77) 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
78) 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
79) 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
80) 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
81) 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
82) Stores are using ________ to measure a product’s handling costs from the time it reaches the
warehouse until a customer buys it in the retail store.
A) electronic data interchange (EDI)
B) direct product profitability (DPP)
C) radio-frequency identification (RFID)
D) global positioning systems (GPS)
E) compounded annual grown rate (CAGR)
83) 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 recordkeeping, and free dry cleaning. Inside the store are 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
84) 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
85) Retailers can target their customers more effectively by using only a single channel to reach
them.
86) Featuring exclusive national brands that are not available at competing retailers is a way of
generating consumer interest in a retailer.
87) In order to clearly differentiate themselves from competitors, retailers must keep
merchandise and prices consistent.
88) The gross margin on a product bears a direct relation to the direct product profit.
89) Some high-volume products may have such high handling costs that they are less profitable
and deserve less shelf space than low-volume products.
90) Mass merchandisers are usually high-markup, lower-volume stores.
91) Low prices on some items serve as traffic builders or loss leaders for retailers.
92) EDLP can lead to lower advertising costs and higher retail profits.
93) Accepting telephone and mail orders is an example of the ancillary services that a retailer
offers.
94) Postpurchase services include shipping and delivery, gift wrapping, adjustments, and returns.
95) List some differentiation strategies retailers can use to compete successfully in the market.
96) Skincare company E&OE retails its products through standalone stores or through its own
stores within malls. The management uses this method so that customers are sure of finding only
E&OE products at the stores and the brand image remains strong. In this scenario, what can
E&OE do to generate consumer interest while retaining its exclusivity?
97) Over the past three years, skincare products retailer E&OE has realized that it is losing sales
to competitors who sell products online. E&OE has always cultivated an exclusive upscale
image, and the management feels that shifting to the online route will only harm the brand image
and sales in the long run. How can E&OE encourage customers to frequent its stores?
98) Imagine that you are in charge of creating a distinctive store atmosphere at a clothing
retailer. What can you do to make your store stand out in the customer experience?
99) Give one example of a retailer that uses standalone stores as opposed to stores located in
malls. Why do you think retailers opt for this channel?
100) E&OE is looking to reduce its inventory costs for all its products. The company realizes
that its inventory depends on the setup costs of its various products. How do setup costs affect
E&OE’s inventory costs?
101) 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
102) Though it is sold only in Walmart stores, Walmart’s Ol’Roy dog food has surpassed Nestlé’s
Purina brand as the top-selling dog food. Ol’Roy is an example of a ________.
A) generic product
B) national brand
C) franchise
D) copy-cat brand
E) private label
103) Which of the following is true for distributor brands?
A) They sell at higher volumes than national brands and are also known as generics.
B) They are usually sold at higher prices than national brands because production costs are
higher.
C) They are always of better quality than national brands as production is strictly monitored.
D) Distributor brands can be sold at lower prices yet generate a higher profit margin because of
their lower cost structure.
E) Advertising and sales promotion costs for distributor brands are much higher than those for
national brands.
104) ________ are unbranded, plainly packaged, less expensive versions of common products
such as spaghetti, paper towels, and canned peaches.
A) Common carriers
B) Shills
C) Generics
D) Private labels
E) Marques
105) 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
106) 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
107) Private label or store brands are also known as generics.
108) The lower price of generics is made possible by lower-cost labeling and packaging and
minimal advertising, and sometimes lower-quality ingredients.
109) The growth of “house brands” has skyrocketed in recent years. What benefits do
intermediaries receive from sponsoring their own brands?
110) Supermarket chain Reynold’s is considering making a switch to stocking almost exclusively
private-label products in order to offer customers the lowest prices. Offer reasons why Reynold’s
should think twice before opting to stock exclusively private-label products.
111) Supermarket chain Reynold’s is considering stocking a number of private-label products in
order to offer customers the lowest possible prices. Explain how this strategy could benefit the
company.
112) What should manufacturers do to compete against or collaborate with private labels?
113) Which of the following is considered a wholesaler?
A) retailers
B) brokers
C) producers
D) manufacturers
E) farmers
114) ________ are independently owned businesses that take title to the merchandise they
handle. They are full-service and limited-service jobbers, distributors, and mill supply houses.
A) Brokers
B) Agents
C) Merchant wholesalers
D) Specialized wholesalers
E) Retailers’ branches
115) ________ serve bulk industries such as coal, lumber, and heavy equipment, assuming title
and risk from the time an order is accepted to its delivery.
A) Producers’ cooperatives
B) Cash and carry wholesalers
C) Truck wholesalers
D) Drop shippers
E) Rack jobbers
116) ________ sell and deliver a limited line of semiperishable goods to supermarkets, grocery
stores, hospitals, restaurants, and hotels.
A) Producers’ cooperatives
B) Cash and carry wholesalers
C) Truck wholesalers
D) Drop shippers
E) Rack jobbers
117) The owner of supermarket chain Reynold’s has realized that customers want a wider variety
of goods than is currently available. However, Reynold’s cannot afford the costs of storing
excess inventory. Additionally, the owner is not willing to take the risk that the new products
will remain unsold. Which of the following types of wholesalers can help Reynold’s meet
customer demand while minimizing costs?
A) producers’ cooperatives
B) cash and carry wholesalers
C) truck wholesalers
D) drop shippers
E) rack jobbers
118) Agricultural assemblers, petroleum bulk plants and terminals, and auction companies are
examples of ________.
A) full-service wholesalers
B) specialized wholesalers
C) limited-service wholesalers
D) merchant wholesalers
E) brokers
119) Which of the following is true of brokers?
A) Brokers represent buyers or sellers on a semipermanent basis.
B) Most brokers are small businesses with a few skilled salespeople.
C) Brokers bring buyers and sellers together and assist in negotiation.
D) Selling brokers have contractual authority to sell a manufacturer’s entire output.
E) Purchasing brokers make purchases for buyers and often receive, inspect, warehouse, and ship
merchandise.