McDonald’s and Burger King are sometimes forced to drop prices by promoting ‘value
meals’ in the face of mounting competition. This is an example of a ______ objective.
a. target
b. status quo
c. competitive
d. comparable
e. market share
The retailer who never makes a buying error is probably:
a. missing profit opportunities by being too conservative.
b. overestimating demand.
c. overpromoting.
d. maximizing profits.
e. controlling expenses.
What type of vertical marketing channel has a well established authority structure?
a. Franchise system
b. Contractual vertical marketing system
c. Conventional marketing system
d. Corporate vertical marketing systems
e. Wholesaler-sponsored voluntary group
A _____ discount is one that a vendor provides a retailer for running a special
promotion for a manufacturer.
a. promotional
b. advertising rebate
c. psychological
d. special
e. cash
An environmental orientation will allow retailers to:
a. anticipate and adapt continuously to external forces.
b. adapt systematically to a changing environment.
c. focus on fundamental management of assets, sales revenues and expenses.
d. focus on the need to collect and analyze data.
e. to acquire merchandise from suppliers.
What three elements should be used as the basis for designing customer service
programs?
a. In-store, post-purchase, and transient
b. Product selection, product availability, and time spent looking
c. Pretransaction, transaction, and posttransaction
d. Product availability, searching time, and price
e. Repair, personal selling, and warranty services
A ‘retailer’s cost management’ strategy refers to:
a. getting shoppers into the store.
b. having the right merchandise, using the right layout and display, and having the right
sales force.
c. the small size of the retailers’ stores which gives these advantages in negotiating
leases in an industry with a surplus of stores, thus reducing their operating costs.
d. having a low marginal cost, where the cost of selling one more unit does not
significantly impact total costs, thus making them want to maximize revenue.
e. getting shoppers and converting them into customers at the lowest operating cost
possible that is consistent with the level of service that customers expect.
Which of the following is NOT an item that must be considered when planning an
initial markup?
a. Customer returns and allowances
b. Stock shortages
c. Planned gross margin
d. Cash discounts to customers
e. Employee discounts
_____ is NOT a common factor considered when selecting a merchandise source.
a. Trade terms
b. Fabric colors used
c. Consumers’ perception of the manufacturer’s reputation
d. Projected markup on the merchandise
e. After-sale service from the vendor
Which of the following statements is correct?
a. Operating costs per sales dollar are usually lower for larger retailers than they are for
small retailers.
b. Larger retail firms generally have higher operating costs per sales dollar.
c. Retailers cannot be classified by number of stores.
d. Retailers are rarely classified by sales volume.
e. The operating performance of retailers has no relationship to retailers’ size.
The term ‘floor plan’ in retailing refers to:
a. the process of deciding what price zones should be placed next to each other.
b. planning budgets, promotions, and specific activities for each department over a
given period of time.
c. the activities associated with the planning of store lighting, designs, colors, and other
elements of the store environment.
d. where merchandise and customer service departments are located, how customers
circulate through the store, and how much space is dedicated to each department.
e. planning merchandise mixes, prices, and inventory for each department in a store.
The specific content of these laws varies, but usually they prohibit the retailer from
seeking wrongful advantages from vendors or selling merchandise below cost with the
intent of using profits from another geographic area or from cash reserves to destroy or
hurt competition.
a. Taxing laws
b. Unfair trade practices laws
c. Zoning laws
d. Franchise laws
e. Blue laws
A(n) _____ supply chain is the channel that results once independent channel members
are added between the manufacturer and the consumer.
a. direct
b. indirect
c. localized
d. undiverted
e. limited
Vertical marketing channels are typically classified into the following three categories:
a. contractual, administered, and corporate.
b. cooperatives, owned, and voluntary.
c. wholesaler-sponsored, retailer-sponsored, and franchised.
d. vertical, horizontal, and interfaced.
e. facilitating, primary, and conventional.
During the ‘to market era’, merchandise and goods moved primarily by:
a. waterways and automobile.
b. automobile and airplane.
c. horse and wagon.
d. railroads and waterways.
e. railroads and airplanes.
Merchandise presentation is important as evidenced in studies which show that over 70
percent of present department store sales are unplanned purchases.
A rule of thumb for markdowns is that prices should be marked down at least 20
percent in order for the consumer to notice.
Stock-to-sales ratios always express inventory levels at retail, not cost.
After 1900 retail advertising witnessed rapid growth in the form of print, billboards and
television.
The first step in developing a merchandise budget is to determine the buyer’s planned
profit objective for the season.