Retailing Management, 10e (Levy)
Chapter 12 Buying Merchandise
1) Copycat brands imitate the manufacturer’s brand in appearance and packing, generally are
perceived as lower quality, and are offered at lower prices.
2) The availability of national brands can affect a customer’s image of the retailer.
3) Wholesale markets for retail buyers include only annual trade shows.
4) Due to an increase in the production of private-label brands, resident buying offices have
become increasingly more significant and important.
5) In a Dutch auction, the retail buyer provides a specification for what they would like to be
produced for their private-label products, and then manufacturers bid on the opportunity to be the
supplier.
6) Bonuses are funds vendors give retailers to cover lost gross margin dollars due to markdowns
needed to sell unpopular merchandise.
7) Slotting allowances are charges imposed by a retailer to stock a new item.
8) Credible commitments are tangible investments in the strategic relationship and involve
spending money to improve the supplier’s products or services provided to the customer.
9) Diverted and gray-market goods go through distribution channels that are not authorized or
intended by the manufacturer.
10) A buyer asking or receiving something of value that influences purchasing decisions occurs in
the black market.
11) National brands are also called
A) generic brands.
B) private-label brands.
C) exclusive brands.
D) manufacturer’s brands.
E) distributor’s brands.
12) Techno Comp is a well-known national brand of computer and electronic products and
accessories. Their tablet would be considered a(n)
A) premium brand.
B) copycat brand.
C) umbrella brand.
D) exclusive brand.
E) subbrand.
13) Spring Clean, Sparkle Glass, and Dazzle Floor are various cleaning liquids marketed under the
brand name Clean Homes. Therefore, Clean Homes is a(n)
A) premium brand.
B) copycat brand.
C) umbrella brand.
D) exclusive brand.
E) subbrand.
14) Tide detergent, Ralph Lauren polo shirts, and Hewlett-Packard printers are all examples of
A) private-label brands.
B) national brands.
C) general brands.
D) generic brands.
E) licensed brands.
15) All of the following are terms for products developed by retailers except
A) store brands.
B) private-label brands.
C) house brands.
D) own brands.
E) manufacturer’s brands.
16) ________ are products developed by retailers.
A) Copycat brands
B) National brands
C) Exclusive brands
D) Store brands
E) Parallel imports
17) Which of the following is true of store brands?
A) Store brands are limited in variety when compared to national brands.
B) These products are sold to competing retailers.
C) They are labeled only with the commodity name and have no distinguishing brand names.
D) Retailers develop the design for these products in most cases.
E) National brand vendors are not involved in the development of these products.
18) When identifying national brands, vendors use a(n) ________ associated with their company.
A) premium brand
B) copycat brand
C) umbrella brand
D) exclusive brand
E) subbrand
19) A(n) ________ developed by a retailer is comparable with national brands on quality rather
than price.
A) premium brand
B) copycat brand
C) umbrella brand
D) exclusive brand
E) subbrand
20) Home Day is a large supermarket. It recently launched its own brand of cereals called Fast
Bites, equivalent to most national brands and also priced slightly lower. Therefore, Fast Bites is an
example of a(n)
A) premium store brand.
B) generic brand.
C) copycat brand.
D) parallel import.
E) licensed brand.
21) A(n) ________ is a brand that is developed by a national-brand vendor, often in conjunction
with a retailer, and sold solely by the retailer.
A) premium brand
B) generic brand
C) copycat brand
D) exclusive brand
E) subbrand
22) ________ are private-label products produced by the retailer that imitate the national brand in
both appearance and packaging, but are often offered at a lower price.
A) Premium brands
B) Generic brands
C) Copycat brands
D) Exclusive brands
E) Licensed brands
23) When a grocery retailer develops its own high-quality private-label organic food product, this
would be a(n)
A) premium brand.
B) copycat brand.
C) umbrella brand.
D) exploratory brand.
E) superbrand.
24) The only retailer that offers Fresh Sun organic food products is Daily Needs. Therefore, Fresh
Sun is an example of a(n)
A) generic brand.
B) private-label brand.
C) exclusive brand.
D) premium private label.
E) copycat brand.
25) Popular national brands are placed next to a manufacturer’s brands in a store and look like
them. This kind of brand is called a(n)
A) premium brand.
B) generic brand.
C) copycat brand.
D) exclusive brand.
E) licensed brand.
26) ________ target a price-sensitive segment by offering a no-frills product at a discount price.
A) Generic brands
B) Store brands
C) National brands
D) Family brands
E) Diverted merchandise
27) Which of the following is neither a store brand nor a national brand?
A) Premium brand
B) Exclusive brand
C) Generic brand
D) Copycat brand
E) Private-label brand
28) How does a national retailer benefit from selling private-label brands?
A) The retailer spends less on advertising private-label brands and therefore saves money.
B) Since the retailer carries the cost of advertising of a private-label brand, the costs are covered by
the consumer.
C) Since nationwide stores carry the private-label brands, it gives little choice to the consumer
about assortments.
D) Since it is a national retailer, customers will naturally know the private-label brand.
E) By selling private-label brands, a national retailer can differentiate its assortments.
29) The premium option in the multiple price tiers created for store brands offers
A) a reduced risk of uncertain sales.
B) retailers a large number of alternatives for getting rid of excess inventory.
C) consumers a substantial saving without compromising on quality.
D) consumers quality that is comparable to that of national brands.
E) consumers a higher quality than national brands at a higher price.
30) National brands
A) offer no alternatives for getting rid of excess inventory.
B) offer a higher profitability potential than store brands.
C) can limit a retailer’s flexibility.
D) are specific to a retailer.
E) pose a risk in the form of uncertain sales.
31) If there are so many advantages to selling national brands, why do retailers still carry
private-label brands?
A) Private-label brands yield higher profits to retailers.
B) Private-label brands require less investment for a retailer from design to display.
C) Customers have loyalty to national brands.
D) National brands have better quality overall than private-label brands.
E) National brands offer a retailer more flexibility on how merchandise is displayed and
advertised.
32) What is an advantage of selling private-label brands for a national retailer?
A) There are fewer steps and supply chain resources needed to develop private-label products.
B) The retailer saves costs as it does not need to market private-label products.
C) There is less risk involved with selling private-label brands.
D) Private-label brands have more clout than national brands.
E) Customers can’t compare prices for private-label products because of their exclusivity.
33) Which of the following is a drawback for a retailer offering national brands?
A) Retailers view national brands as a threat to private-label brands.
B) Retailers have to discount some national brands in order to attract customers to their stores
because customers compare prices for these brands across stores.
C) Significant investment is needed to develop relationships with national brands’ vendors.
D) Retailers have to work to market national brands to make them better known and desired by
customers.
E) Many customers will only patronize retailers that sell particular national brands.
34) Which of the following is a drawback of selling private-label merchandise?
A) National brands are far superior to private-label brands.
B) National brands are produced with better quality.
C) Significant investment is needed to develop, manage, and market private-label brands.
D) Gross margins are lower with private-label brands than with national brands.
E) Designing private-label merchandise is only possible for department store retailers.
35) A ________ for retail buyers is a concentration of vendors within a specific geographic
location, perhaps even under one roof or over the Internet.
A) distribution center
B) wholesale market
C) gray market
D) black market
E) resident buying office
36) One way for a buyer to become familiar with products and styles is to
A) interact with retail exchanges.
B) attend trade shows.
C) become acquainted with diverted merchandise.
D) insist on objective information.
E) have and maintain a common goal with vendors.
37) Which of the following is not descriptive of a trade show?
A) Buyers meet with manufacturer executives to discuss strategies to grow their business.
B) Buyers review performance of the vendor during the previous season.
C) Vendors have celebrities at their booth to promote their merchandise and attract buyers.
D) Trade shows are often associated with wholesale market centers.
E) Buyers see the latest products and styles being offered by vendors.
38) At FN Platform, vendors display their fashion footwear in designated areas at the Las Vegas
Convention Center and have sales representatives available to talk with buyers as they walk
through the exhibit area. This exhibition is an example of a
A) retail exchange.
B) trade show.
C) diverted merchandise sale.
D) gray-market sale.
E) reverse auction.
39) ________ are taxes collected by a government on imported merchandise.
A) Chargebacks
B) Country of origin costs
C) Slotting fees
D) Duties
E) Obligation fees
40) When contemplating sourcing products internationally, which of the following would not be
an additional cost associated with global sourcing?
A) Foreign currency fluctuations
B) Tariffs
C) Reduced lead times
D) Larger inventory carrying costs
E) Increased transportation costs
41) ________ are imposed by governments to shield domestic manufacturers from foreign
competition.
A) Chargebacks
B) Country of origin costs
C) Slotting fees
D) Import tariffs
E) Obligation fees
42) Which of the following is a subjective issue associated with global sourcing?
A) Transportation costs
B) Tariffs
C) Longer lead times
D) Relative value of foreign currencies
E) Quality control
43) Why are inventory carrying costs higher for retailers who source internationally?
A) Lead times are longer, and there is a need to maintain higher levels of safety stocks.
B) There is no way to predict the extra tariffs that will be levied by importing countries.
C) Labels of origin are typically put on products and need to be removed upon arrival.
D) Changes in fixed costs result in additional inventory.
E) Foreign distribution centers charge higher storage fees.