7. How can a retailer obtain the best net price from its suppliers?
A retailer can obtain the best net price from its suppliers by
8. Explain how a retailer can effectively communicate its low-price message to its consumers.
A retailer can effectively communicate its low-price message to its consumers by
• Refusing to unnecessarily upgrade services.
Chapter 3
Low-Cost Strategies I:
Delivering Low Costs Through Minimizing Product Proliferation
Questions for Discussion:
1. Comment on the statement that “Although consumers will always say they want more choice,
this is often not the case.”
There are various ways of answering this question. One way could focus on the limited
11
associated with a good may demand larger selections. For example, a foodie may require a
2. Describe the advantages of a carefully edited product selection to consumers.
A carefully edited product selection has the following advantages to consumers:
• There is less confusion.
3. Describe the advantages of a carefully edited product selection to a retailer.
A carefully edited product selection has the following advantages to a retailer:
• Better bargaining power.
4. Discuss the disadvantages to minimizing variety to a retailer.
Disadvantages to minimizing variety to a retailer include
5. Apply the four-tier inventory classification system (on page 54) to an electronics retailer such
as Best Buy.
Destination categories include goods where Best Buy is the customer’s first choice for
specific products. These may include its Insignia and Dynex private-label electronics, costly
3D Blue Ray players, costly digital single-lens reflex cameras. Best Buy needs a broad
selection of these goods to attract customers from long distances to its stores.
Routine categories are goods where Best Buy is the preferred supplier, such as clock radios,
inexpensive point-and-shoot cameras, inexpensive printers, scanners, and GPS units. The
6. Describe the cost implications of confusion and stress resulting from product proliferation.
As a result of product proliferation, some consumers will require increased sales assistance,
7. Does the issue of consumer confusion and stress associated with product proliferation apply
to all products? Explain your answer.
8. Discuss how trade promotions and discounts as well as slotting fees contribute to product
proliferation.