Marketing Management, 15e (Kotler)
Chapter 18 Managing Retailing, Wholesaling, and Logistics
1) ________ includes all the activities in selling goods or services directly to final consumers for
personal, non-business use.
A) Wholesaling
B) Retailing
C) Procurement
D) Promoting
E) Warehousing
2) 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.
3) 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.
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
5) Reynold’s is a grocery 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 and
discounted products. 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 services should Mal avoid in order to lower costs?
A) limited service
B) self-selection
C) full-service
D) self-service
E) limited-selection
6) 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
7) 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
8) 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
9) Which of the following is true for self-service retailing?
A) They 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.
10) 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
11) Which of the following is an example of a limited-service retailer?
A) Customers at TAB pick out the products they want and pay at the checkout counter.
B) Salespeople at Eli are always on hand to offer shoppers advice and assistance in choosing
products.
C) Mina’s 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.
12) 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
13) H&A is a retail chain that specializes in selling goods at very low prices. To achieve this, it
stocks a very narrow assortment of basic necessities and offers customers a “no-frills” shopping
experience. H&A is an example of a(n) ________ store.
A) off-price
B) specialty
C) hard-discount
D) superstore
E) convenience
14) An example of a restaurant with a narrow and deep assortment is a ________.
A) small lunch counter
B) cafeteria
C) large restaurant
D) casual dining restaurant chain
E) delicatessen
15) 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
16) Aldi, Lidl, Dollar General, and Family Dollar are examples of ________, as they carry a
more restricted merchandise mix than discount stores at even lower prices.
A) off-price retailers
B) extreme value stores
C) superstores
D) convenience stores
E) specialty stores
17) A factory outlet is an example of a(n) ________ retailer.
A) off-price
B) specialty
C) discount
D) department
E) catalog
18) Avon, Tupperware, and Southwestern Company of Nashville are among companies in the
multibillion-dollar ________ industry, which involves selling door-to-door or at home sales
parties.
A) direct marketing
B) catalog showroom
C) direct selling
D) automatic vending
E) buying services
19) Companies that 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
20) Which of the following is an example of direct selling?
A) E&OE sells its herbal skincare products exclusively through its standalone 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.
21) Which of the following is an example of direct marketing?
A) E&OE sells its herbal skincare products exclusively through its standalone 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.
22) The ________ marketing sales system works by recruiting independent businesspeople who
act as distributors.
A) catalog
B) multilevel
C) direct-response
D) corporate
E) direct
23) 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
24) Telemarketing is a type of ________.
A) direct selling
B) network marketing
C) multilevel selling
D) close-range marketing
E) direct marketing
25) Electronic shopping is a type of ________.
A) direct selling
B) network marketing
C) multilevel selling
D) corporate selling
E) direct marketing
26) A(n) ________ 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
27) 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
28) 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
29) A ________ is a 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
30) 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 trademark from the franchisee.
C) The franchisor must change its operations to suit those of the franchisee.
D) The franchisor collects royalty payments from the franchisee.
E) The franchisor pays startup costs for the franchisee.
31) 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 trademark to the franchisor.
C) The franchisee must change its operations to suit those of the franchisor.
D) The franchisee collects royalty payments from the franchisor.
E) The franchisee owns the trade or service mark.
32) 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 trademark.
C) The franchisee must change its operations to suit those of the franchisor.
D) The franchisee collects royalty payments from the franchisor.
E) The franchisee is paid by the franchisor for being part of the system.
33) 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
34) Which of the following wholesaler functions reduces inventory costs and risks to suppliers
and customers?
A) selling and promoting
B) warehousing
C) transportation
D) market information
E) assortment building
35) ________ 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
36) Retailing includes all the activities involved in selling goods or services directly to final
consumers.
37) Full-service retailers generally have the lowest costs of all retail types.
38) Discount stores usually stock leftover goods, overruns, and irregular merchandise, sold at
less than retail.
39) The network marketing sales system works by recruiting independent businesspeople who
act as distributors.
40) Electronic shopping is a form of direct marketing.
41) A superstore is a storeless retailer serving a specific clientele who are entitled to buy from a
list of retailers that have agreed to give discounts in return for membership.
42) A retailer cooperative is a retail firm that is owned by its customers.
43) A franchise organization is a corporate retail organization.
44) Gap and Pottery Barn are examples of franchise organizations, where two or more retail
outlets are owned and controlled by a corporation that employs central buying and
merchandising and sells similar lines of merchandise.
45) The franchisor owns a trade or service mark and licenses it to franchisees in return for
royalty payments.
46) Corporate chain stores such as Subway, Jiffy-Lube, Holiday Inn, Supercuts, and 7-Eleven
account for $1 trillion of annual US sales and 40 percent of all retail transactions.
47) List and explain the four service levels offered by retailers.
48) List the four categories of nonstore retailing and briefly explain each.
49) In what ways does franchising benefit the franchisor? In what ways does it benefit the
franchisee?
50) List the major types of limited-service wholesalers and explain how each type functions.
51) Differentiate between brokers and agents.
52) Sandy’s Stores is a small chain of grocery stores located in a few neighboring towns. The
stores have always been largely self-service, but the company is considering making a switch to
full-service stores. Offer reasons why Sandy’s should stick with its current system.
53) Sandy’s Stores is a small chain of grocery stores located in a few neighboring towns. The
stores have always been largely self-service, but the company is considering making a switch to
full-service stores. What can Sandy’s do to justify this move?
54) Sandy’s Stores is a small chain of grocery stores located in a few neighboring towns. The
stores have always been largely self-service, but the company is considering making a switch to
full-service stores. Offer one possible reason why this move is justified.
55) Skincare company E&OE has realized that its customers are very loyal to the brand and play
a large part in popularizing it by word of mouth. E&OE wants to leverage this customer loyalty
by using it to generate sales outside its store format. How can E&OE achieve this?
56) Mal’s father and grandfather ran Reynold’s, a general store in the town of Bayswater. When
Mal inherited the store, the town was expanding rapidly and a number of multinational
franchisors showed interest in entering the town. Mal wants to turn Reynold’s into a franchise of
Blue Sun, a fast-food chain. What benefits can Mal gain from this move?
57) Mal’s father and grandfather ran Reynold’s, a general store in the town of Bayswater. When
Mal inherited the store, the town was expanding rapidly and a number of multinational
franchisors showed interest in entering the town. Mal wants to turn Reynold’s into a franchise of
Blue Sun, a fast-food chain. Why shouldn’t Mal go the franchise route?
58) 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 nonstore retailing.
E) Discount stores are not doing as well as middle-market retailers.
59) 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
60) 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
61) Which of the following is an example of a category killer?
A) PETCO
B) Walmart
C) Kohl’s
D) The Limited
E) Tesco
62) “Pop-up” stores let retailers promote brands to seasonal shoppers for a limited time.
63) Department stores only face competition from other department stores as other retailing
forms are not a threat to their sales and profitability.
64) Consumers now receive sales offers through direct-mail letters and catalogs, television, cell
phones, and the Internet. The nonstore-based retailers are taking business away from store-based
retailers.
65) Supercenters retail grocery items as well as a huge selection of nonfood merchandise.
66) Growth in the retail market is centered firmly in the middle market, leaving luxury retailers
and discounting specialists struggling.
67) As discount retailers improve their quality and image, consumers have been willing to trade
down.
68) Electronic shelf labeling allows retailers to check inventory levels instantaneously.
69) Firms are increasingly recognizing the importance of influencing consumers at the point of
purchase.
70) List some recent trends in retailing.
71) HCN is a wholesaler that supplies consumer good products to a number of retailers. HCN
has witnessed the worrying trend of its competitors losing out on suppliers who approach
retailers directly. How can HCN strengthen its relationship with manufacturers and prevent this?
72) 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
73) 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
74) Which of the following is true for direct product profitability?
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.
75) 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, low-volume
76) 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