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Indicate whether the statement is true or false.
1. Suggestion selling by sales or service associates should always help shoppers recognize true needs rather than sell them
unwanted merchandise.
a. True
b. False
2. Destination stores are very likely to be profitable even in isolated locations.
a. True
b. False
3. Higher prices often indicate a level of exploitation that weakens the prestigious image of retailers.
a. True
b. False
4. Service quality is a priority in service industries because that industry is especially customer oriented.
a. True
b. False
5. Salespeople should practice trading-up techniques, whether customers need those products or not, to increase overall
product sales.
a. True
b. False
6. Establishing channel-wide network coherence is a key factor in maintaining service quality.
a. True
b. False
7. Around the world, most retailers are independent, with each owner operating a singular store within a local community.
a. True
b. False
8. Shopper marketing is responsible for the decline of the partnership trend between brand manufacturers and specific
retailers.
a. True
b. False
9. Among department stores, specialty stores, drugstores, and convenience stores, the gross margin is highest for specialty
stores.
a. True
b. False
10. Customers are always skeptical about the reasons for retailer errors; however, their reactions to mistakes such as
product stockouts and unexpectedly poor-quality products are limited to casual indifference.
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b. False
11. With fewer loyal customers and a low customer penetration, the shop-at-home industry has shrunk over the years.
a. True
b. False
12. A restaurant has a narrow product assortment and its level of service, price, and gross margin all range between low
and high.
a. True
b. False
13. Many drugstores also carry an extensive selection of cosmetics, health and beauty aids, seasonal merchandise,
greeting cards, toys, and some non-refrigerated convenience foods.
a. True
b. False
14. In-store retailing adds a level of convenience for customers who wish to shop from their current locations.
a. True
b. False
15. Microtargeting is an effective tool for online retailing.
a. True
b. False
16. Specialty stores such as Best Buy, Staples, and GameStop have the thinnest product assortments, usually carrying
single or narrow product lines that are considerably deep. Specialty stores compete on the basis of low prices, high
turnover, and high volume.
a. True
b. False
17. Floor stock refers to the inventory held in reserve for potential future sale in a retailer’s storeroom or stockroom.
a. True
b. False
18. Retailing’s ultimate goal is to sell products to consumers, and the right price is critical to ensure sales. Because retail
prices are usually based on the cost of the merchandise, an essential part of pricing is efficient and timely buying.
a. True
b. False
19. Determining a target market is optional while creating the retailing mix.
a. True
b. False
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20. Retailers can better acquire and use assets when they customize store layouts and merchandise mixes to the tastes of
local consumer bases.
a. True
b. False
21. Many retailers have found that natural lighting, either from windows or skylights, can lead to increased sales.
a. True
b. False
22. Consumer use of mobile devices and social media—while browsing, comparison shopping, and making a purchase—
limits retailers from accessing useful information about their customers and provides retailers no concrete way to appeal
to shoppers.
a. True
b. False
23. Will, a salesperson at a superstore, mistakenly provides wrong information to a customer about the location of a
specific brand of dishwashing liquid. The customer, as a result, wastes time searching for the product. This is an example
of brand cannibalization.
a. True
b. False
24. Target markets in retailing are often defined by demographics, geographic boundaries, and psychographics.
a. True
b. False
25. In a franchise, a franchisor pays a franchisee for the right to use its name, product, and methods of operation.
a. True
b. False
26. Shopper marketing brings brand managers and account managers together to connect with consumers along the entire
path-to-purchase, whether it be at home, on the go via mobile marketing, or in the store.
a. True
b. False
27. Toys“R”Us working with Macy’s to open stores-within-a-store at numerous Macy’s locations is an example of a
smaller specialty line opening shop inside a larger store to expand the former’s retail opportunities without risking
investment in a separate store.
a. True
b. False
28. Unlike nonstore retailing, in–store retailing enables customers to shop without visiting a physical store location.
a. True
b. False
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29. Which of the following is widely believed to be true of the audio and visual factors creating a store’s atmosphere?
a. Red is used to open up closed-in places and create an air of elegance and cleanliness.
b. Natural lighting, either from windows or skylights, can lead to increased sales.
c. Music played in a store cannot influence store traffic or the shopper’s focus of attention.
d. The type of music played cannot influence a customer’s choice of product.
30. A(n) _____ is a retail business where the operator is granted a license to operate and sell a product under the brand
name of a larger supporting organizational structure.
a. chain store
b. independent retail store
c. franchise
d. factory outlet
31. The ways in which connected consumers exchange goods and services with each other through a digital marketplace,
such as Craigslist, is called ______.
a. e-tailing
b. the sharing economy
c. microtargeting
d. social shopping
32. In a particular supermarket, a customer picks up a J. K. Rowling book to examine before purchase. The retailer uses
technology to suggest related items, such as other books by the author and Harry Potter merchandise, via the customer’s
mobile phone. What technology is the store using?
a. Beacon
b. RFID
c. Swarm
d. Click-and-collect
33. Which of the following represents the thinking behind off-price retailers?
a. They sell items from a full-line discount stock to customers who are drawn in primarily by the food on sale.
b. They sell overruns, irregular merchandise, and/or overstocks purchased from manufacturers at or below cost.
c. They turn customers into suppliers by buying back pre-owned items from customers and reselling to different
customers.
d. They offer a nearly complete selection of merchandise within a single category and use self-service, discount
prices, high volume, and high turnover to their advantage.
34. How would brand cannibalization resulting from a product promotion likely affect the retailer?
a. The promotion works out cheaper for the retailer.
b. The promotion causes the brand to suffer stockouts.
c. The promotion creates accurate sales forecasts for the cannibalized product.
d. The retailer gains from discounting surplus inventory of the cannibalized brand.
35. _____ is a selling technique that seeks to broaden customers’ original purchases with related items.
a. Suggestion selling
b. Co-marketing
c. Shopper marketing
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d. Benefit selling
36. Providing great customer service is one of the most challenging elements in the retail mix because:
a. customer relations do not increase brand value.
b. customers are indifferent to service quality.
c. customer expectations for service vary greatly.
d. customers do not trust retail salespeople.
37. Delta Graphics Inc. specializes in publishing educational books. It recruits and trains college students to sell its
products door-to-door. Which of the following forms of nonstore retailing is illustrated in this scenario?
a. Direct retailing
b. Telemarketing
c. Automatic vending
d. E-tailing
38. Which factor is considered the most critical in determining where customers choose to shop?
a. Store/website design
b. Display
c. Merchandise selection
d. Service
39. Shopper marketing has significant implications for retailers’ supply chains, which must react more quickly to
customer demand changes as instore initiatives become ______.
a. more unique and long-term and products become more customized
b. more unique and short-term and products become more standardized
c. less unique and short-term and products become more customized
d. more unique and short-term and products become more customized
40. How do retailers respond to customers who “showroom” and just visit a physical retail store to examine product
features or quality firsthand before eventually making the purchase online?
a. They increase the amount of stock kept on hand.
b. They rent or lease much larger spaces in prominent locations.
c. They ramp up their fulfillment capabilities at distribution centers.
d. They reject the strategy of retail channel omnification.
41. Which methodology does Walmart use to determine where in the store to stock products for customer convenience
(for example, placing Kleenex tissues in the paper-goods aisle and also beside cold medicines)?
a. Shopper marketing
b. Shopper analytics
c. Big data analysis
d. Market-basket analysis
42. Asif, a member of a local baseball team, broke his bat during a practice match. With the final match scheduled for the
next day, Asif urgently required a new bat. Therefore, he placed an order on Duke.com, an online portal for sporting
goods, and he dropped in at its nearest physical store to pick up his order. This is an example of the use of _____.
a. microtargeting
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b. click-and-collect
c. telemarketing
d. e-tailing
43. A large discount store that specializes in a single line of merchandise and becomes the dominant retailer in its category
is called a ______.
a. superstore
b. category killer
c. warehouse club
d. factory outlet
44. According to research, how does a customer typically view a product that is out of stock?
a. Customers view stockouts as an indication of the store’s poor management of inventory.
b. The stockout will lead the customer to buy an item that is similar to the out-of-stock item.
c. Customers who cannot buy the out-of-stock item will not buy an item similar to that item.
d. The tendency to buy an out-of-stock item decreases with every subsequent stockout.
45. Berkley’s Nooks are a self-service chain of service stations with stores that are located near residential areas. They are
open long hours and offer fast service in exchange for charging premium prices. Their customers are beginning to demand
more from them, such as higher quality food and lower prices on staple items such as gasoline and milk. Which type of
retailers are Berkley’s Nooks?
a. Supermarket
b. Convenience store
c. Superstore
d. Specialty store
46. Which of the following is a miniature supermarket, carrying only a limited line of high-turnover goods?
a. Specialty discount store
b. Warehouse club
c. Department store
d. Convenience store
47. Which customer behavior has motivated retailers to reduce the amount of stock kept on hand, rent or lease smaller
spaces, and ramp up their fulfillment capabilities at distribution centers?
a. Customers visit an online retail store to examine product features or quality, but then eventually make the
purchase in a physical store.
b. Customers visit a physical retail store to examine product features or quality firsthand, but then eventually make
the purchase online.
c. Customers visit an online retail store to buy a single product but eventually buy several related items that are not
often stocked in a physical store.
d. Customers visit a physical retail store to buy a single product but eventually buy several related items that are not
often stocked in an online store.
48. Which of the following statements is true of retail channel omnification?
a. Physical and online stores are combined into a single system for delivering on customer demand.
b. Consumers are required to pick up their orders from a physical store after purchasing online.
c. Physical stores are replaced by warehouses to store goods that can be purchased online.
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d. Consumers are required to visit physical stores before getting access to their online store.
49. Which of the following sells bulk quantities of merchandise to customers at volume discount prices in exchange for a
periodic membership fee?
a. Full-line discount store
b. Specialty discount store
c. Factory outlet
d. Warehouse club
50. Which of the following describes vending as a nonstore option?
a. Retailers generally avoid opportunities to sell via vending as it is too impersonal.
b. A downside of vending is that it is yet to integrate cashless payment into its systems.
c. Automatic vending can serve customers seeking luxury items such as champagne.
d. Its users are generally time strapped and live in rural or suburban areas.
51. Which of the following represents all activities directly related to the sale of goods and services to the ultimate
consumer for personal, nonbusiness use?
a. Product development
b. Production
c. Retailing
d. Manufacturing
52. Which of the following is true of the current retail industry?
a. About one in every ten American jobs is in the retail industry.
b. Most current retail employees are dissatisfied with their jobs.
c. Most retail businesses employ less than 50 people.
d. The industry is dominated by many large companies.
53. TJ Maxx, a discount apparel and home decor store, recently added an online retail option. It cautiously promoted this
online shopping outlet because the company was concerned that online shopping might decrease in-store sales. TJ Maxx
wanted to minimize ______.
a. microtargeting
b. brand cannibalization
c. retail mixing
d. retail channel omnification
54. Dillard’s, Target, and Walmart use big data analytics to determine ______.
a. which products to stock and at what prices and how to manage markdowns, but the data cannot be used to plan
how to advertise to draw target customers.
b. which products to stock and at what prices and how to advertise to draw target customers, but the data cannot be
used to manage markdowns.
c. how to manage markdowns and how to advertise to draw target customers, but the data cannot be used to evaluate
which products to stock and at what prices.
d. which products to stock and at what prices, how to manage markdowns, and how to advertise to draw target
customers.
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55. Which of the following is true of regional malls?
a. They are neither enclosed nor roofed to allow an open-air shopping experience.
b. They offer a much wider variety of merchandise and acres of free parking.
c. They have no decorative elements such as fountains, sculptures, and the like.
d. The anchor stores are all usually located near the entrance of the mall.
56. Which of the following is always true of a factory outlet?
a. It works quite unlike an off-price retailer.
b. It is owned and operated by a manufacturer.
c. It stocks and sells a wide variety of merchandise.
d. It is the dominant retailer in its category.
57. Social networking sites such as Facebook, Instagram, and Twitter enable users to immediately purchase items
recommended by their social connections, a phenomenon known as ______.
a. e-tailing
b. sharing economy
c. microtargeting
d. social shopping
58. How can firms that provide services, such as hair salons and financial services, improve delivery of their services?
a. By implementing a no-return policy after sale
b. By maximizing wait times for customers
c. By increasing the costs of services provided
d. By choosing the right distribution channel
59. Which of the following represents the thinking behind used goods retailers?
a. They sell items from a full-line discount stock to customers who are drawn in primarily by the food on sale.
b. They sell overruns, irregular merchandise, and/or overstocks purchased from manufacturers at or below cost.
c. They offer a nearly complete selection of merchandise within a single category and use self-service, discount
prices, high volume, and high turnover to their advantage.
d. They turn customers into suppliers by buying back pre-owned items from customers and reselling to different
customers.
60. Which type of retailer generally has a medium-to-broad product assortment, while the others typically have a broad
product assortment?
a. Department stores
b. Warehouse clubs
c. Supermarkets
d. Full-line discount stores
61. A _____ is a discount store that carries a vast depth and breadth of product within a single product category.
a. supercenter
b. specialty discount store
c. warehouse club
d. full-line discount store
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62. Which statement describes department stores such as JCPenney and Macy’s?
a. All departments—such as shoes, children’s clothing, electronics, housewares, etc.—operate collectively as a
single profit center, but policies about pricing and the types of merchandise carried are set at the individual departmental
level.
b. All the departments—such as shoes, children’s clothing, electronics, housewares, etc.—operate collectively as a
single profit center, and the central management sets policies about pricing and the types of merchandise carried.
c. Each department acts as a separate profit center, setting its own policies about pricing and the types of
merchandise carried.
d. Each department acts as a separate profit center, but the central management sets policies about pricing and the
types of merchandise carried.
63. Which of the following is true of freestanding store locations?
a. They may have the advantages of low site cost or rent.
b. They may have many nearby competitors to contend with.
c. They may have the advantages of easy access to customers.
d. They may have the option to share costs with nearby retailers.
64. Unlike supermarkets, convenience stores:
a. charge lower prices.
b. carry a much more limited line of high-turnover convenience goods.
c. enable customers to shop without visiting a physical store location.
d. offer no service to customers.
65. Which of the following is a difference between off-price retailers and specialty shops?
a. Off-price retailers keep a greater amount of floor stock, whereas specialty shops keep a lower amount of floor
stock.
b. Off-price retailers charge customers higher prices, whereas specialty shops charge customers lower prices.
c. Off-price retailers focus on lean inventory management, whereas specialty shops have an agile approach to
inventory.
d. Off-price retailers focus on providing high-quality customer service, whereas specialty shops de-emphasize
customer service.
66. Redoubt Nation, a specialty store that sells adventure sports gears, employs one salesperson per customer. Each
salesperson is required to influence customers to purchase items related to the products they have purchased. In this
scenario, Redoubt Nation is using _____ as its marketing strategy.
a. low employee density
b. suggestion selling
c. merchandise type
d. trading up
67. One risk of executing a store promotion that results in brand cannibalization is that the promotion could ______.
a. create inaccurate sales forecasts for both the promoted and cannibalized products.
b. create inaccurate sales forecasts for the promoted product and none for the cannibalized products.
c. increase the accuracy of the sales forecasts for both the promoted and cannibalized products.
d. create accurate sales forecasts for the promoted product and none for the cannibalized products.
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68. Zeta Inc., a multinational retail corporation, uses a device that sends customers a marketing message via email or text
when they are near a store. This is an example of _____.
a. cloud computing
b. a beacon
c. shopper marketing
d. click-and-connect
69. Which of the following statements is true of click-and-collect?
a. It requires representatives to sell products door-to-door, in offices, or at in-home sales parties.
b. It employs outbound and inbound telephone contacts to sell directly to customers.
c. It enables consumers to make their purchases online and pick up their orders from physical stores.
d. It allows customers to shop over the Internet and have items delivered directly to their doors.
70. In addition to making shopping easy and convenient for the customer, an effective layout:
a. heightens the olfactory sense of the customers.
b. provides customers with the ability to easily replace sold items.
c. can persuade customers to purchase expensive products.
d. has a powerful influence on traffic patterns and purchasing behavior.
71. What is the selling technique of trading up?
a. It seeks to broaden customers’ original purchases with related items available in the store.
b. It persuades customers to buy a higher-priced item than they originally intended to purchase.
c. It allows customers to shop by themselves as long as they can easily find what they need.
d. It focuses on the value of the product to the customer more than the cost of the product to the supplier.
72. Which of the following statements is true of big data analytics?
a. It analyzes customers’ needs based on their proximity to a retail store.
b. It focuses on understanding the behavior of a brand’s target customers.
c. It enables retailers and suppliers alike to gain better customer insights.
d. It allows customers to evaluate the service quality offered by retailers.
73. Off-price retailers sell their goods at prices 25 percent or more below traditional department store prices. What makes
such a policy viable?
a. They offer only volume discounts in exchange for a periodic membership fee.
b. They specialize in a single line of merchandise and are the dominant retailer in their category.
c. They pay cash for its stock and usually doesn’t ask for return privileges.
d. They resell items purchased from one of the other types of retailers.
74. The first element in the retailing mix is the _____.
a. retail promotion
b. product offering
c. retail location
d. product pricing
75. Strategic retailing goals typically focus on:
a. reducing costs of goods sold.
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b. increasing costs of goods sold.
c. reducing return on assets or equity.
d. not using a retailing mix.
76. The technology involved in RFID (Radio Frequency Identification) has traditionally been used to ______.
a. track items that customers pick up during the course of their shopping
b. manage inventory prior to items reaching the sales floor
c. create instant promotion for the specific item in a customer’s hand
d. conduct market surveys to help redistribution across geographies
77. A _____ is the originator of a trade name, product, methods of operation, and the like that grants operating rights to
another party to sell its product.
a. broker
b. franchisor
c. consumer
d. wholesaler
78. At the store level, one goal of tactical retailing is to:
a. eliminate the need for segmenting a market.
b. increase the sales of a specific item.
c. increase overhead costs.
d. eliminate the need for new advertising campaigns.
79. Gross margin is how much the retailer makes as a percentage of ______.
a. profit after the discount on the goods sold is subtracted
b. sales after the cost of the goods sold is subtracted
c. sales after the discount on the goods sold is added
d. the cost of all goods after the profit is subtracted
80. _____ is a form of nonstore retailing that uses machines to sell its goods.
a. Direct retailing
b. Telemarketing
c. Automatic vending
d. E-tailing
81. Both Goodwill stores and thredUP ______.
a. are online used goods retailers
b. are brick-and-mortar used goods retailers
c. turn customers into suppliers
d. turn suppliers into customers
82. Unlike off-price retailers, specialty shops:
a. adopt an operating model that implies low prices for customers.
b. focus on lean inventory management.
c. can accommodate a broader range of customer demands.
d. de-emphasize customer service and product selection.
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83. Which of the following is a case of brand cannibalization?
a. A tea manufacturer introduces a new brand of tea that eats into the sales of an existing brand of another
manufacturer.
b. A tea manufacturer introduces a new but inferior brand of tea to promote the sales of an existing tea brand in its
product mix.
c. A tea manufacturer introduces a new brand of tea that eats into the sales of an existing tea brand in its product
mix.
d. A tea manufacturer introduces a new brand of tea that has the unintended result of promoting the sales of an
existing brand of another manufacturer.
84. Which of the following allows direct mailers from a manufacturing company to pick out (based on data analytics of
census data, lifestyle patterns, financial information, and past purchase and credit history) those most likely to buy its
products?
a. Automatic vending
b. Direct retailing
c. Microtargeting
d. Telemarketing
85. Which of the following is true of freestanding retail store units?
a. Retailers decide to relocate their businesses in pedestrian malls.
b. Retailers feel outlets generally stand out better in huge shopping centers and malls.
c. These account for more than half of all retail store construction in the United States.
d. These are a bad idea for an aggressive expansion plan in an area without shopping centers.
86. _____ is an emerging retailing trend that employs market data to best serve customers as they prepare to make a
purchase.
a. Channel omnification
b. Click-and-collect
c. Shopper marketing
d. Cloud computing
87. Lily’s Apparel, a renowned apparel store, focuses on Generation Y customers and provides them with a customized
clothing experience. Lily’s Apparel has defined its target market by _____.
a. religious convictions
b. educational qualifications
c. geographic boundaries
d. psychographic characteristics
88. Which of the following represents the thinking behind supercenters?
a. They offer a nearly complete selection of merchandise within a single category and use self-service, discount
prices, high volume, and high turnover to their advantage.
b. They sell overruns, irregular merchandise, and/or overstocks purchased from manufacturers at or below cost.
c. They sell items from a full-line discount stock to customers who are drawn in primarily by the food on sale.
d. They specialize in a single line of merchandise and become the dominant retailer in its category.
89. Which of the following represents the thinking behind single-line specialty discount stores such as Foot Locker?
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a. They offer a nearly complete selection of merchandise within a single product category and use self-service,
discount prices, high volume, and high turnover to their advantage.
b. They sell items from a full-line discount stock to customers who are drawn in primarily by the food on sale.
c. They specialize in a single line of merchandise and become the dominant retailer in their category.
d. They sell overruns, irregular merchandise, and/or overstocks purchased from manufacturers at or below cost.
90. Which of the following is a similarity between specialty stores and restaurants?
a. Both have low gross margins.
b. Both have narrow product assortment.
c. Both offer high levels of service.
d. Both have low prices.
91. Which of the following is a similarity between factory outlets and off-price retailers?
a. Both sell at prices well below traditional department store prices.
b. Both offer high levels of customized service to customers.
c. Both follow an agile approach to inventory.
d. Both carry multiple product lines that are considerably deep.
92. Which of the following statements is true of service failures?
a. These can be eliminated by successful market segmentation.
b. Retailers cannot recover from service failures.
c. These can be solved by canceling return policies.
d. If handled effectively, these can result in higher customer loyalty.
93. The Hunt, a liquor store, is famous for its unique and extensive collection of alcoholic beverages. Its employees
possess up-to-date knowledge of the liquor available in the store, which allows them to assist customers in their
purchasing decisions. The Hunt is an example of a _____.
a. supermarket
b. specialty store
c. warehouse club
d. convenience store
94. Full-line discounters typically carry ______.
a. narrow assortments of merchandise that are shallow
b. narrow assortments of merchandise that are deep
c. wide assortments of merchandise that are shallow
d. wide assortments of merchandise that are deep
95. _____ is the technique used to sift through the data collected by point-of-purchase scanning equipment.
a. Big data analysis
b. Shopper marketing
c. Market-basket analysis
d. Shopper analytics
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96. Henry runs Moonlight Café, a world-renowned, fast-food restaurant, in his locality. He started the restaurant after
getting a license from Moonlight Café and by regularly paying a fee for the right to use its brand name, products, and
methods of operation. Henry most likely operates a(n) _____.
a. independent retail store
b. warehouse club
c. chain store
d. franchise
97. The retailing mix consists of six Ps: the four Ps of the marketing mix (product, promotion, place, and price) plus
______.
a. presentation and personnel
b. population and personnel
c. presentation and preference
d. population and purpose
98. Briefly explain the actions a retailer should take to address retail product/service failures.
99. Why is it important to maintain service quality in service industries? Explain the four areas that service distribution
should focus on to maintain the quality of service.
100. Briefly explain the process of defining a target market.
101. What is brand cannibalization? Why is it dangerous to the retailer in terms of sales, inventory, and promotion?
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Answer Key
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