Chapter 11 Retailing and Wholesaling Answers Part 1

Marketing: An Introduction Chapter 11 Retailing and Wholesaling 1) ________ refers to the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use. A) Sole sourcing B) Retailing C) Manufacturing D) Procurement E) Warehousing Answer: B Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 2) ________ builds around what P&G calls the "First Moment of Truth" — the critical three to seven seconds that a shopper considers a product on a store shelf. A) Internal marketing B) Sole sourcing C) Warehousing D) Test marketing E) Shopper marketing Answer: E Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Analytical thinking 3) ________ creates a seamless cross-channel buying experience that integrates in-store, online, and mobile shopping. A) Shopper marketing B) Omni-channel retailing C) Test marketing D) Online marketing E) Consolidation marketing Answer: B Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 1 4) Stores that provide moderate sales assistance because they carry shopping goods about which customers need a moderate level of information are called ________ retailers. A) self-service B) full-service C) off-price D) limited-service E) convenience Answer: D Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 5) Which types of stores are characterized by specialty goods for which customers need assistance and higher operating costs that are passed along to customers as higher prices? A) self-service stores B) convenience stores C) full-service stores D) discount stores E) off-price stores Answer: C Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 6) Food Galore is a regional chain of supermarkets in the Midwest. The primary role of the staff is to restock shelves and operate cash registers. Customers locate, compare, and select their groceries and other sundry items. Food Galore is most likely a ________. A) self-service retailer B) category killer C) full-service retailer D) supermarket E) pop-up store Answer: A Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Analytical thinking 2 7) Customers at Carat, a premium jewelry store, are encouraged to make an appointment before a visit so that a customer service representative is assigned to them. These representatives help every customer make a purchase that meets his or her needs and budget after considering numerous options. The different styles and special features of the jewelry are explained to each customer to aid the purchase decision. In this case, Carat is an example of a(n) ________. A) self-service retailer B) off-price retailer C) full-service retailer D) supermarket E) convenience store Answer: C Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Analytical thinking 8) Which type of retailer typically carries deep product assortments of narrow product lines? A) self-service retailers B) specialty stores C) warehouse clubs D) discount stores E) factory outlets Answer: B Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 9) The American Tie Company, a necktie retailer, offers a deep assortment of men's neckties. The American Tie Company is best described as a(n) ________. A) department store B) supermarket C) specialty store D) discount store E) off-price retailer Answer: C Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Analytical thinking 3 10) Specialty stores are characterized by ________. A) the sale of convenience and staple items B) narrow product lines with deep assortments C) a wide range of products and categories D) low prices on a wide range of goods E) routinely purchased food products and services Answer: B Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 11) Department stores are most likely characterized by ________. A) narrow product lines B) specialty goods and services C) predatory pricing strategies D) deep assortments of luxury brands E) wide varieties of product lines Answer: E Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 12) Jones & Company, a major retail chain across the United States, offers a wide range of consumer goods such as clothing, furniture, home appliances, cosmetics, jewelry, and food. Jones & Company is best described as a ________. A) supermarket B) department store C) specialty store D) pop-up store E) category killer Answer: B Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Analytical thinking 13) A convenience store ________. A) markets to segments comprised mostly of white-collar workers B) stocks narrow product lines that have wide, deep assortments C) carries a limited line of high-turnover goods for consumer self-service D) involves high operation costs due to full-service customer assistance E) is a multi-channel food and discount retailer that targets niche markets Answer: C Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 4 14) Which type of retailer is much larger than a regular supermarket and offers a large assortment of routinely purchased food products, nonfood items, and services? A) discount stores B) specialty stores C) factory outlets D) superstores E) off-price outlets Answer: D Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 15) Which term refers to a giant specialty store with a very deep assortment of a particular product line? A) category killer B) convenience store C) factory outlet D) department store E) independent store Answer: A Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 16) Office Solutions is a large retailer that specializes in office products and services. Their offerings include a wide and deep assortment of computers, desk furniture, printers, office supplies, stationery, and printing. Office Solutions is most likely an example of a ________. A) convenience store B) pop-up store C) category killer D) lifestyle center E) supermarket Answer: C Diff: 3 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Analytical thinking 5 17) Which of the following statements is true of retailing? A) All retail stores are full-service retail stores. B) A department store has a narrow product line with a deep assortment. C) The largest type of retail outlet is a supermarket. D) Services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed. E) A feature common to all types of retail stores is the use of the everyday low pricing strategy. Answer: D Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 18) Leading "big-box" stores, such as Walmart and Target, now dominate the retail scene. However, even "small-box" stores like Dollar General, are thriving in the current economic environment. All three retailers are considered ________. A) convenience stores B) discount stores C) full-service retailers D) designer shops E) specialty stores Answer: B Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Analytical thinking 19) ________ have filled the ultralow-price, high-volume gap by buying at less-than-regular wholesale prices and charging consumers less than retail. A) Off-price retailers B) Specialty stores C) Convenience stores D) Designer shops E) Full-service retailers Answer: A Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 20) Which of the following is a type of off-price retailer? A) specialty store B) full-service retailer C) discount store D) warehouse club E) supermarket Answer: D Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 6 21) Kids.com is an online retailer that buys clothing from a variety of brand name manufacturers at less-than-regular wholesale prices and then charges customers less than retail. Kids.com is an example of a(n) ________. A) specialty retailer B) independent off-price retailer C) departmental retailer D) full-service retailer E) category killer Answer: B Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Analytical thinking 22) An off-price retailing operation that is owned and operated by a manufacturer and normally carries the manufacturer's surplus, discontinued, or irregular goods is called a ________. A) category killer B) factory outlet C) specialty store D) superstore E) warehouse club Answer: B Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 23) Dina loves branded apparel and accessories but cannot afford to buy them too often. Fortunately, Dina lives close to an off-price retail store that is owned and operated by a famous brand. The company utilizes this store to sell its surplus, discontinued, or irregular goods at significantly lower costs. The retail store is best referred to as a ________. A) category killer B) factory outlet C) specialty store D) superstore E) power center Answer: B Diff: 3 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Analytical thinking 7 24) ________ are off-price retailers that operate in huge facilities offering few frills but ultra-low prices and surprise deals on selected branded merchandise. A) Warehouse clubs B) Department stores C) Convenience stores D) Specialty stores E) Superstores Answer: A Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 25) ________ refer to two or more outlets that are commonly owned and controlled. A) Corporate chains B) Factory stores C) Specialty stores D) Designer shops E) Warehouse clubs Answer: A Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 26) A group of independent retailers that bands together to set up a jointly owned, central wholesale operation and conduct joint merchandising and promotion efforts is referred to as a ________. A) factory outlet mall B) retailer cooperative C) corporate chain D) warehouse club E) voluntary chain Answer: B Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 8 27) Which contractual system is distinguished by the fact that it is normally based on some unique product or service; method of doing business; or trade name, goodwill, or patent that has been developed? A) voluntary chain B) retailer cooperative C) franchise D) corporate chain E) warehouse club Answer: C Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 28) Mind and Body Fitness recently entered into a financial agreement that allows 25 independent business people at select locations across the country to set up establishments that offer its holistic services and programs. They include weight-management, group programming, sport-specific training, yoga, Pilates, and nutrition. Which type of contractual retail association does this represent? A) corporate chain B) voluntary chain C) franchise organization D) independent retailer E) retailer cooperative Answer: C Diff: 3 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Analytical thinking 29) ________ now command about 45 percent of all retail sales in the United States. A) Franchises B) Factory outlets C) Superstores D) Acquisitions E) Joint agreements Answer: A Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 30) Although manufacturers, wholesalers, and retailers do retailing, it is the primary business of retailers. Answer: TRUE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 9 31) Shopper marketing involves focusing the entire marketing process — from product and brand development to logistics, promotion, and merchandising — toward turning shoppers into buyers at the point of sale. Answer: TRUE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 32) Omni-channel retailing creates a seamless cross-channel buying experience that includes instore and online shopping but excludes mobile. Answer: FALSE Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 33) Convenience stores are the most frequently visited type of retail store. Answer: FALSE Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 34) Venns is a chain of department stores that has become more focused in recent years and now stocks only exclusive labels of designer home accessories. Venns has transformed itself into a chain of pop-up stores. Answer: FALSE Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Analytical thinking 35) Service retailers in the United States are growing faster than product retailers. Answer: TRUE Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 36) Category killers are superstores that carry a deep assortment of a particular product line. Answer: TRUE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 37) The three types of off-price retailers are: independents, factory outlets, and corporate chains. Answer: FALSE Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 10 38) Independent off-price retailers purchase merchandise at rates that are substantially higher than regular wholesale rates. Answer: FALSE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 39) Factory outlet malls combine manufacturers' outlets with off-price retail stores and department store clearance outlets. Answer: FALSE Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 40) Voluntary chains are normally based on one unique product or a specific trade name. Answer: FALSE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 41) In a retailer cooperative, independent retailers band together to set up a jointly owned, central wholesale operation and conduct joint merchandising and promotion efforts. Answer: TRUE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 42) What is retailing? Explain the concept of shopper marketing. Answer: Retailing includes all the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use. Many institutions — manufacturers, wholesalers, and retailers — do retailing. But most retailing is done by retailers, businesses whose sales come primarily from retailing. Retailing plays a very important role in most marketing channels. Last year, retailers accounted for more than $5 trillion of sales to final consumers. Many marketers are now embracing the concept of shopper marketing, focusing the entire marketing process — from product and brand development to logistics, promotion, and merchandising — toward turning shoppers into buyers as they approach the point of sale. Of course, every well-designed marketing effort focuses on customer buying behavior. What differentiates the concept of shopper marketing is the suggestion that these efforts should be coordinated around the shopping process itself. Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 11 43) How are retailers classified based on the amount of service they provide to customers? Provide examples of each service level to illustrate your response. Answer: Different types of customers and products require different amounts of service. To meet these varying service needs, retailers may offer one of three service levels: self-service, limited service, and full service. Self-service retailers serve customers who are willing to perform their own locate-compare-select process to save time or money. Self-service is the basis of all discount operations and is typically used by retailers selling convenience goods (such as supermarkets) and nationally branded, fast-moving shopping goods (such as Target or Kohl's). Limited-service retailers, such as Sears or JCPenney, provide more sales assistance because they carry more shopping goods about which customers need information. Their increased operating costs result in higher prices. Full-service retailers, such as high-end specialty stores (for example, Tiffany or Williams-Sonoma) and first-class department stores (such as Nordstrom or Neiman Marcus) assist customers in every phase of the shopping process. Full-service stores usually carry more specialty goods for which customers need or want assistance or advice. They provide more services, which results in much higher operating costs. These higher costs are passed along to customers as higher prices. Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 44) Compare and contrast specialty stores and convenience stores. Answer: Specialty stores carry narrow product lines with deep assortments within those lines. The increasing use of market segmentation, market targeting, and product specialization has resulted in a greater need for stores that focus on specific products and segments. Convenience stores are small stores that carry a limited line of high-turnover convenience goods. Many convenience store chains have tried to expand beyond their primary market of young, blue-collar men by redesigning their stores to attract female shoppers. They are shedding the image of a "truck stop" where men go to buy gas, beer, cigarettes, or shriveled hotdogs on a roller grill and are instead offering freshly prepared foods and cleaner, safer, more-upscale environments. Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 12 45) Describe superstores, category killers, and service retailers. Answer: Superstores are much larger than regular supermarkets and offer a large assortment of routinely purchased food products, nonfood items, and services. Walmart, Target, Meijer, and other discount retailers offer supercenters, very large combination food and discount stores. Recent years have also seen the rapid growth of superstores that are actually giant specialty stores, the so-called category killers (e.g., Best Buy, Home Depot, Petco, and Bed, Bath & Beyond). They feature stores the size of airplane hangars that carry a very deep assortment of a particular line. Category killers are found in a wide range of categories, including electronics, home-improvement products, books, baby gear, toys, home goods, party goods, sporting goods, and even pet supplies. Finally, for many retailers, the product line is actually a service. Service retailers include hotels and motels, banks, airlines, restaurants, colleges, hospitals, movie theaters, tennis clubs, bowling alleys, repair services, hair salons, and dry cleaners. Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 46) Describe the differences between discount stores and off-price retailers. Answer: A discount store sells standard merchandise at low prices by accepting lower margins and selling a higher volume. The early discount stores cut expenses by offering few services and operating in warehouse-like facilities in low-rent, heavily traveled districts. Today's discounters have improved their store environments and increased their services, while at the same time keeping prices low through lean, efficient operations. Off-price retailers can be found in all areas, from food, clothing, and electronics to no-frills banking and discount brokerages. Offprice retailers buy at less-than-regular wholesale prices and charge consumers less than retail. Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 13 47) Crunch and Munch is the country's favorite fast-food vendor of fried chicken. Over the years, the company has diversified into providing a larger variety of snacks like hot dogs, burritos, and burgers, but consumers still consider it the best seller of fried chicken. Many potential investors have approached Crunch and Munch with offers to buy the company, but Crunch and Munch continues to operate through its stores. What is franchising? Why would franchising be a good contractual system for Crunch and Munch? Answer: A franchise is a contractual association between a manufacturer, wholesaler, or service organization and an independent businessperson who buys the right to own and operate one or more units within the franchise system. The main difference between franchise organizations and other contractual systems (voluntary chains and retail cooperatives) is that franchise systems are normally based on some unique product or service; a method of doing business; or the trade name, goodwill, or patent that the franchisor has developed. Franchising has been prominent in fast-food restaurants, motels, health and fitness centers, auto sales and service dealerships, and real estate agencies. Since Crunch and Munch enjoys the position of being a favorite among consumers, franchising is a good tool to capitalize on its reputation without losing its identity. Diff: 3 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. AACSB: Application of knowledge 48) What is the difference between corporate chains, voluntary chains, and retailer cooperatives? How are such retail organizations different from franchise organizations? Answer: Corporate chains are two or more outlets that are commonly owned and controlled. They have many advantages over independents. Their size allows them to buy in large quantities at lower prices and gain promotional economies. They can hire specialists to deal with areas such as pricing, promotion, merchandising, inventory control, and sales forecasting. A voluntary chain is a wholesaler-sponsored group of independent retailers that engages in group buying and common merchandising. The other type of contractual association is the retailer cooperative — a group of independent retailers that bands together to set up a jointly owned, central wholesale operation and conduct joint merchandising and promotion efforts. The main difference between franchise organizations and other contractual systems is that franchise systems are normally based on some unique product or service; a method of doing business; or the trade name, goodwill, or patent that the franchisor has developed. Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 14