Eastern Michigan University

MKT 510A

Chapter 14-Managing Retailing, Wholesaling, and Logistics

TRUE/FALSE Questions

1)Retail stores pass through a retail life cycle that parallels the product life cycle of products.  

 

2. It does not matter how or where goods are sold, it is considered retailing if it is sold to the final consumer.

 

3. The wheel-of-retailing hypothesis is that as current store types go up the scale in price and service offerings, they create an opportunity for new, low-price, low-service competitors.  

 

4. Discount stores are large stores that combine the principles of supermarket, discount, and warehousing into one store.  

 

5. An example of a retail store positioned to offer a broad product assortment and high value added would be Wal-Mart.  

 

6. The slowest growing segment of retailing is nonstore retailing.  

 

7. Stores with high value added and a broad product assortment tend to focus on centralized buying and advertising to keep costs low.

 

8. Starbucks store offers a narrow but deep assortment of products.  

 

9. Some manufacturers feel threatened by Direct Product Profitability (DPP) because it gives retailers a powerful argument for selecting or rejecting existing or new products.  

 

10. Global expansion, lower levels of competition, and selling an experience are all important trends in retailing.  

 

11. Wholesaling includes all of the activities involved in selling goods or services to those who buy for resale or business use.  

 

12. Drop shippers sell bulky goods like coal and lumber from their inventory.

 

13. Some wholesalers do not take title to the goods they handle.  

 

14. Wholesalers rely primarily on sales promotions to achieve their promotional objectives.  

 

15. A supply chain management perspective leads to ideas for improving productivity

versus the more traditional view of wholesaling as a demand chain.

 

16. The order-to-payment cycle is the elapsed time between an order’s receipt, delivery, and payment.  

 

17. Fishyback, airtruck, and trainship are examples of containerization methods mentioned in the text, and each uses two modes of transportation.  

 

18. The optimal inventory ordering quantity can be determined by observing how order processing costs and inventory carrying costs sum up at different order levels.  

 

19. A private carrier is one that is owned and controlled by the firm.  

 

20. Deciding on transportation modes means shippers are choosing from private, public, and contract carriers.  

 

Multiple Choice Questions

 

21. Which of the following is NOT one of the four levels of retail service mentioned in the text?

1. Staffed service.
2. Self-service.
3. Self-selection.
4. Limited service.
5. Full service.

 

22. A concept in retailing that helps explain the emergence of new retailers is called the

                            hypothesis.

1. retail life cycle
2. wheel-of-retailing
3. service-assortment
4. product life cycle
5. retail profitability

 

23. Convenience goods, such as snack foods, are sold through                                    retailing.

1. the wheel-of-
2. self-selection
3. limited-service
4. full-service
5. self-service

 

24. Which of the following best describes the retailers that carry more shopping goods, and where customers need more information and assistance?

1. Self-service.
2. Self-selection.

3. Limited service.
4. Full service.
5. Automated service.

 

25. In which of the following retailers are salespeople ready to assist in every phase of the locate-compare-select process?

1. Self-service.
2. Self-selection.
3. Limited service.
4. Full service.
5. Automated service.

26. Best Buy stores carry a deep assortment of the latest electronics gadgets. They offer buyers a great deal of assistance and advice in making selections. Best Buy would be an example of a                           .

1. specialty store
2. factory outlet
3. department store
4. superstore
5. combination store

 

27. Grandbuy is a chain of stores found primarily in southern China. Each store carries several product lines, and each line is managed separately by a specialist buyer or merchandiser. Grandbuy is an example of a      .

1. specialty store
2. factory outlet
3. superstore
4. combination store
5. department store

 

28. Every night after working the swing shift, Sierra stops by the 7-Eleven store near her house. She often buys bread and drinks while she’s there even though the prices at the 7- Eleven store are higher than at her local supermarket. The7-Eleven store is an example of a      .

1. specialty store
2. superstore
3. warehouse store
4. convenience store
5. combination store

 

29. When Cyler goes to do his grocery shopping for the week, he also likes to drop off his finished rolls of film and visit the bank at the same time. He would also like the idea of having a package-mailing service to use while he is shopping. Cyler would enjoy doing his grocery shopping at a                                                    .

1. combination store
2. category killer
3. superstore

4. hypermarket
5. warehouse store

 

30. The fastest growing segment of retailing is                                  .

1. nonstore retailing
2. chain store retailing
3. warehouse stores
4. hypermarkets
5. category killers

 

31. A businesswoman has agreed to buy the right to use a process and a system from a company that also sells the same thing to other businesspeople. The woman is a

                           .

1. wholesaler
2. member of a voluntary chain
3. corporate chains store
4. franchiser
5. franchisee

 

32. The residents in a Chinese remote village got tired of having to walk miles to the town to buy daily commodities. They have decided to open their own store. All have contributed money to purchase the initial inventory and open this store, which will carry daily commodities like soaps, tooth brushes and so on. Each participant will have a vote in store policy, will elect someone to operate the store, and will receive dividends based on any profits. They are engaged in a(n)                                                                        .

1. consumer cooperative
2. retailer cooperative
3. merchandising cooperative
4. voluntary store
5. independent superspecialty store

 

33. A         consists of a wholesaler-sponsored group of independent retailers engaged in bulk buying and common warehousing.

1. retailer cooperative
2. voluntary chain
3. consumer cooperative
4. retailing franchise
5. merchandising conglomerate

 

34. A         is a free-form corporation that combines several diversified retailing lines and forms under central ownership, along with integration of distribution-and- management functions of those retailing lines and forms.

1. voluntary chain
2. retailer cooperative
3. consumer cooperative
4. retail licensing arrangement

5. merchandising conglomerate

 

35. The most important retail marketing decision a retailer has to make is to                                     .

1. choose a positioning strategy
2. identify its target market
3. choose the service level it wants to support
4. select the product assortment
5. develop an effective store atmosphere

 

36. Josie is choosing the mix of products and determining how many product lines she will carry in her teacher supply store. Josie is making the                                                                                                                             decision.

1. target market
2. market segmentation
3. product-assortment
4. store atmosphere
5. service level

 

37. Which of the following product differentiation strategies would NOT allow retailers to significantly distinguish themselves from others?

1. Feature the latest or newest merchandise before any other retailer can.
2. Offer a broad merchandise assortment.
3. Feature mostly private branded merchandise.
4. Offer merchandise customizing services.
5. Feature exclusive national brands not carried by competitors.

 

38. Which of the following is NOT a part of a store’s atmosphere?

1. The music played by the speakers located throughout the store.
2. The way merchandise is displayed.
3. The lighting system used in the store.
4. The employee that helps you carry your purchases to your car.
5. The smell from potpourri containers scattered throughout the store.

 

39. Jorge owns a sports equipment superstore, and wants to open a second one. He wants it to be the second anchor store at the location he selected. He believes the store’s product line needs to draw customers from 5–20 miles away to be successful. The best location for this retail outlet would be in a             .

1. regional shopping center
2. community shopping center
3. general central business district
4. neighborhood shopping center
5. strip mall

 

40. Which of the following describes a significant trend in retailing?

1. Competition today is increasingly intratype.
2. Retailers are going smaller to chase smaller target segments.
3. Superstores and combination stores are putting an end to nonstore retailing’s growth.
4. Retail life cycles are growing longer.
5. Retailers are experimenting with limited-time stores called “pop-ups”

 

 

41. Which of the following is NOT described by the text authors as a significant trend in retailing?

1. Competition between store-based and non-store-based retailers.
2. Growth of middle market retailers.
3. Growth of giant retailers.
4. Global presence of major retailers.
5. Growing investment in technology.

 

42. Trader Joe’s is a high-end grocer. From on the shelves, from bags of pecans and popcorn, to moderately-priced wines, everything seems to be Trader Joe’s brand. This is an example of                                .

1. acquiring brands from outside
2. encouraging slotting fees
3. private label branding
4. creating customer preferences by offering few choices
5. generic branding

 

43. Wholesaling excludes all of the following types of companies EXCEPT:

1. manufacturers.
2. farmers.
3. retailers.
4. distributors.
5. consumers.

 

44. Which of the following is NOT a function of wholesalers?

1. Bulk-breaking.
2. Selling and promoting.
3. Transportation.
4. Risk bearing.
5. Final customer segment selection.

 

45. Which of the following is an example of a merchant wholesaler?

1. A mail-order wholesaler.
2. A food broker.
3. A drop shipper.
4. An industrial distributor.
5. A commission merchant.

 

 

46. Which of the following products would a rack jobber most likely handle?

1. Dell servers.
2. Eggs and dairy products.
3. Industrial shelving.
4. Fresh tulips.
5. Magazines.

 

47.   do not carry inventories, are paid by the party who hired them, and their chief function is bringing buyers and sellers together.

1. Brokers
2. Industrial distributors
3. Rack jobbers
4. Producer’s cooperatives

5. Commission merchants

 

48.   have long-term relationships with buyers and make purchases for them. These wholesalers often receive, inspect, warehouse, and ship merchandise for their buyers.

1. Brokers
2. Purchasing agents
3. Drop shippers
4. Commission merchants
5. Selling agents

 

 

49. Which form of marketing communications is most likely to be used by wholesalers?

1. Print advertising.
2. In-kind promotions.
3. Sales promotions.
4. Personal selling.
5. Broadcast advertising.

 

50.   logically looks at the creation of a product. It begins with the examination of the procurement of inputs and raw materials and then examines how suppliers obtain their inputs. It sees the market as a destination point for the manufactured goods.

1. Physical distribution
2. Supply chain management
3. Demand-driven management
4. Market logistics
5. Distribution management

 

51. Integrated logistics systems (ILSs) involves all of the following EXCEPT:

1. materials management.
2. material flow systems.
3. physical distribution.
4. information technology.
5. financing.

 

52. Planning the infrastructure to meet demand, then implementing and controlling physical flows of materials and final goods from place to place to meet customer needs at a profit is called                                .

1. market logistics
2. demand chain planning
3. sales forecasting
4. supply chain management
5. value-added services

 

53. Which is  of market-logistics systems?

1. So-called cross-docking systems are likely to add costs and value.
2. They cannot simultaneously maximize customer service and minimize distribution cost.
3. As long as a logistics strategy is in place, no specific tactics are necessary.
4. Voluntary value chains tie distribution to production.
5. Transportation is a part of logistics, but storage is not.

 

54. Which of the following is NOT one of the major decisions related to market logistics?

1. How should orders be handled?
2. Where should stocks be located?
3. How much stock should be held?
4. Should a particular line be carried?
5. How should goods be shipped?

 

55. The order-to-payment cycle may include all of the following EXCEPT:

1. order entry.
2. salesperson soliciting order.
3. customer credit check.
4. order shipment.
5. receipt of payment.

 

 

56. By definition, a(n)     warehouse receives goods from various company plants and suppliers and moves them out as soon as possible.

1. storage
2. automated
3. field
4. common
5. distribution

 

57. An order point of 20 means                                .

1. orders are batched in parcels of 20s
2. reordering when the stock falls to 20 units
3. order processing costs rise greatly when ordering more than 20 items
4. there is a 20 percent cost increase in out-of-stock costs when the order point is not complied with
5. inventory turns 20 times per year

 

58. A small Taiwan-owned chain of grocery stores in northeastern China, sometimes stocks up on some brand paper products when the prices are extremely low. They are likely to store these products in  warehouses.

1. distribution
2. cross-docking
3. antiquated
4. central
5. storage

 

 

59. A         provides services between predetermined points on a schedule and is available to all shippers at standard rates.

1. private carrier
2. contract carrier
3. drop shipper
4. common carrier
5. freight forwarder

 

Essay Questions

60. Retailers can position themselves at four levels of service. In a short essay, list and describe those levels.

 

 

61. Patty Allegro has a summer intern job at a manufacturing company that makes guitar strings. Patty works in the shipping department. All summer she has heard her immediate boss (who’s been there for years) be negative about the distributors the company uses. In a short essay, discuss the reasons a manufacturer would talk in negative terms about its wholesalers.

 

 

 

62. Whitney is thinking about opening a new high-end collectibles store in Xian, a historic city of China. She knows that the services mix she offers will be a key tool for differentiating her store from others in the area. She hires you to advise her on the services mix possibilities. What do you tell her?

 

 

72. When considering logistics and the ways to minimize the associated costs, the text gives the following equation: M = T + FW + VW + S, where the goal is to minimize M. Explain the model, and what trade-offs are associated with marketing logistics objectives.

 

73. In a short essay, discuss supply chain management.

 

Mini-Cases Mini-Case 14-1

Big Lots! sells a wide variety of goods that have been clearanced to them (close-out merchandise, products that represent overruns in production, etc.). Although consumers never know what will be on the shelves at Big Lots!, they know that the prices are typically 40 percent to 75 percent less than what those goods go for elsewhere. Big Lots! Corporation owns all the stores. They like to house the stores along major thoroughfares of large cities, clustered with other stores in long buildings. They have had good success

with this business model since the beginning.

 

74. Refer to Mini-Case 14-1. What type of organization is Big Lots!?

1. Voluntary chain.
2. Corporate chain.
3. Retailer cooperative.
4. Consumer cooperative.
5. Franchise operation.

 

75. Refer to Mini-Case 14-1. What type of retailer is Big Lots!?

1. Factory outlet.
2. Warehouse club.
3. Independent off-price retailer.
4. Superstore.
5. Specialty store.

 

76. Refer to Mini-Case 14-1. Big Lots! tends to favor what type of retail location?

1. General business district.
2. Regional shopping center.
3. Community shopping center
4. Location within larger operation.
5. Strip mall.

 

Mini-Case 14-2

Elliott and Robin want to open a store and call it The Home Shop. They have decided that it will feature household items such as decorative vases and planters, sheets and towels, bathroom accessories, and pictures. Their offerings will change from week to week depending on what’s available from their wholesalers. Initially, they plan to sell irregulars and factory overruns, but they are flexible. Elliott has a real knack for spotting items others admire. People are always telling him what good taste he has. They must, however, be careful about how they spend the small amount of capital they have. One of their goals is to find an inexpensive location.

 

Once the store is up and operational, they hope they can use their cash flow to meet expenses. They plan to have no more than two full-time employees other than themselves and possibly some part-time help as the need arises. Customers will be allowed to make their own selections, but either Elliott or Robin will be there if they request some advice. Elliott and Robin plan on letting their customers use credit cards. They also feel it is important to have a generous merchandise return policy. Because Elliott and Robin are retailing novices, they want to join a retail organization for advice and support and to share the costs of promotions. Elliott and Robin think that word-of-mouth will be their most powerful advertising tool. They expect to attract customers that appreciate the merchandise found at major department stores and mall specialty stores, but who would like the lower prices.

77. Refer to Mini-Case 14-2. Elliott and Robin should join what type of retail organization?

1. retailer cooperative.
2. voluntary chain.
3. consumer cooperative.
4. wholesaler-sponsored cooperative.
5. merchandising conglomerate.

 

78. Refer to Mini-Case 14-2. The Home Shop will offer what level of service?

1. Self-service.
2. Self-selection.
3. Limited service.
4. Full service.
5. Relationship service.

 

79. Refer to Mini-Case 14-2. Given Elliott and Robin’s perspective on their business, what would be the best location for this outlet?

1. Central business district.
2. Regional shopping center.
3. Stand-alone destination site.
4. Strip mall.
5. A location within a larger store.