their grocery purchases in supermarkets. A. True B. False Answer: True 194. Convenience stores combine features of discount stores and supermarkets and generally carry about four times as many items as supermarkets. A. True B. False Answer: False 195. Despite their name, specialty retailers do not sell specialty items except when specialty goods complement the overall product mix. A. True B. False Answer: True 196. Category killers are stores that buy manufacturers’ seconds, overruns, returns, and off­season production runs at below-wholesale prices for resale to consumers at deep discounts A. True B. False Answer: False 197. Retailers should look for compatibility with nearby retailers, because stores that complement one another draw more customers with similar product needs for everyone. A. True B. False Answer: True 198. Community shopping centers usually consist of several small convenience and specialty stores, such as small grocery stores, gas stations, and fast-food restaurants. A. True B. False Answer: False 199. Neighborhood shopping centers usually have the largest department stores, widest product mixes, and deepest product lines of all shopping centers. A. True B. False Answer: False 200. Lifestyle shopping centers are often located near affluent neighborhoods and may have fountains, benches, and other amenities that encourage “casual browsing.” A. True B. False Answer: True 201. Retail positioning involves identifying an unserved or underserved market segment. A. True B. False Answer: True 202. Interior atmospheric elements include the appearance of the storefront, display windows, store entrances, and degree of traffic congestion. A. True B. False Answer: False 203. The advantages of catalog retailing include efficiency and convenience for customers because they do not have to visit a store. A. True B. False Answer: True 204. A franchiser supplies labor and capital, operates a franchised business, and agrees to abide by the provisions of a franchise agreement. A. True B. False Answer: False 205. Direct marketing enables a franchisee to start a business with limited capital and benefit from the business experience of others. A. True B. False Answer: False 206. A retailer is an individual or organization that sells products that are bought for resale, making other products, or general business operations. A. True B. False Answer: False 207. Wholesalers help retailers select inventory. A. True B. False Answer: True Test Bank for Foundations of Marketing William M. Pride, O. C. Ferrell 9781285429779, 9781439039441

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