Deck 11: Buying Strategies

Question 1

Reasons for a chargeback may include all of the following,except:

A) vendor mistakes such as shoddy labelling
B) fees paid by a vendor for space in a retail store
C) merchandise isn't selling
D) wrong-size boxes or hangers
E) late shipments

Answer 1

B

Question 2

Why might The Bay shift suppliers from Asian countries to Caribbean countries or even local suppliers in Canada?

A) It may be more profitable.
B) The Caribbean countries may offer shorter and more consistent lead times.
C) Some customers may prefer "Made in Canada" merchandise.
D) It may be easier to monitor working standards in domestic factories.
E) All of these are valid reasons to consider this change.

Answer 2

E

Question 3

Retailers achieve lower gross margins from selling national brands because of:

A) poor customer service
B) the distinctive identity national brands have assumed
C) the popularity of private-label brands
D) the cost of quality control
E) the costs incurred by the vendors of promoting the national brands

Answer 3

E

Question 4

Save-A-Lot grocery stores offer shoppers a no-frills environment and many discount brands found in no other store.Which of the following categories would best describe this type of private label?

A) Copycat
B) Generic
C) Complementary
D) Premium
E) Parallel

Question 5

What can a successful private label do for a retailer?

A) It can help develop store loyalty
B) It can increase store traffic
C) It can enhance store image
D) It can differentiate a retailer from its competitors
E) It can do all of these

Question 6

When given a choice between a national brand of jeans and a private-label brand,the buyer for a chain of mall specialty stores might choose the private-label brand:

A) to prevent its customers from comparison shopping
B) to limit its store traffic to qualified buyers
C) to increase its sales expenses
D) to increase its merchandising flexibility
E) for all of these reasons

Question 7

Disney's Donald Duck brand orange juice is an example of a(n)___________ brand.

A) general
B) licensed
C) exclusive
D) generic
E) private-label

Question 8

The problems with selling private-label merchandise are most severe with:

A) power and hand-held tools
B) housewares
C) canned foods
D) high-fashion merchandise
E) outdoor wear

Question 9

Some customers who have shopped in a variety of malls have used the term "cookie cutter stores" to describe how similar each apparel store appears and how each seems to stock identical merchandise.The stores look like they were cut from the same cookie cutter.This sameness is due in large part to:

A) mall promotional campaigns
B) the stocking of manufacturer brands
C) a perceived rather than an actual image
D) using the same architects
E) the development of store loyalty

Question 10

Why do department stores organize some of their categories around national brands as opposed to the traditional classification scheme?

A) It is helpful to the vendors as they can make their quotas in department stores
B) It is ethical for retailers to support their vendors by selling their national brands
C) National brands are much more profitable for the retailer than the private brands
D) Merchandise can be purchased and coordinated around a central theme
E) Sales are unpredictable and retailers prefer a sure thing with national brands

Question 11

Which of the following is true about licensed brands?

A) Licensed brands' market share has grown large in recent years
B) There is always a fee associated with licensing the right to use a name
C) Owners of trade names have gotten into the licensing business
D) A licensee can be a retailer
E) All of these are true

Question 12

With so many retailers offering Elizabeth Arden's Green Tea Scent Spray,how can a cosmetics store manager attract customers to her store to purchase the product?

A) Offer a significant discount on the product
B) Advertise heavily in local papers and media about the product's availability at her store
C) Put all perfumes on sale for a one-day event
D) Negotiate better delivery dates with the vendor to coordinate with selling events
E) Do none of these

Question 13

Which of the following type of brands would a retailer normally expect to get the lowest gross margin?

A) National brands
B) Private-label brands
C) Exclusive brands
D) Generic brands
E) Unique brands

Question 14

Which of the following is TRUE of a grey-market good?

A) Grey-market merchandise is counterfeit merchandise.
B) Grey-market merchandise often is not the same quality and is visually different to merchandise brought into the country through normal channels.
C) A grey-market good is merchandise that possesses a valid North American registered trademark and is made by a foreign manufacturer but is imported into North America without permission of the trademark owner.
D) Grey-markets are a declining business
E) All of these are true of a grey-market good.

Question 15

A discount store would most likely buy from vendors of manufacturer brands to:

A) increase its promotional expense
B) moderate its traffic flow
C) gain a positive impact on its store image
D) create brand recognition
E) do all of these

Question 16

Which of the following is not a type of retail branding strategy?

A) Generic
B) Exclusive
C) Complementary
D) Premium
E) Parallel

Question 17

National brands are also called _______________ brands.

A) manufacturer
B) private-label
C) exclusive
D) generic
E) distributor

Question 18

Which of the following is a drawback of selling private-label merchandise?

A) Vendors that sell private labels still view national brands as their priority
B) National brands are still produced with better quality
C) Sales associates need additional training to sell them against national brands
D) Gross margins are lower than margins with national brands
E) They are limited to being sold only in department stores

Question 19

Paul ran a chain of discount sporting goods stores which struggled for years when Walmart opened in the surrounding area.Walmart carried the same brands as Paul's shops,but Paul couldn't compete with the giant's pricing,so merchandise in his shops didn't sell.Which of the following would have been Paul's best chance for surviving?

A) Paul should consider partnering with Walmart's sportswear buyers
B) Paul should sell other discount sporting brands other than the brands Walmart carries
C) Paul should advertise more and extend his hours
D) Paul should consider developing a private label for his stores
E) Paul should consider going out of business

Question 20

Gerber baby food,Lubriderm moisturizer,Dell computers,and Harley Davidson motorcycles are all examples of _______________ brands.

A) national
B) private-label
C) general
D) generic
E) licensed

Question 21

When making a decision about global sourcing,which of the following would be a cost consideration?

A) Vendor employees' working conditions
B) Vendor negotiation fees
C) Retailer inventory carrying costs
D) Vendor factory standards
E) Retailer's differentiation from competitors

Question 22

A German manufacturer has developed the next generation of hand held computers,and retailers in Europe have enjoyed its success with minimal promotion.The manufacturer wants to market it in North America,but the tariffs are too high.Which of the following would be the German company's best option?

A) Supply only the markets in Europe
B) Wait until NAFTA has reduced tariffs
C) Seek a free trade zone in Central America to assemble the item
D) Sell to Asian markets
E) Concentrate on selling globally in duty-free shops

Question 23

On the product label for Walmart's Equate Antacid Tablets,it says "Compare to Tums active ingredient".What type of private labelling is demonstrated by this approach?

A) complementary
B) copycat
C) bargain
D) parallel
E) premium

Question 24

Bianca starts college in the fall and her parents want to buy her a computer as a graduation gift.She has researched the different brands of computers,and knows the price differences for the components she desires in her new PC.Being price-sensitive,she is aware of an inexpensive Korean-made computer,but she worries it may be of lower quality.Bianca is dealing with:

A) commitment credibility
B) foreign currency fluctuations
C) supply and demand discrepancies
D) a country-of-origin effect
E) a problem with free trade zones

Question 25

An ad campaign run by the Shoppers Drug Mart drugstore chain compares the Life brand over-the-counter drugs with their national brand equivalent.The goal was to get consumers to perceive Life brand as being just as effective as Bayer Aspirin.Shoppers Drug Mart used ______________ branding.

A) complementary
B) parallel
C) no name
D) confrontational
E) premium

Question 26

Foods with no brand names and household products are examples of _______________ brands found in Loblaws supermarkets.

A) generic
B) copycat
C) complementary
D) premium
E) parallel

Question 27

Denise is a small scale fashion designer who sourced out to a manufacturer in India to assemble her new fall line.She assumed the patterns for the clothes were simple and obvious,so she thought it unnecessary to personally visit the factory and supervise the workers sewing her clothes.Months later,the shipment arrived in Montreal,and much to her surprise,the seams on all of the blouses were sewn incorrectly.This mishap is an issue of:

A) tariff restrictions
B) quality control
C) poor marketing
D) global trends
E) limited foreign vendors

Question 28

In which of the following stores would you be most likely to find house brands?

A) The Bay
B) Lululemon yoga stores
C) HMV music stores
D) Shoppers Drug Mart stores
E) Chapters

Question 29

Retailers often say they are "going to market." What does "market" mean in this context?

A) A shopping center in which the firm plans to open a new store
B) The target consumers at whom a line of merchandise will be aimed
C) A geographic location where the retailer anticipates remarkably good prospects for above-average levels of sales
D) The place where a large number of vendors are concentrated
E) The intention to price merchandise at whatever the "going rate" happens to be in a particular location

Question 30

Generic brands are successful because they are:

A) heavily promoted
B) effectively displayed
C) offered at lower prices
D) of lower quality
E) packaged attractively

Question 31

Why have some traditional manufacturers like Calvin Klein and Nike become retailers?

A) They have total control over the way their merchandise is priced, promoted, and merchandised.
B) These manufacturers/retailers can use these stores to test new merchandise and concepts.
C) They can use their stores as a showcase for the public which can enhance the manufacturer's image.
D) These stores create a name recognition and synergy between the manufacturer and the retailer that can benefit both parties.
E) All of these.

Question 32

A(n)_____________ is a tax placed by a government upon imports.

A) foreign currency fluctuation
B) country-of-origin effect
C) tariff
D) maquiladoras
E) inventory carrying cost

Question 33

Parallel branding:

A) can be used to bolster private-label sales
B) targets a price-sensitive consumer
C) is frequently referred to as the house brand
D) imitates the manufacturer brand and is perceived as lower quality
E) abounds in the fragrance market

Question 34

Mark's Work Wearhouse features Denver Hayes jeans which are high quality denim that washes and wears as well as or better than many of the leading national brands of jeans,yet are lower-priced.Which of the following best describes this type of private-labelling?

A) Promotional branding
B) Premium branding
C) Exclusive branding
D) Bargain branding
E) Comparison branding

Question 35

Helen is planning to open a boutique in Victoria,specializing in large women's sizes.What is her best option for merchandising her store on her limited budget?

A) Visit trade shows in Toronto once a year
B) Use a resident buying office to buy in Montreal and Hong Kong
C) Convince vendors to visit her store
D) Interact electronically with vendors on a retail exchange
E) Buy at similar shops going out of business

Question 36

Which of the following statements about tariffs is true?

A) Retailers want to raise them
B) Import tariffs have been used to shield domestic manufacturers from foreign competition
C) Tariffs have never been used as a government fund raiser
D) Tariffs lower the cost of imported merchandise
E) The World Trade Organization is responsible for the increase in the tariff rate

Question 37

The North American Free Trade Agreement (NAFTA):

A) has member countries from Canada to Chile
B) is supervised by the World Trade Organization (WTO)
C) has 12 member countries
D) provides manufacturers with ready access to relatively low-cost and abundant Mexican labour
E) has assisted Europe in the development of the Euro

Question 38

Sears sells men's casual wear under the private brand name Nevada.It also carries sportswear by Arrow,Adidas,Dockers,Point Zero,and other manufacturer brands,but Nevada is priced slightly below the manufacturer brands.Sears makes no attempt to trade off the manufacturer brand equity,however,consumers perceive the Nevada to be the equivalent of the manufacturer brand.With the Nevada brand,Sears is using __________ branding.

A) copycat
B) bargain
C) complementary
D) premium
E) parallel

Question 39

Which of the following statements supports sourcing closer to,or in,Canada?

A) It is easier to maintain a good standard of quality control
B) It enables quick response delivery
C) Some customers prefer products made in Canada
D) It is easier to monitor potential human rights and child labour violations
E) All of these

Question 40

Premium branding:

A) is primarily a manufacturer product strategy
B) is an example of leveraging strategy used to bolster a retailer's private-brand sales
C) offers the consumer a private label at a comparable manufacturer-brand quality, usually with modest price savings
D) is often called house branding
E) is a risky private-branding strategy because the act may constitute trademark infringement

Question 41

By selling ________________ brands,a retailer can help store image,increase traffic flow,and reduce promotional expenses.

Question 42

Which of the following is the best type of exchange to use if you are operating a large retail firm?

A) Consortium
B) Reliant
C) Private
D) Independent
E) Concrete

Question 43

Trademarks,copyrights,and patents are all under the general umbrella of ______________________________.

Question 44

Kim owns a small toy shop specializing in hobbies.At a recent trade show,he saw a new vendor selling electric trains that were powered by a single track.The merchandise looked detailed,seemed to run smoothly,and didn't jump the track.He went back to his hotel to research the vendor on the Internet,and to make a few calls to other shops to inquire about its reputation.Kim is in which phase of the level of commitment to a retailer-vendor relationship?

A) Commitment
B) Consideration
C) Exploration
D) Expansion
E) Awareness

Question 45

Which of the following is best described by tangible investment in a strategic relationship?

A) Mutual trust
B) Partnering
C) Credible commitments
D) Common goals
E) Open communication

Question 46

Which of the following statements about collaboration is true?

A) Collaboration with other retailers may be difficult to achieve
B) The lead time altered by collaboration is insignificant
C) Collaboration is not the most beneficial function of retail exchanges
D) Standard merchandise with predictable lead times will benefit most from collaboration
E) Buyers of fashion fads cannot benefit from this type of retail exchange function

Question 47

In reverse auctions,:

A) buyers are required to place an order with the lowest bidder
B) vendors win with the highest bid
C) there are usually several retail buyers and only one vendor
D) strategic relationships are difficulty to nurture
E) all of these are true

Question 48

When Whitney took over her father's sporting goods shop,she evaluated some of her father's old vendor relationships.She found that Rodney's exercise wear wasn't particularly profitable for the store.Although committed,he was expensive and inflexible.Whitney tried to work out a more amicable relationship with him by discussing her sales goals and new ideas for the coming year,but Rodney seemed uninterested.What is most likely lacking from this relationship is:

A) credible commitments
B) poor leadership
C) continuous relationship
D) open communication
E) long-term gains

Question 49

By sharing common goals,buyers and vendors:

A) can pool their strengths and abilities to exploit potential opportunities
B) can avoid sharing each firm's most strategic information
C) can conclude that the long-term results of the relationship are insignificant
D) do not have to coordinate systems for the partnership to succeed
E) commonly miscalculate the cost of merchandise

Question 50

Which of the following is a type of retail exchange?

A) Concurrent
B) Consortium
C) Concrete
D) Interdependent
E) Reliant

Question 51

Retail exchanges enable buyers to search for merchandise by vendor or type of product electronically,with buyers no longer wandering through trade shows and showrooms.Which of the following best describes this function?

A) Pricing
B) Selection
C) Directory
D) Content
E) Collaboration

Question 52

Products designed,produced,and marketed by a vendor are called ____________ brands.

Question 53

Many of the independent grocery stores in Hamilton use the same bags at the checkout and the same polystyrene trays for meats in the meat department.What can these stores do to minimize the costs of the bags and the trays?

A) The stores can independently purchase lower-grade products
B) The stores can independently search for new vendors
C) The stores can work together and run a reverse auction to find a low-cost supplier
D) The stores can work together to encourage recycling
E) The stores can outbid each other to pay the lowest cost on the products

Question 54

Which of the following is an important retail exchange function?

A) Distributing
B) Pricing
C) Supervision
D) Quality control
E) Advertising

Question 55

A department store chain is considering a promotion for one of their buyers.This buyer has strong communication skills,learns quickly,and has an ability to develop long-term relationships.Which of the following would be the least advantageous to the store in utilizing this buyer's talents?

A) Move the buyer into buying Liz Claiborne apparel
B) Have the buyer purchase Tommy Hilfiger apparel
C) Give the buyer responsibility for men's socks
D) Give the buyer responsibility for women's intimate apparel
E) Put the buyer in charge of Lancôme cosmetics

Question 56

Products developed by a retailer,and only available for sale by that retailer,are called _________ brands.

Question 57

What is the best reason for retailers to develop and maintain relationships with multiple and sometimes competing suppliers?

A) Buyers need to always have a way to cut and move on to better vendors without a break in the supply chain
B) A function of retailers is to provide assortments, so they must deal with a variety of suppliers
C) By working with multiple suppliers, retailers tend to make better negotiators
D) A variety of vendors assures more buys on behalf of the retailer
E) A buy should never be contracted with a sole supplier

Question 58

Eve worked as a senior buyer for jewellery.On a recent visit to a trade show,she noticed a new vendor selling unique earrings,necklaces,and bracelets with small gemstones depressed into the gold.She had seen such pieces in trade magazines before,but ignored them because of the exorbitant price.She thought her affluent customers would appreciate the look,so she decided to make a smaller buy than usual,and try the jewellery out in only a few urban markets.Which phase best describes Eve's level of commitment to a retailer-vendor relationship?

A) Commitment
B) Consideration
C) Exploration
D) Expansion
E) Awareness

Question 59

Why would a buyer consider utilizing a retail exchange if he is already a successful buyer?

A) Exchanges can increase his efficiency by saving time and money
B) Vendors are more likely to offer lower prices if a buyer uses the Internet
C) Exchanges are able to bring better merchandise to the negotiating table
D) The traditional trade show is obsolete, leaving him no option
E) Vendors are no longer visiting the buyer's office

Question 60

Slotting fees:

A) when viewed from the vendor's perspective, are fees paid by the retailer to the vendor.
B) differ from commercial bribes in that they are made to the retailer itself rather than to an individual buyer.
C) are considered to be illegal in Canada.
D) are found only in grocery retailers.
E) values are set by the government to ensure fairness and legality.

Question 61

If parallel branding attempts to benefit from the brand equity of a national brand by imitating its packaging and product qualities,then why is it not illegal?

Question 62

______________ branding offers the consumer a private label at a comparable manufacturer-brand quality.

Question 63

Private-label options may be grouped into four categories: generic,premium,exclusive,and parallel.Compare and contrast their differences.

Question 64

What are some of the benefits of offering private labels?

Question 65

Electronic market places operated by organizations that facilitate the buying and selling of merchandise,using the Internet,are called ____________________.

Question 66

____________ have been used to shield domestic manufacturers from foreign competition.

Question 67

How are slotting fees different than commercial bribes?

Question 68

What benefits does a retailer receive from buying from vendors of manufacturer brands?

Question 69

The branding strategy that targets the price-sensitive segment by offering no-frills products at discount prices is known as a(n)________________ branding.

Question 70

The three types of exchanges are _____________,____________,and ______________.

Question 71

Private labels that closely imitate the packaging and product attributes of national brands,but invite the consumer to "compare to national brand" on its label,are ___________ brands.

Question 72

Exchanges that are operated for the exclusive use of a single firm are called _________________.

Question 73

A special type of manufacturer brand is called a(n)____________,in which the owner of a well-known brand name enters a contract to develop,produce,and sell the branded merchandise.

Question 74

Why do manufacturer brands often generate lower gross margins for retailers than do private- label brands?

Question 75

What are some of the drawbacks of using private-label brands?

Question 76

_____________________ are plants in Mexico that make goods and parts for export.

Question 77

___________________ are tangible investments in the strategic relationship between retailers and vendors.

Question 78

A(n)________________ exchange is a retail exchange that is owned by several firms within one industry.

Question 79

A(n)______________,from a retail buyer's perspective,is a concentration of vendors within a specific geographic location.

Question 80

How is parallel branding a leveraging strategy used to bolster a retailer's private-label sales?