Archives: Quiz

Population characteristics are the criteria most often used to segment markets. A neighborhood shopping center typically has over 500,000 square feet in gross leaseable space. Answer: F A trading area is the geographic area from which a retailer, group of […]

The density of supply refers to the extent which retailers are concentrated in different areas of the market under question. Common services provided by retailers, such as alterations, free delivery, bridal registries, check cashing, credit, short check-out lines, and gift […]

A retailer’s location decision making process begins with an evaluation of supply and demand densities. Customer service standards vary throughout the world. Answer: T Value proposition is the difference between the benefits offered by one retailer versus those of the […]

Although most retailers have frequent shopper card programs, few retailers utilize the economic information they have access to. Lowering the lighting levels in a fashion department can actually discourage sales, because the low lighting may suggest a discount-store image. Answer: […]

E-tailing restricts consumers from shopping when they like and from where they like. There are two basic types of merchandising: visual merchandising and on-shelf merchandising. Answer: T Four-digit NAICS codes provide are easier to work with than three-digit NAICS codes. […]

Market structures characterized as pure competition have heterogeneous products, many buyers and few sellers, and ease of entry for both buyers and sellers. What is the key difference between a retailer using the analytical method and one using the creative […]

On-shelf merchandising refers to the merchandise which is displayed on shelves and on counters, but not carried on racks and fixtures. Category killers are not allowed to divert business away from traditional wholesale supply houses. They can only compete with […]

A service-dominant mindset views the customer or beneficiary as using what the firm sells to do something valuable or to create value. Markdowns, employee discounts, and stock shortages are all various forms of reductions. Answer: T With annual spending of […]

Gross margin is the difference between net sales and cost of goods sold or the amount available to cover operating expenses and produce a profit. There is no way for retailers to increase their OTB once they have met their […]

Trade discounts are sometimes referred to as functional discounts. Vertical price fixing is also referred to as resale price maintenance or ‘fair trade.’ Answer: T Frequency is the average number of times each person who is reached is exposed to […]

The Internet is playing an important promotional role for retailers. The closure of more than 300,000 retail stores between 2008 and 2009 as a result of bankruptcy provided a new retail growth format: recycled merchandise retailers. Answer: F A low-margin, […]

Retailers that recognize that they are selling intangibles, even if their merchandise is tangible, will be able to develop more effective retail marketing strategies. The retailer’s basic objectives can be summarized by stating: ‘Get customers into the store, get them […]

Market performance objectives compare a retailer’s actions against those of competitors. A retailer must identify its location before it decides how best to reach its target market. Answer: F An advantage of the early markdown policy is that it allows […]

The stock-to-sales ratio will fluctuate on a monthly basis because sales tend to fluctuate monthly. Publicity is non-paid-for media communications about the company or product. Answer: T The only way U.S. retailers can be sure that they are not buying […]

The key to a successful sales presentation is to get the customer to want to buy your product or service. A common error made by retail buyers is not buying too many trendy fashions. Answer: F JCPenney opened the nation’s […]

The value of intangibles is measured by what is referred to as the price to book ratio. Retail salespeople and the service they provide are major factors in the consumer purchase decision. Answer: T The practice of advertising a low-priced […]

As goods are sold through more retail outlets, their markup percentage should decrease. While a chocolate-covered donut would taste great right now, the second, third, or tenth one, purchased and consumed today, would be less desirable. This is an example […]

The break-even point is where total revenues equal total expenses. An equity objective reflects the retailer’s desire to treat the consumer and suppliers fairly and not endanger their living conditions. Answer: T The method of merchandise presentation can have a […]

What are the various factors that a customer service and sales enhancement audit seeks to measure? What value is provided to management by measuring these factors? Answer: The audit provides management with a detailed analysis of current sales activity by […]

The single factor that distinguishes business districts from shopping centers or malls is that business districts are unplanned. The annual cost to retailers for carrying inventory is between 15 to 20 percent. Answer: T The new management mindset that retailers […]

The notion of unique value does not apply when the retail shopper is a group of individuals, such as a family. Because odd prices are associated with low prices, they are typically used by retailers who sell at prices below […]

An owner of a computer repair service has decided that 8 percent of next year’s projected sales will be spent on advertising. The owner is utilizing the percentage-of-sales method in determining the service’s advertising budget. A small neighborhood drugstore is […]

The age distribution of the U.S. population is changing. Channel members must work together with their partners to offer products at appropriate prices. No one will win if either partner is not honest and fair with the other or with […]

Same-store sales compare an individual store’s sales to its sales for the same day of the week (e.g., Friday) to that day in the previous two weeks. Approximately 30 percent of American workers have admitted stealing from their employers. Answer: […]

Convenience stores often employ a scrambled merchandising technique. Because it is important to always have the correct stock on hand, the amount of space being devoted to the back room has increased in recent years. Answer: F Today specialization in […]

Neighborhoods in the United States have been found to be very heterogeneous. Visual merchandising is the artistic display of merchandise and theatrical props used as scene-setting decoration in the store. Answer: T Explain why a retailer may wish to engage […]

Administered vertical marketing channels exist when one member of the channel takes the initiative to lead the channel by applying the principles of effective interorganizational management. Closing the sale is the action the salesperson takes when the customer decides to […]

Success in retailing is a function of strategic planning and operations management. Please explain the retail strategic planning and operations management model and the ways a retailer can employ this model in a globally competitive environment. A retailer who employs […]

A retailer has a cost per unit of $22 on a pair of pants and a selling price of $38. The markup equals $22. Local sales taxes can influence the outshopping behavior of consumers. Answer: T Two types of implied […]

A common error made by retail buyers is having too much or too little basic stock on hand. Whenever possible, begin the sales presentation with, ‘May I help you?’ Answer: F A secondary business district (SBD) is a shopping area […]

Many retailers do a very poor job at engagement. Private label branding is an example of using nonprice competition to achieve a protected niche. Answer: T Divertive competition can be intratype, but not intertype. Answer: F A markup of 100 […]

A GIS can help develop an optimal mix of merchandise, but is not useful in site analysis. Explain how population growth, age distribution and geographic trends are affecting retailers in the United States. Answer: Every shift in consumer population patterns […]

Retailers should direct their promotional dollars first toward households in their primary trading areas. The spine layout is heavily used by medium-sized specialty stores. Answer: T A major advantage of a freestanding location is that such locations are generally free […]

Customers integrate three major types of resources as they co-create value in their daily lives: personal resources, public resources, and private resources. Movies and vending machine products are common examples of items that use customary pricing. Answer: T How are […]

As long as there is a lack of spending power, the ability of ACSI alone to predict consumer spending will be limited. A planogram is a graphic schematic which shows the precise location of every SKU on a shelf or […]

Retailers seldom use newspaper advertising because of its short life span. Retail analysts predict that only catalog sales will experience significant growth over the next decade, while other forms of nonstore retailing will remain steady or decline. Answer: F The […]

All forms of price discrimination are illegal. The first step in strategic planning is to determine the firm’s retail marketing strategy. Answer: F Should facilitating institutions be eliminated from the supply chain? Why or why not? Answer: The institutions involved […]

The conversion rate is computed by dividing the total number of customers who walk out of the store with a purchase by the total number of customers who entered the store. Competition at the local level is often more complex […]

Territorial restrictions may be a violation of the Sherman Antitrust Act. A retailer selling a seasonal item would want to be 75 percent sold out at the planned out-of-stock date. Answer: F Horizontal price fixing violates Section 1 of the […]

Employee and customer discounts are some of the reasons for the difference between initial and maintained markup. Reductions should be included in a merchandise budget only when they exceed 5% of sales. Answer: F During negotiations between buyer and seller, […]

Setting and presentation are now critical factors in serving the customer. As nonstore-based retailing continues to grow, retailers need to recognize that the index of retail saturation may become less useful. Answer: T Inventory turnover refers to the number of […]

Retailers need only to pay close attention to the behavior of consumers and not worry about other environmental factors. Institutional advertising is an attempt by the retailer to gain long-term benefits by selling the store itself rather than the merchandise […]

Service retailers, such as a plumbers or house painters, may not be concerned about the convenience of their locations. Culture is the buffer that humankind has created between itself and the raw physical environment. Answer: T A functional discount is […]

The services offered by competitors will have a little effect on the level and variety of customer services offered. The best way to improve sales is to place as much merchandise as possible into the store. Answer: F An item […]

Markdowns are always the result of buyer errors. Answer: F To enhance sales productivity, retailers must incorporate planning, merchandise presentation, and design strategies which minimize shrinkage. Answer: T The “wealth effect” claims that for every $100 of additional wealth generated […]

As a general rule, a retailer should strive to have a net profit margin of 1.5 to 2.5 percent. Gross margin return on inventory (GMROI) is based on both the retailer’s inventory turnover and its profit margin. Answer: F The […]

Ethics is a set of rules for moral human behavior. In today’s environment, even so-called “reasonable” people may disagree as to what is “right” and “wrong” behavior in certain retail situations. Answer: T As a rule, retailers that offer greater […]

Increasing sales should be a retailer’s primary advertising objective. By limiting the number of partners for each merchandise line, one can signal greater commitment and trust to partners, thus building stronger relationships. Answer: T FOB factory implies that the retailer […]

The three basic tasks of retailing are: a. getting consumers from outside your trading area into your store, getting these consumers to sign up for store credit, and keeping these consumers happy. b. getting consumers from inside your trading area […]

A retailer ensures that customers are able to locate a needed item by having proper in-store signage, displays, helpful employees, and a well-designed layout. This is an example of: a. pretransaction services. b. transaction services. c. promotional services. d. posttransaction […]