Deck 16: Managing Retailing, Wholesaling, and Logistics

Question 1

Bill and Josh are considering opening a retail store. They have identified their target market and location and are finalizing the details of the merchandise they will carry. Since the neighborhood is rundown and the customers in the area are very price-conscious, Bill and Josh want to offer goods from well-known brands, but at lower rates than the full retail prices of the products. They choose to stock excess production from manufacturers or goods that have remained unsold at other retailers. This is a description of a(n) ________ retailer.

A) off-price
B) specialty
C) discount
D) department
E) catalog

Answer 1

A

Question 2

A large staff, along with a higher proportion of specialty goods and slower-moving items and many services, are usually features of ________ retailing.

A) self-service
B) self-selection
C) limited service
D) full-service
E) limited-selection

Answer 2

D

Question 3

Which of the following is an example of direct selling?

A) E&OE sells its herbal skincare products exclusively through its stand-alone stores.
B) TCJ is a telemarketing firm that sells products from a number of different suppliers.
C) Jayne's sells most of its products to customers through home sales parties.
D) J3 is an online shopping portal where customers can buy directly from manufacturers.
E) Reynold's tries to minimize its staff costs by installing vending machines in its stores.

Answer 3

C

Question 4

Discount stores that try to keep prices as low as possible are more likely to function using ________ operations.

A) limited service
B) self-selection
C) full-service
D) self-service
E) limited-selection

Question 5

Which of the following is an example of a limited-service retailer?

A) Customers at Daiso pick out the products they want and pay at the checkout counter.
B) Salespeople at Nubox are always on hand to offer shoppers advice and assistance in choosing products.
C) Cold Storage allows customers to checkout their own purchases in order to reduce the staff count.
D) As CLO's offers a number of merchandise-return privileges, customers need information and assistance while shopping.
E) Alison's stocks a number of specialty products and the store's salespeople generally help shoppers with all their needs.

Question 6

Which of the following is an example of retailing?

A) Dylan's sends catalogs to retail, industrial, and institutional customers.
B) SEZ U Inc. sells a limited line of fast-moving goods to small retailers for cash.
C) BEL Inc. sells FMCG goods to merchant wholesalers and distributors.
D) Praxis International sells products to consumers directly through the Internet.
E) Hub Styles procures its raw materials directly from farmers in the region.

Question 7

Reynold's is a supermarket chain that has always catered to mid-market customers. However, the owner, Mal, has noticed that an influx of new residents are buying mostly the lower-cost products and products on discount. To attract customers, Mal decides to make a gradual switch to the discount store format, but to do this, he will have to cut costs wherever possible. Which of the following types of service should Mal avoid in order to lower costs?

A) limited service
B) self-selection
C) full-service
D) self-service
E) limited-selection

Question 8

Which of the following is true for self-service retailing?

A) These retailers carry more shopping goods and services such as credit and merchandise-return privileges.
B) This service model is favored by discount stores and customers who want to save money.
C) It results in high staffing costs compared to other forms of retailing.
D) Salespeople are ready to assist in every phase of the "locate-compare-select" process.
E) Customers need more information and assistance than in other forms of retailing.

Question 9

Which of the following is an example of direct marketing?

A) E&OE sells its herbal skincare products exclusively through its stand-alone stores.
B) TCJ is a telemarketing firm that sells products from a number of different suppliers.
C) Jayne's sells most of its products to customers through home sales parties.
D) J3 is a storeless retailer that organizes the retail activity of the employees of four firms.
E) Reynold's tries to minimize its staff costs by installing vending machines in its stores.

Question 10

E&OE produces and markets its own brand of skincare products using herbal remedies and natural ingredients through standalone stores as well as an online portal. E&OE is a(n) ________ retailer.

A) off-price
B) specialty
C) discount
D) department
E) extreme value

Question 11

A factory outlet is an example of a(n) ________ retailer.

A) off-price
B) specialty
C) discount
D) department
E) catalog

Question 12

In ________ retailing, salespeople are ready to assist in every phase of the "locate-compare-select" process.

A) self-service
B) self-selection
C) full-service
D) limited service
E) limited-selection

Question 13

________ includes all the activities in selling goods or services directly to final consumers for personal, nonbusiness use.

A) Wholesaling
B) Retailing
C) Procurement
D) Promoting
E) Warehousing

Question 14

Which of the following types of retailing generally entails the highest costs?

A) full-service
B) self-service
C) limited-selection
D) limited service
E) self-selection

Question 15

Which of the following is true for retailing?

A) Manufacturers are not considered to be retailers as they are engaged in producing the product.
B) Vending machines are considered to be retailing only if they are located within stores.
C) Retailing deals only with goods; it does not include services.
D) Selling from a consumer's home is direct selling, but not retailing.
E) Wholesalers are only considered to be retailers if they are selling to final consumers.

Question 16

Companies who sell products door-to-door or at home sales parties are engaging in ________.

A) franchising
B) network marketing
C) direct-response marketing
D) corporate selling
E) direct marketing

Question 17

In ________, a salesperson goes to the home of a host who has invited friends, demonstrates the products and takes orders.

A) catalog marketing
B) franchising
C) direct-response selling
D) network marketing
E) direct marketing

Question 18

In the ________ type of retailing, customers usually find their own goods, although they can ask salespeople for assistance.

A) self-service
B) self-selection
C) full-service
D) limited service
E) limited-selection

Question 19

_____________ is the cornerstone of all discount operations.

A) Full-service
B) Self-service
C) Limited-selection
D) Limited service
E) Self-selection

Question 20

The ________ marketing sales system works by recruiting independent businesspeople who act as distributors.

A) catalog
B) multilevel
C) direct-response
D) corporate
E) direct

Question 21

Which of the following is true for franchisees?

A) The franchisee is paid by the franchisor to be part of the franchise system.
B) The franchisee licenses a trade mark to the franchisor.
C) The franchisee must change its operations to suit those of the franchisor's.
D) The franchisee collects royalty payments from the franchisor.
E) The franchisee owns the trade or service mark.

Question 22

Staples is a giant retailer that concentrates on selling office supplies. Staples is an example of a(n) ________.

A) ambush marketer
B) supercenter
C) megamarketer
D) category killer
E) guerilla marketer

Question 23

Which of the following is true for direct product profitability analysis?

A) It is highly correlated with the gross margin on a product.
B) It is negligible compared to the gross margin on a product.
C) It bears little relation to the gross margin on a product.
D) It is significantly lower than the gross margin on a product.
E) It is exactly the same as the gross margin on a product.

Question 24

In the corporate headquarters of a supermarket chain, ________ are responsible for developing brand assortments and listening to salespersons' presentations.

A) central buyers
B) brokers
C) specialist buyers
D) agents
E) specialized wholesalers

Question 25

A store selling expensive artwork and luxury goods typically falls into the ________ group with respect to margins and volume.

A) mixed markup, high-volume
B) low-volume, mixed markup
C) low-volume, low-markup
D) high-volume, low-markup
E) high-markup, low-volume

Question 26

Electronic shelf labeling allows retailers to ________.

A) check inventory levels instantaneously
B) order electronically from suppliers
C) run continual promotional messages
D) advertise sales and special offers
E) change price levels instantaneously

Question 27

Which of the following is true for the retail industry?

A) Discount stores and catalog showrooms are competing for the same customers.
B) Upscale retailers see a decline in sales as middle-market retailers thrive.
C) Small, specialized retailers are crowding out larger, more diverse retailers.
D) Store retailing sees no competition from non-store retailing.
E) Discount stores are not doing as well as middle-market retailers.

Question 28

Which of the following is a benefit of franchising for franchisees?

A) The franchisee finds it easier to borrow money from financial institutions.
B) The franchisee receives ownership of the franchisor's trade mark.
C) The franchisee must change its operations to suit those of the franchisor's.
D) The franchisee collects royalty payments from the franchisor.
E) The franchisee is paid by the franchisor for being part of the system.

Question 29

Mass merchandisers and discount stores typically fall into the ________ group with respect to margins and volume.

A) mixed markup, high-volume
B) low-volume, mixed markup
C) low-volume, low-markup
D) high-volume, low-markup
E) high-markup, lower-volume

Question 30

Telemarketing is a type of ________.

A) direct selling
B) network marketing
C) multilevel selling
D) close-range marketing
E) direct marketing

Question 31

A ________ is a retail firm owned by its customers. Members contribute money to open their own store, vote on its policies, elect a group to manage it, and receive dividends.

A) retailer cooperative
B) voluntary chain
C) consumer cooperative
D) merchandising conglomerate
E) franchise organization

Question 32

An independent retailer using a central buying organization and joint promotion efforts with other retailers is part of a ________.

A) corporate chain store
B) voluntary chain
C) retailer cooperative
D) merchandising conglomerate
E) franchise organization

Question 33

Electronic shopping is a type of ________.

A) direct selling
B) network marketing
C) multilevel selling
D) corporate selling
E) direct marketing

Question 34

Which of the following is true for franchisors?

A) The franchisor has to pay the franchisee to be part of the franchise system.
B) The franchisor licenses the trade mark from the franchisee.
C) The franchisor must change its operations to suit those of the franchisee's.
D) The franchisor collects royalty payments from the franchisee.
E) The franchisor pays start-up costs for the franchisee.

Question 35

Most retailers will put low prices on some items in order to increase traffic to the store. These low-priced products are known as ________.

A) loss leaders
B) price ceilings
C) price skimmers
D) price floors
E) cold calls

Question 36

Which of the following is true of store retailers?

A) A hard-discount store offers a wider merchandise mix than discount stores at higher prices.
B) A discount store offers leftover goods, overruns, and irregular merchandise sold at less than retail.
C) A specialty store generally stocks a very narrow product line.
D) An extreme value store generally has a broad selection of high-markup, brand-name goods.
E) A catalog showroom is a large, low-cost, low-margin, high-volume, self-service store.

Question 37

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

A) direct-selling vendor
B) direct marketing vendor
C) buying service
D) automatic vendor
E) corporate retailer

Question 38

Jake wants to open a Subway franchise in his small town. To do this, he must pay the company a ________ fee.

A) slotting
B) title
C) royalty
D) merchandising
E) residual

Question 39

In supermarkets and other retail outlets, RFID is used to ________.

A) change prices instantaneously
B) check for spoilage or damage to goods
C) advertise special offers and discounts
D) run continual promotional messages
E) monitor inventory and track goods

Question 40

A ________ is wholesaler-sponsored group of independent retailers engaged in bulk buying and common merchandising.

A) retailer cooperative
B) voluntary chain
C) consumer cooperative
D) merchandising conglomerate
E) franchise organization

Question 41

Through ______________, wholesalers help retailers improve their operations by training sales clerks, helping with store layouts and displays, and setting up accounting and inventory-control systems.

A) selling and promoting
B) buying and assortment building
C) warehousing
D) risk bearing
E) management services and counseling

Question 42

Through ______________, wholesalers absorb some risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.

A) selling and promoting
B) buying and assortment building
C) warehousing
D) risk bearing
E) transportation

Question 43

Which of the following is a prepurchase service offered by retailers?

A) accepting orders over the telephone
B) shipping the product
C) delivery to the customer's doorstep
D) general information
E) interior decoration of the retail outlet

Question 44

Which of the following is an ancillary service offered by retailers?

A) accepting orders over the telephone
B) advertising and window displays
C) delivery to the customer's doorstep
D) general information
E) alterations and tailoring

Question 45

Through ______________, wholesalers hold inventories, thereby reducing inventory costs and risks to suppliers and customers.

A) selling and promoting
B) buying and assortment building
C) warehousing
D) risk bearing
E) transportation

Question 46

In your neighborhood there is a small men's store that has a limited selection of clothing, but the selection that is carried is of very high quality and price. Services include free alterations and tailoring, personalized record keeping, and free dry cleaning. The inside of the store has deep leather chairs and couches and thick pile carpet. Upon entering the store, a customer feels "special and rich." In terms of differentiation, what is this retailer trying to communicate by its decorations and service level?

A) differentiation based on services mix and atmosphere
B) differentiation based on prepurchase services
C) differentiation based on postpurchase services and atmosphere
D) differentiation based on ancillary services and atmosphere
E) differentiation based on prepurchase and postpurchase services

Question 47

Which of the following is a postpurchase service offered by retailers?

A) accepting orders over the telephone
B) advertising and window displays
C) delivery to the customer's doorstep
D) general information
E) interior decoration of the retail outlet

Question 48

________ offer standard or lower quality at a price that may be as much as 20-40 percent lower than nationally advertised brands and 10-20 percent lower than retailer private label brands.

A) Common carriers
B) Shills
C) Generics
D) Copy-cat brands
E) Marques

Question 49

________ includes all the activities in selling goods or services to those who buy for resale or business use.

A) Retailing
B) Wholesaling
C) Procurement
D) Promoting
E) Warehousing

Question 50

In addition to its store brands and nationally well-known brands of detergents, Reynold's also carries much cheaper varieties of detergents that are not advertised and have little-known names. They are often manufactured from lower-quality ingredients and save on packaging and advertising costs. These are known as ________.

A) common carriers
B) shills
C) generics
D) private labels
E) marques

Question 51

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

A) generic
B) franchisee
C) marque
D) national
E) private label

Question 52

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

A) retainer
B) slotting fee
C) residual fee
D) contingent fee
E) royalty

Question 53

Through ______________, wholesalers finance customers by granting credit, and finance suppliers by ordering early and paying bills on time.

A) selling and promoting
B) buying and assortment building
C) financing
D) risk bearing
E) transportation

Question 54

American businessman King Gillette pioneered the sales model in which razor handles were given away for free or sold at a loss, but sales of disposable razor blades were very profitable. This is known as the _______ model.

A) two-tiered pricing
B) predatory pricing
C) cross selling
D) loss leading
E) product churning

Question 55

Through ______________, wholesalers' sales forces help manufacturers reach many small business customers at a relatively low cost.

A) selling and promoting
B) buying and assortment building
C) warehousing
D) risk bearing
E) transportation

Question 56

________ are unbranded, plainly packaged, less expensive versions of common products such as soy sauce, paper towels, and canned fruits.

A) Generics
B) National brands
C) Franchisees
D) Copy-cat brands
E) Private labels

Question 57

___________ often help retailers improve their operations by training sales clerks, helping with store layouts and displays, and setting up accounting and inventory-control systems.

A) Retailers
B) Wholesalers
C) Producers
D) Manufacturers
E) Farmers

Question 58

Through ______________, wholesalers are able to select items and build the assortments their customers need, saving the customers considerable work.

A) selling and promoting
B) buying and assortment building
C) warehousing
D) risk bearing
E) transportation

Question 59

Which of the following is the strongest differentiator for brick-and-mortar stores who want to emphasize their superiority over online retailers?

A) product quality
B) the shopping experience
C) product range
D) pricing
E) the retailer's reputation

Question 60

The Body Shop and Giordano carry mostly own-brand merchandise. These are examples of ________.

A) generic product
B) national brand
C) franchise
D) copy-cat brand
E) private labels

Question 61

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

A) Bulk breaking
B) Containerization
C) Wholesaling
D) Warehousing
E) Broking

Question 62

Companies are reducing their inventory costs by treating inventory items differently, positioning them according to risk and opportunity. High-risk, low-opportunity items are known as ________.

A) nuisance items
B) bottleneck items
C) variable items
D) critical items
E) commodities

Question 63

A stock order point of 10 means ordering the product ________.

A) every 10 days
B) when stock falls to 10 units
C) every 10 units
D) when stock falls to 9 units
E) in batches of 10 items

Question 64

________ consists of putting goods in boxes or trailers that are easy to transfer between two transportation modes.

A) Containerization
B) Haulage
C) Inventory carrying
D) Order processing
E) Warehousing

Question 65

Discount stores usually stock leftover goods, overruns, and irregular merchandise, sold at less than retail.

Question 66

________ encompass sales forecasting, production planning, and inbound materials transportation.

A) Market logistics
B) Containerization
C) Transportation
D) Nonstore retailing
E) Wholesaling

Question 67

E&OE is trying to minimize its inventory costs, which are extremely high. The company has realized that it can achieve this by maintaining a near-zero inventory and producing more only once a product is ordered. Which of the following is true for E&OE?

A) Inventory costs are lower than order-processing costs.
B) Running costs are higher than inventory-carrying costs.
C) Setup costs for the products are low.
D) Order-processing costs are high.
E) Order-processing costs are lower than setup costs.

Question 68

________ costs for a manufacturer consist of setup costs and running costs.

A) Inventory-carrying
B) Containerization
C) Wholesaling
D) Order-processing
E) Transportation

Question 69

Retailing includes all the activities involved in selling goods or services directly to final consumers.

Question 70

As inventory draws down, management must know at what stock level to request additional stock. This stock level is called the ________.

A) reorder point
B) least fixed point
C) point of divergence
D) inflection point
E) critical point

Question 71

Beyond the optimal order quantity, total cost per unit increases because ________.

A) inventory-carrying cost per unit increases
B) inventory-carrying cost per unit decreases
C) order-processing cost per unit increases
D) order-processing cost per unit increases though inventory cost decreases
E) inventory-processing cost per unit falls slowly

Question 72

The ________________ can be determined by observing how order-processing costs and inventory-carrying costs sum up at different order levels.

A) order quantity
B) right order quantity
C) optimal order quantity
D) inventory-carrying costs
E) near-zero inventory

Question 73

HCN recently introduced a product that the distributor considers a "bottleneck" item. What is the risk/opportunity relationship for bottleneck items?

A) low risk, mediocre opportunity
B) low risk, high opportunity
C) low risk, low opportunity
D) high risk, mediocre opportunity
E) high risk, low opportunity

Question 74

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

A) variable-costs-to-payment cycle
B) product-to-payment cycle
C) inventory-to-sale cycle
D) order-to-inventory cycle
E) order-to-payment cycle

Question 75

The trucking firm hired by your transportation manager provides a trucking service between the city of Bangkok and the surrounding towns on a regular schedule and at fixed prices. The trucking firm saves transportation costs by transporting the goods using trains as well as trucks, instead of trucks alone. Your transportation manager has hired a(n) ________.

A) airship carrier
B) airtruck carrier
C) trainship carrier
D) fishyback carrier
E) piggyback carrier

Question 76

E&OE is trying to minimize its inventory costs, which are extremely high. The company has realized that it can achieve this by maintaining a near-zero inventory and producing only once a product is ordered. Which of the following will be true for E&OE?

A) Short production runs will be more expensive than longer ones.
B) Setup and order-processing costs will be high.
C) The order point will be high.
D) Order-processing costs will be lower than the inventory-carrying costs.
E) E&OE can reduce the average cost per unit by producing a long run.

Question 77

If the shipper owns its own truck or air fleet, it becomes a ________.

A) containerized carrier
B) private carrier
C) contract carrier
D) common carrier
E) diversified carrier

Question 78

An item described as low-risk and low-opportunity is a ________.

A) nuisance item
B) bottleneck item
C) variable item
D) critical item
E) commodity

Question 79

Full-service retailers generally have the lowest costs of all retail types.

Question 80

Which of the following is an example of a private carrier?

A) MET is a transporter that operates only in the Southeast Asian region and charges fixed prices.
B) BCL is a family firm that owns only three trucks, but takes small orders for transport.
C) VTV owns a fleet of trucks and transports goods for any client for a fee.
D) COM is a shipping firm that transports goods by road and rail across Malaysia.
E) BEL Inc. manufactures parts for cars and transports its products to customers itself.