Master Retail Guide Exam 1

A retailer with sales of $1,000,000 and operating expenses of $350,000 has an operating efficiency rate of

0.65.

Operating efficiency is expressed as

1 - (operating expenses/company sales)

Credit-card fees paid by retailers average what percent of sales?

1.5 to 5.0

What is the markup equivalent at cost of a 50 percent markup at retail?

100 percent

D

A ___ store has an extensive assortment and is organized into separate departments for purposes of buying, promotion, customer service, and control. A category B specialty C membership D department

C

A ____ store is usually a food-oriented retailer that is well located, is open long hours, and carries a moderate number of items. A specialty B membership C convenience D warehouse

a

A ________ is a department in a retail store that is rented to an outside party. a leased department b franchised department c cooperative department d primary department

b

A ____________ consists of all the levels of independently owned businesses along a channel of distribution. a horizontal marketing system b vertical marketing system c homogeneous marketing system d heterogeneous marketing system

Which type of store space allocation begins planning at the individual product level and then proceeds to the category, total store, and overall company levels?

A bottom-up space management approach

a

A chain can be defined on the basis of which of the following characteristics? a Common ownership of multiple outlets b Over dependence on the owner c Decentralized purchasing d Decentralized decision making

b

A chain retailer operated multiple outlets (store units) under ____ ownership. a franchised b common c generic d independent

d

A firm engaging in more than one type of distribution arrangement is using _____ marketing. a dynamic b intensive c selective d dual

T

A full-line discount store is a type of department store.

t

A great deal of competition in retailing is due to the ease of entry into retailing. Open Hint for Question 24 in a new window.

Which statement concerning vertical price fixing is correct?

A recent Supreme Court ruling legalizes minimum pricing agreements between manufacturers and wholesalers and retailers

Which concept recognizes that shopping behavior is less predictable and more individualistic? A. Component life-styles B. Perceived risk C. Reference groups D. Gender roles

A. Component life-styles

Which statement concerning the value chain is not correct? A. Consumers are more concerned with the value chain process than the results of the process. B. From a customer's perspective, value is the perception the shopper has of a value chain. C. A retail value chain represents the total bundle of benefits offered to consumers through a channel of distribution. D. A retail value chain is comprised of such elements as store location, retailer ambiance, and the level of customer service.

A. Consumers are more concerned with the value chain process than the results of the process.

____________ enables centralized record keeping and lets customers complete transactions 24 hours a day, 7 days a week at bank and non-bank locations. A. Electronic banking B. Debit banking C. Inventory computerization D. Store systemization

A. Electronic banking

In which approach to space do highly-profitable product categories receive large amounts of space? A. Sales-productivity ratio B. Model stock approach C. Functional product grouping D. Market-segment product grouping

A. Sales-productivity ratio

For a store-based retailer, _____ refers to the store's physical characteristics that are used to project an image and to draw customers. A. atmosphere B. perception C. storefront D. visibility

A. atmosphere

A relationship-oriented technique in which channel members collaborate to manage products by category rather than by individual item is ____________. A. category management B. category assessment C. category promotion D. category internationalization

A. category management

In order to overcome _________, a retailer must first realize that the consumer decision process does not end with the purchase. A. cognitive dissonance B. cognitive awareness C. low involvement D. high involvement

A. cognitive dissonance

When a customer regrets that a purchase was made or wishes that another alternative had been chosen, he or she is experiencing A. cognitive dissonance. B. purchase doubt. C. perceived risk. D. performance risk.

A. cognitive dissonance.

Experiential merchandising seeks to add customer excitement by A. converting shopping from a passive activity to a more interactive one. B. simplifying the shopping experience. C. beautifying store interiors. D. reducing costs.

A. converting shopping from a passive activity to a more interactive one.

A nursery, lounge, and benches are part of a store's A. customer space. B. display space. C. dead space. D. functional space.

A. customer space.

Objective and quantifiable population data that are easily identifiable and measurable are called A. demographics. B. life-style variables. C. social class groupings. D. family life cycle variables.

A. demographics.

Giving employees discretion, within limits, to satisfy a customer is called ____________. A. employee empowerment B. value chain C. customer service D. customer strategy

A. employee empowerment

The purchase of a life insurance policy often involves ____ decision making. A. extended B. limited C. routine D. structured

A. extended

A consumer who makes full use of the decision process and spends a great deal of time evaluating alternatives undergoes A. extended decision making. B. limited decision making. C. routine decision making. D. high perceived risk.

A. extended decision making.

How a retailer is perceived by consumers and others is its A. image. B. atmosphere. C. positioning. D. self-concept

A. image.

The _____ of the service provider and his or her services means the owner-operator is often indispensable and good customer relations are necessary. A. inseparability B. intangibility C. perishability D. variability

A. inseparability

A major advantage of a Web page versus a direct mail printed catalog is the increased ability to _____ A. keep the page current B. easily navigate the site C. generate ideas more rapidly D. control speed of graphics

A. keep the page current

With __________ product groupings, various products that appeal to a given target market are placed together. A. market segment B. purchase motivation C. storability based D. functional based

A. market segment

A consumer must pay his/her bill in full when it is due in a(n) A. open credit account. B. option credit account. C. revolving credit account. D. rotating credit account.

A. open credit account.

A small-town retailer may lose part of his/her local shoppers due to ____. A. outshopping B. risk C. attitudes D. dissonance

A. outshopping

Retailers may try to minimize _________ by insisting on off-the-job clothes changing and other tactics. A. personnel space B. merchandise space C. dead space D. customer space

A. personnel space

The increased number of working women, the commute between work and home, and the greater number of people working at second jobs contribute to ____________. A. poverty of time B. increased consumer sophistication C. blurring gender roles D. component life-styles

A. poverty of time

The use of a hotel room by a tourist is an example of a(n) __________. A. rented good B. owned good C. nongood service D. tangible good

A. rented good

A major problem associated with the checkout counter for Web retailers is A. security considerations. B. download time. C. upload time. D. design costs.

A. security considerations.

An informal ranking of people based on income, occupation, education, and other factors is A. social class. B. reference group. C. family life cycle. D. household life cycle.

A. social class.

The stimulus a consumer receives from talking to friends, relatives, and so on is known as a A. social cue. B. commercial cue. C. physical drive. D. conversational stimulus.

A. social cue.

A retail ____________ represents the total bundle of benefits offered to consumers through a channel of distribution. A. value chain B. value perception C. value measure D. value initiative

A. value chain

a

Among the many competitive advantages for ________ are bargaining power, cost efficiencies, computerization, access to media, well-defined management philosophies and long-range planning. a chain retailers b independent retailers c consumer cooperatives d leased departments

t

An advantage of a leased department from the leased department operator's perspective is the ability to use an existing store's traffic.

a

An independent vertical marketing system is most likely to be used when a task specialization is desirable. b manufacturers and/or retailers are large. c selective or exclusive distribution is sought. d company resources are high.

Which of the following is not a job classification method?

Associated

A customer loyalty program should be designed to appeal to what types of customers? A. Dissatisfied customers B. A retailer's best customers C. Satisfied customers D. Customers who have recently defected

B. A retailer's best customers

With which type of point-of-purchase display does a retailer exhibit a wide range of merchandise for the customer? A. Theme-setting display B. Assortment display C. Rack display D. Case display

B. Assortment display

_____ are awkward spaces where normal displays cannot be set up. A. Walkway areas B. Dead areas C. Selling spaces D. Merchandise spaces

B. Dead areas

Which strategy is an important part of customer service? A. Retail research B. Employee empowerment C. Organization mission D. Cost consciousness

B. Employee empowerment

Gathering a list of alternative goods or services occurs during which step of the consumer's decision process? A. Problem awareness B. Information search C. Evaluation of alternatives D. Post-purchase behavior

B. Information search

Which value-chain based concept seeks to capitalize on potential features to gain a head start over the offerings of competitors? A. Customer loyalty programs B. Potential retail strategy C. Expected retail strategy D. Augmented retail strategy

B. Potential retail strategy

Impulse goods are located near a store's entrances in a A. storability product grouping. B. Purchase motivation product grouping. C. market segment product grouping. D. functional product grouping.

B. Purchase motivation product grouping.

Which retail strategy is an extension of cross-merchandising? A. Scrambled merchandising B. Solutions selling C. Category management D. Everyday low pricing

B. Solutions selling

A store's physical characteristics that project an image and draw customers make up its A. overall retail image. B. atmosphere. C. general interior. D. self-concept.

B. atmosphere.

Extra elements that differentiate one retailer from another are part of the retailer's A. expected retail strategy. B. augmented retail strategy. C. potential retail strategy. D. total retail strategy.

B. augmented retail strategy.

Multiple retailers that situate under the same roof (or at one Web site) to share costs and stimulate consumer to visit more often practice A. cross selling. B. co-branding. C. scrambled merchandising. D. solutions selling.

B. co-branding.

The development of product-testing programs, and the setting of clear procedures for handling consumer complaints are examples of ______. A. ethics B. consumerism C. bonding D. volunteerism

B. consumerism

A distinctive heritage shared by a group of people is a A. social class. B. culture. C. reference group. D. household life cycle.

B. culture.

Social cues, commercial cues, and physical drives are examples of __________. A. problem awareness B. different stimuli C. decision criteria D. cognitive dissonance

B. different stimuli

Automatic teller machines (ATMs) and the instant processing of retail purchases are part of A. self-scanning. B. electronic banking. C. item price removal. D. point-of-sales systems.

B. electronic banking.

The minimum value chain elements a given customer segment expects from a given type of retailer is a(n) _______ retail strategy. A. augmented B. expected C. potential D. rational

B. expected

A _____ is a sign that displays the store's name. A. storefront B. marquee C. display D. prototype

B. marquee

With a(n) _______________, a customer must pay the bill in full when it is due. A. revolving credit account B. open credit account C. option credit account D. customer self checkout

B. open credit account

The notion that some shoppers travel significant distances to shop is referred to as A. perceived risk. B. outshopping. C. problem awareness. D. component life-styles.

B. outshopping.

With extended decision making, consumer A. characteristics have little impact on purchases. B. perceived risk of all kinds is high. C. problem awareness is the key step in the consumer decision making process. D. the potential for cognitive dissonance is low.

B. perceived risk of all kinds is high.

If it is difficult to evaluate the characteristics of alternative goods or services, consumers will make a decision based upon brand name, store name, or ____. A. location B. price C. delivery D. installation

B. price

A retailer tries to appeal to impulse buying through the use of __________ product groupings. A. market segment B. purchase motivation C. storability based D. functional based

B. purchase motivation

A _____ traffic flow is most often used by food retailers, discount stores, hardware stores, and other shopping-oriented stores. A. curved (free-flowing) B. straight (gridiron) C. consistent D. rationalized

B. straight (gridiron)

Perceived risk is high in all of the following situations except when A. the brand is new to the market. B. the shopper has high experience with the retailer and brand. C. there are many alternatives from which to choose. D. the purchase is socially visible.

B. the shopper has high experience with the retailer and brand.

Which of the following is not an advantage of rationalized retailing?

Better ability to meet local merchandising preferences

_________ restrict the times during which retailers may operate

Blue laws

Which is not a characteristic of recognition of shortage? A. A good wears down beyond repair. B. A consumer runs out of an item. C. A consumer becomes aware of a good or service that has not been purchased before. D. Service is required when a good can be repaired.

C. A consumer becomes aware of a good or service that has not been purchased before.

Which is not a demographic variable? A. Language spoken B. Income C. Class consciousness D. Employment status

C. Class consciousness

__________________ reward a retailer's best customers. A. Value-added services B. Customer service programs C. Customer loyalty programs D. Customer affinity programs

C. Customer loyalty programs

The intangibility of the service offering affects which service retailer the most? A. Owned goods B. Rented goods C. Nongoods D. Nonrented goods

C. Nongoods

Which of the following is not a type of service? A. Owned-goods service B. Rented-goods service C. Tangible-goods service D. Nongoods service

C. Tangible-goods service

Which is not a type of impulse purchase? A. Completely unplanned B. Partially unplanned C. Unplanned convenience D. Unplanned substitution

C. Unplanned convenience

Which value-based concept is concerned with a channel of distribution? A. Perception B. Expected retail strategy C. Value chain D. Augmented retail strategy

C. Value chain

A retailer can most effectively respond to the poverty-of-time concept by A. providing a selection of private label brands. B. catering to both male and female shoppers. C. adding on-floor sales personnel. D. arranging for vans to pick up senior citizen shoppers at designated times and places.

C. adding on-floor sales personnel.

A person who is concerned about the social status associated with goods, services, and particular retailers is best described as A. innovative. B. autonomous. C. class conscious. D. aggressive.

C. class conscious.

Dissatisfaction may result from A. high perceived risk. B. high information search. C. cognitive dissonance. D. extended decision making.

C. cognitive dissonance.

The right to safety, the right to be informed, the right to choose, and the right to be heard are all parts of A. an ethical code of conduct. B. social responsibility. C. consumerism. D. ethics.

C. consumerism.

Discount retailers tend to have relatively little A. functional space. B. nondisplay space. C. customer space. D. selling space.

C. customer space.

When a retailer has a sense of ______, it acts in a trustworthy, fair, honest, and respectful manner with each of its constituencies. A. responsibility B. compassion C. ethics D. loyalty

C. ethics

Prototype stores are commonly used by A. specialty stores. B. independent retailers. C. franchisors and chains. D. department stores.

C. franchisors and chains.

The equivalent of the storefront for a Web retailer is the ______ A. banner advertisement B. logo design C. home page D. hot links

C. home page

The store layout for a Web retailer has two components: the layout of each individual Web page and the A. graphics that can be downloaded. B. hot links to other related Web sites. C. links that move from page to page. D. banner ads that accompany the Web pages.

C. links that move from page to page.

With ____ marketing, a firm sells goods and services to a broad spectrum of consumers. A. concentrated B. differentiated C. mass D. segmented

C. mass

The area where non-displayed items are kept in stock is called A. dead space. B. personnel space. C. merchandise space. D. customer space.

C. merchandise space.

Value chain elements not yet perfected by a competing firm in a retailer's good/service category are a retailer's A. expected retail strategy. B. augmented retail strategy. C. potential retail strategy. D. total retail strategy.

C. potential retail strategy.

A _________ is used by franchisors and chains that seek a uniform image. A. unique building B. recessed storefront C. prototype store D. prefabricated building

C. prototype store

When a customer is billed monthly on the basis of his/her outstanding cumulative balance, this is a(n) A. open account. B. open credit account. C. revolving credit account. D. option credit account.

C. revolving credit account.

A customer exhibiting brand loyalty in a purchase undergoes A. extended decision making. B. limited decision making. C. routine decision making. D. high perceived risk.

C. routine decision making.

A retailer assigns floor space on the basis of sales or profit per foot with the ________ A. assortment-stock plan B. customer-appeals approach C. sales-productivity ratio D. model-stock approach

C. sales-productivity ratio

The activities that seek to balance corporate citizenship with a fair level of profits for stockholders, management, and employees are referred to as A. consumerism. B. an ethical code of conduct. C. social responsibility. D. ethics.

C. social responsibility.

A ____ is a cue or a drive meant to motivate or arouse a person to act. A. drive B. motive C. stimulus D. motivator

C. stimulus

A(n) ____ is the total physical exterior of the store itself. A. image B. marquee C. storefront D. exterior

C. storefront

Displays and aisles are constructed in a rectangular pattern in a A. storability product grouping. B. market segment product grouping. C. straight (gridiron) traffic-flow pattern. D. free-flowing traffic-flow pattern.

C. straight (gridiron) traffic-flow pattern.

The total bundle of benefits offered to customers through a channel of distribution is referred to as A. an augmented retail strategy. B. an expected retail strategy. C. value. D. the value chain.

C. value.

C

CHAPTER 5 STARTS HERE Scrambled merchandising has become popular among retailers because a it increases a retailer's depth of assortment. b unrelated items may have low inventory turnover. c unrelated items may have high profit margins. d the new product lines are directly related to the firm's original business.

Which job classification method is usually used by large retailers?

Combination

Executives choose their own combination of salary, bonus, fringe benefits, stock options, and retirement benefits through which system?

Compensation cafeteria

Which of the following is a strategy that a manufacturer or wholesaler can use to legally control a good's final retail selling price?

Consignment selling

_________ should be established for as many different types of major crisis situations as possible.

Contingency plans

In the _____ phase, a retail audit, which is a systematic process for analyzing the performance of a retailer, should be used.

Control

Which form of organization is subject to double taxation?

Corporation

__________ involves the policies and practices retailers follow in receiving payments from their customers.

Credit management

Which pricing strategy is usually used for newspapers, candy, vending machine items and foods on restaurant menus?

Customary pricing

The top one-fifth of U.S. households earn ____ or more. A. $45,000 B. $65,000 C. $85,000 D. $100,000

D. $100,000

Which types of service can be used by a retailer to differentiate itself from competition? A. Peripheral customer service B. Core customer service C. Expected customer service D. Augmented customer service

D. Augmented customer service

________ refers to the extent to which a person desires and pursues social status. A. Social acceptance B. Social conformity C. Socialization skills D. Class consciousness

D. Class consciousness

Which of the following is not characteristic of a straight (gridiron) traffic-flow pattern? A. Distinct aisles are created. B. Security is simplified. C. More floor space is devoted to product displays. D. Customers are encouraged to browse.

D. Customers are encouraged to browse.

Which type of display minimizes fixture costs? A. Dump bin display B. Ensemble display C. Rack display D. Cut case display

D. Cut case display

____ are objective and quantifiable population statistics that are easily identifiable and measurable; life-styles are the ways in which individual consumers and families (households) live and spend time and money. A. Psychographics B. Logistics C. Semantics D. Demographics

D. Demographics

Which of the following is not a basic step in the consumer decision process? A. Stimulus B. Problem awareness C. Information search D. Goods or service usage

D. Goods or service usage

Which characteristic of service retailing makes expansion of an independent into a chain difficult? A. Perishability of the service B. Intangibility of the service C. Variability in service quality D. Inseparability of the service provider

D. Inseparability of the service provider

Which approach to space utilization considers the ability of a product to round out a retailer's offering? A. Sales-productivity ratio B. Functional product grouping C. Market-segment product grouping D. Model stock approach

D. Model stock approach

From the customer's perspective, value is the _____ the shopper has of a value chain. A. measure B. actualization C. realization D. perception

D. Perception

"The revenues from an unrented hotel room are lost forever." This statement refers to which attribute of services? A. Intangibility of the service B. Inseparability of the service provider C. Variability in service quality D. Perishability of the service

D. Perishability of the service

Which type of product groupings appeal to a consumer's urge to buy products and the amount of time he or she is willing to spend in shopping? A. Functional product groupings B. Market segment product groupings C. Storability product groupings D. Purchase motivation product groupings

D. Purchase motivation product groupings

A version of electronic payment that also stores and modifies customer information as transactions occur is A. an option card. B. an option credit plan. C. revolving credit. D. a smart card.

D. a smart card.

Channel members collaborate to maximize product category performance by offering product assortments and prices that better address consumer needs in A. customer loyalty programs. B. SERVQUAL. C. customer satisfaction. D. a value delivery system.

D. a value delivery system.

A retailer's _______ customers are worth nurturing with long relationships. A. passive B. aggressive C. casual D. core

D. core

A ____ is a distinctive heritage shared by a group of people. A. family B. household C. class D. culture

D. culture

The advantages of __________ and dump bins are reduced display costs and a low-price image. A. ensemble displays B. rack displays C. theme displays D. cut cases

D. cut cases

An important component of a customer loyalty program is a ___________. A. credit card B. delivery system C. special sale D. data base

D. data base

A sporting goods store has a camping department that features tents, sleeping blankets, hiking shoes, and knapsacks. This illustrates a A. storability product grouping. B. market segment product grouping. C. purchase-motivation product grouping. D. functional product grouping.

D. functional product grouping.

Of particular concern to chain retailers and franchisors is maintaining a consistent _____ among all branches and units. A. layout B. size C. exterior D. image

D. image

The reasons for a consumer's behavior are known as ____. A. attitudes B. opinions C. viewpoints D. motives

D. motives

At the _________ stage in the decision process, the consumer not only has been aroused by social, commercial, and/or physical stimuli, but also recognizes that the good or service under consideration may solve a problem of shortage or unfulfilled desire. A. problem solving B. problem probing C. problem avoidance D. problem awareness

D. problem awareness

Aspirational, membership, and dissociative are all examples of A. social classes. B. life-styles. C. family life cycle changes. D. reference groups.

D. reference groups.

The sale of a complete dinner that needs to be reheated in one's home by a supermarket chain best illustrates _____ A. passive shopping B. scrambled merchandising C. cross selling D. solutions selling

D. solutions selling

Recognition of ________ occurs when a consumer becomes aware of a good or service that has not been bought before or a retailer that has not been patronized before. A. wishful thinking B. brand loyalty C. budget assessment D. unfulfilled desire

D. unfulfilled desire

The members of a distribution channel jointly represent a(n) _______________, which comprises all of the activities needed to develop, produce, deliver, and sell and service particular goods and services. A. channel of distribution B. integrated distribution channel C. independent distribution channel D. value delivery system

D. value delivery system

Which of the following is not part of situation analysis?

Developing sales-based objectives

t

Dual marketing allows a company to appeal to different market segments.

Which type of shopper has the highest price elasticity?

Economic consumer

Which of the following is an example of a desired goal?

Employee empowerment in his/her area of work

Which of the following is not a significant benefit of cross-training?

Employee training costs can be reduced.

A firm with a large number of subordinates reporting to one supervisor has a tall organization.

False

A firm with a tall organization structure can handle problems quicker than one with a flat organization.

False

A firm's organizational mission includes its short-term commitment to a place in the market.

False

A goods/service category should be chosen after a retailer has developed a well-defined business plan.

False

According to the Robinson-Patman Act, all discounts are illegal.

False

Agreements among retailers to charge a certain price are referred to as vertical price fixing.

False

All of the steps in a retail strategy are independent of each other.

False

Debit cards utilize end-of-month billing.

False

Department stores are most affected by unit-price regulations.

False

Everyday low pricing is a version of variable pricing.

False

In demand-oriented pricing, a retailer sets a price floor, the minimum price acceptable to the firm so it can reach a specified profit goal.

False

In the partnership form of retail organization, each partner is not personally liable with regard to other partners acting on behalf of the firm.

False

It is generally easy for retailers to compute price elasticity for their goods and services.

False

Manufacturers or wholesalers cannot legally control the retail prices of their goods and services.

False

Sales objectives are expressed only in dollars.

False

The U.S. Supreme Court ruling did not legalize minimum resale price agreements.

False

The corporation form of retail organization accounts for the majority of all U.S. retail firms that file tax returns.

False

The most widely used retail-pricing technique is prestige pricing

False

The retailer must perform all the tasks of retailing.

False

The sole proprietorship form of retail organization accounts for the majority of total U.S. retail store sales.

False

True or False A central premise of a value delivery system is the independence among each channel member.

False

True or False A leased car is an example of an owned-goods service.

False

True or False A reference group is an informal ranking of people in a culture based on factors such as income, occupation, and education.

False

True or False A retailer cannot reduce a shopper's perceived risk.

False

True or False A socially responsible retailer acts in the best interest of society, without regard for the needs of the company.

False

True or False All bank cards and most retailer credit cards involve a revolving credit account.

False

True or False Brand-switching is most prevalent with routine decision making.

False

True or False Consumer loyalty (frequent shopper) programs should be designed to attract and maintain a retailer's new customers.

False

True or False Consumer rights can only be protected by the government.

False

True or False Consumers with low self esteem and high perceived risk are likely to skip some steps in the decision process.

False

True or False Employee empowerment means that a retailer places no limits on what an employee can do to satisfy a customer.

False

True or False Generally, consumers are more concerned with the value chain process than with the results of the process.

False

True or False Limited decision making requires more time than extended decision making.

False

True or False Most consumers are more hesitant to react to shortages than to unfulfilled desires.

False

True or False Most consumers complain to retailers when they are dissatisfied.

False

True or False Only expected customer services provide a retailer with a competitive advantage.

False

True or False Store loyalty increases decision making.

False

True or False The most important group of customers to a retailer are its new customers.

False

True or False The type of perceived risk characterized by wondering whether a good will perform as expected is physical risk.

False

True or False The typical U.S. household has annual after-tax income of $75,000.

False

True or False The value delivery system is the same for both store and nonstore-based retailing.

False

Under a one-price policy, a retailer allows consumers to bargain over selling prices, and those consumers who are good at bargaining obtain lower prices than those who are not.

False

With market penetration pricing, a retailer seeks large revenues by setting low prices and selling many units

False

Which is not part of the special human resource environment faced by retailers?

Few part-time workers

independent

Freedom from unionization, stockholder concerns, and a board of directors are advantages of which type of retail establishment?

c

From a leased department operator's perspective, which of the following is not an advantage of using leased departments? a Existing stores are well-known. b Immediate sales are generated. c Operating style and hours are flexible. d Expenses are reduced.

t

From a leased department operator's perspective, which of the following is not an advantage of using leased departments? Operating style and hours are flexible.

b

From a retail store's perspective, which of the following is not an advantage of using leased departments? a Store personnel might otherwise lack the merchandising ability to handle and sell certain goods and services. b Customers usually blame problems on the lessee and not on the store. c Store costs can be reduced. d The store's market can be enlarged by providing one-stop customer shopping.

Which selection tool enumerates basic functions, the relationship of each job to overall goals, the interdependence of positions, and information flows?

Goal-oriented job description

Which of the following businesses requires the most involvement by the owner?

Hair salon

_______________ involves recruiting, selecting, training, compensating, and supervising personnel in a manner consistent with the retailer's organization structure and strategy mix.

Human resource management

_____ refers to how a retailer is perceived by consumers and others.

Image

d

In business format franchising, a franchisees do not receive the right to operate under suppliers' names. b prototype stores, standardized merchandise lines, and cooperative advertising are rarely used. c dealers operate relatively autonomously from suppliers. d there is a more interactive relationship between the franchiser and the franchisee than with product/trademark franchising.

c

In product/trademark franchising, a franchisees do not receive the right to operate under suppliers' names. b prototype stores, standardized merchandise lines, and cooperative advertising are rarely used. c dealers operate relatively autonomously from suppliers. d there is a more interactive relationship between the franchiser and the franchisee than with product/trademark franchising.

a

In product/trademark franchising, franchised dealers acquire the identity of their suppliers by agreeing to sell the latter's products and/or operate under suppliers' names, whereas in ____________, there is a more interactive relationship between a franchisor and a franchisee. a business format franchising b product assortment franchising c real-time franchising d partner-based franchising

t

Independent retailers have a great deal of flexibility in choosing retail formats and locations. Open Hint for Question 25 in a new window.

b

Independent retailers own only one retail unit. The high number of independents is associated with the ____________ in the marketplace. a size of firms b ease of entry c target market preferences d diversity of consumers

t

It is common for a chain retailer to have high bargaining power in dealing with suppliers due to the large volume of its total purchases.

Which statement concerning energy management is not correct?

It is difficult to reduce total heating, ventilating, and air-conditioning costs for a typical retailer.

__________ is the drive within people to attain work-related goals.

Job motivation

Which pricing strategy is a form of leader pricing?

Loss leaders

__________ is based on the actual prices received for merchandise sold during a time period less merchandise cost.

Maintained markup

__________ is a proper strategy when customers are highly sensitive to price, low prices discourage actual and potential competition, and retail costs do not rise much with volume.

Market penetration

T

Membership (warehouse) clubs sell to both small businesses and final consumers.

Which is not an element of managing a business?

Merchandise management and pricing

Which statement concerning the impact of time demands on a retailer is not correct?

Most retailers work only when the store is open

_____ are the long-run and short-run performance targets a retailer hopes to attain.

Objectives

Which form of retail organization comprises the smallest percentage of U.S. retail store sales?

Partnership

Job analysis is used in which of the following personnel activities?

Personnel selection

__________ is an indoctrination on the history and policies of the retailer and a job orientation on the hours, compensation, chain of command and job duties.

Pre-training

Which statement concerning the Robinson-Patman Act is correct?

Price differences can be justified by differences in costs.

_____ in dollars, _______________, and ____________________ are three profit-based pricing goals

Profit, return on investment, early recovery of cash

a

Question 16. Which statement about full-line discount stores is false? A Centralized checkout service is not provided. B The non-durable (soft) goods carried are usually private brands. C Hard goods generally emphasize well-known manufacturer brands. D Products are sold via self-service.

f

Question 26. Of the different types of retail institutions, independent retailers have the most time to allocate to long-run planning.

B

Question 50. Wal-Mart, Kmart and Target stores are categorized as ____. A department stores B full-line discount stores C traditional department stores D closeout chains

Which is not a sales objective?

Return on investment

Growth, stability, and market share are the _____ objectives most often sought by retailers.

Sales

Which statement is not a benefit of formulating a retail strategy?

Sales maximization is stressed.

Which of the following statements about organizational arrangements used by small independent retailers is false?

Small independent retailers have fewer activities to perform than other types of retailers.

T

Specialty stores usually carry a narrow, deep assortment of goods or services in their specific goods/services category.

Which of these is not an uncontrollable variable?

Store location

___________ encompasses all of the activities involved in managing physical facilities.

Store maintenance

Which statement about store maintenance is correct?

Store maintenance encompasses all of the activities involved in managing a retailer's physical facilities.

In which form of compensation are earnings directly tied to productivity?

Straight commission

Which is not a functional area included in the Mazur plan?

Strategic planning

Which statement concerning horizontal price fixing is correct?

Such agreements are illegal under the Sherman Antitrust Act and the Federal Trade Commission Act, regardless of how "reasonable" the prices may be.

_____ is the manner of providing a job environment that encourages employee accomplishment.

Supervision

The customer group sought by a retailer is called the __________.

Target Market

b

The basic format or structure of a business is referred to as a ________. a retail store b retail institution c retail strategy d retail niche

c

The ease of entry into retailing is reflected in a high retailer operating costs. b the low efficiency of many retailers. c the higher failure rate among newer firms. d the low profitability of many retailers.

t

The high number of independent retailers is associated with the ease of entry into the marketplace. Open Hint for Question 23 in a new window.

Which is not generally a characteristic of the organizational pattern of a chain store?

The use of a simple control system

A clear organizational mission enables a retailer to gain a consumer following and distinguish itself from competitors.

True

A firm with $600,000 in sales and $200,000 in operating expenses has an operating efficiency rate of 67 percent.

True

A signal or cue as to the success or failure of a part of a strategy is called feedback.

True

A supermarket can overcome consumer resistance to item price removal through legible shelf signs noting prices of each item.

True

An independent retailer has a much simpler organization than a chain retailer.

True

Cumulative quantity discounts are harder to justify under the terms of the Robinson-Patman Act than non-cumulative quantity discounts

True

Gray market goods are sold by unauthorized dealers.

True

Ideally, a retail plan should be at least one year in duration

True

If relatively small percentage changes in price result in substantial percentage changes in the number of units purchased, then price elasticity is high.

True

In an open corporation, stock is available for public purchase.

True

In retailing, market share is often an objective only for large retailers and retail chain.

True

Loss leaders are restricted by minimum-price laws

True

Many new retail businesses fail because the owner does not correctly project the financial resources needed to open and operate the firm.

True

Mass merchandising is an opposite positioning philosophy to niche retailing.

True

Merchandise assortment, as well as the types of goods and services sold, has an impact on the initial investment needed to start a business.

True

Personal abilities include aptitude, education, and experience.

True

Prestige pricing is based on the price-quality association.

True

Situation analysis seeks to answer two questions: "What is the retailer's current status?" and "In which direction should the retailer be heading?"

True

Tactics encompass a retailer's daily and short-term operations

True

The difference between initial and maintained markup is that maintained markups reflect additional markdowns, added markups, shortages, and discounts.

True

The product classification method of categorizing jobs recognizes that differences exist in the personnel requirements for different products.

True

True or False A retailer can respond to the poverty-of-time concept by using mail-order, Web sites, and telephone selling.

True

True or False A retailer that has distinct departments grouped by market segment in a single store is practicing differentiated marketing.

True

True or False A retailer's desired mix of new versus loyal customers depends on that firm's stages in its life cycle.

True

True or False An effective customer loyalty program requires that a retailer maintain a data base that is continuously updated.

True

True or False An option credit account is a form of a revolving credit account.

True

True or False Class-consciousness is the extent to which a person pursues social status.

True

True or False Cross-shopping takes place when consumers shop for a product category in more than one retail format.

True

True or False Electronic banking involves both automatic teller machines (ATMs) and the instant processing of retail purchases.

True

True or False Ethics relates to moral principles, social responsibility involves acts benefiting society, and consumerism involves protection of consumer rights.

True

True or False From a retailing perspective, the purchase act may be the most crucial aspect of the consumer decision process.

True

True or False From the customer's perspective, value is the perception the shopper has of a value chain.

True

True or False In the United States, about 12 percent of people move each year.

True

True or False The consumer decision process has six steps: stimulus, problem awareness, information search, evaluation of alternatives, purchase, and post-purchase behavior.

True

True or False The customer base, customer service, customer satisfaction, and loyalty programs and defection rates are key concepts in applying relationship retailing

True

True or False The extent to which a consumer searches for information depends, in part, on that person's perception of the risk attached to the purchase of a specific good or service.

True

True or False The household life cycle incorporates the life stages of both family and nonfamily households.

True

True or False The key step for routine decision making is problem awareness.

True

True or False The optimum value-based retail strategy to a retailer is a potential retail strategy.

True

True or False When one talks with friends, fellow employees, professors, and so on, a social cue is received.

True

Two ways of calculating a markdown are the markdown percentage and the off-retail markdown percentage

True

With a market skimming strategy, a firm charges premium prices and attracts customers less concerned with price than service, assortment, and prestige.

True

With an owner-manager management system, planning tends to be less formal and more intuitive.

True

A significant problem with the use of computerized checkouts is

UPC symbols are not readable by humans.

_______________ occurs when manufacturers or wholesalers seek to control the retail prices of their goods and services.

Vertical price fixing

T

Warehouse stores concentrate on special purchases of national brands.

b

Which is not an advantage of being an independent retailer? a There is high flexibility in choosing a store location. b Uniform location standards are needed. c There is great latitude in selecting a target market. d Investment costs can be held down.

C

Which retailer specializes in the sale of fill-in items and gas? A Supermarket B Box (limited-line) store C Convenience store D Warehouse store

D

Which statement about department stores is not correct? A Department stores offer the greatest selection of any general merchandise retailer. B Department stores serve as anchor tenants. C Department stores are usually part of a chain. D Department stores use centralized buying for all departments.

a

Which statement about product/trademark franchising is correct? a Franchised dealers sometimes agree to operate under suppliers' names. b Dealers operate under the strict control of suppliers. c Product/trademark franchising accounts for about 30 percent of all retail franchising sales. d Examples are restaurants and real estate establishments.

B

Which statement concerning convenience stores is not correct? A Convenience stores generally have average to above-average prices. B Convenience stores carry a very deep assortment of merchandise. C Most of the items purchased at convenience stores are consumed within thirty minutes of purchase. D Many convenience stores also sell gasoline.

A

Which statement concerning conventional supermarkets is correct? A Conventional supermarkets generally rely on high inventory turnover. B Few conventional supermarkets are chain-owned. C Conventional supermarkets account for 50 percent of all grocery sales. D Conventional supermarkets started in the 1950s.

c

Which statement concerning franchising is correct? a Business format franchising accounts for more retail franchising sales than product/trademark franchising. b Most franchising sales are from franchiser-owned outlets. c Automobile and truck dealers account for the largest segment of the franchise industry in terms of dollar sales. d Franchising is not an important factor in the gasoline station industry.

b

Which statement concerning independent retailers is correct? a An independent retailer owns two or more outlets. b The high number of independents is associated with the ease of entry into the marketplace. c Few independents are able to cooperate as specialists. d Independents represent a very small portion of retailers in the United States.

t

Which type of marketing system is used when a company is involved in more than one type of distribution arrangement? Dual marketing

d

Which type of marketing system is used when a company is involved in more than one type of distribution arrangement? Open Hint for Question 17 in a new window. a Independent vertical marketing system b Partially integrated vertical marketing system c Fully integrated vertical marketing system d Dual marketing

c

Which type of marketing system is used when a single company performs all production and distribution functions without the aid of other firms? Open Hint for Question 16 in a new window. a Independent vertical marketing system b Partially integrated vertical marketing system c Fully integrated vertical marketing system d Dual vertical marketing system

t

Which type of marketing system is used when a single company performs all production and distribution functions without the aid of other firms? Fully integrated vertical marketing system

b

Which type of marketing system is used when two independently-owned companies perform all production and distribution functions? a Independent vertical marketing system b Partially integrated vertical marketing system c Fully integrated vertical marketing system d Dual vertical marketing system

a

With a(n) ________ vertical marketing system, two independently owned businesses along a channel perform all production and distribution functions without the aid of the third. a partially integrated b fully integrated c independently integrated d interdependently integrated

Which form of compensation is an indirect payment?

Your Answer: Bonus Correct Answer:

Unit-pricing laws are required due to

a lack of standardized package sizes among manufacturers.

A systematic procedure for analyzing the performance of a retailer is called

a retail audit

Stockholders, consumers, suppliers, employees, and government are examples of

a retailer's publics.

A retailer plans space management on the total available store space, divides the space into categories, and then works on product layouts in

a top-down space management approach.

Usually, the first tool used by a retailer to screen applicants is the

application blank.

Gray market goods are products that

are purchased in foreign markets or goods that have been transshipped from other retailers.

With a(n) _______________, the amount and timing of markdowns are controlled by the length of time merchandise remains in stock

automatic markdown plan

Under the Mazur plan, the individual with complete accountability for controlling expenses and reaching profit goals within his or her department is the

buyer.

The training method which entails presenting an actual or hypothetical problem and learning by doing is __________.

case study

Planning authority ability is limited to top management or ownership in a(n)

centralized structure.

The _____ parts of a retail strategy are broken down into these basic categories: choosing a store location, managing a business, merchandise management and pricing, and communicating with the customer.

controllable

Those aspects of business that a retailer can directly affect, such as store hours and merchandise lines carried, are referred to as

controllable variables

Screening, transaction, and collection costs are cost components of

credit management.

A retailer can eliminate the risk of nonpayment through requiring that consumers use

debit cards

________ relate(s) more to the job environment.

desired goals

The starting point in developing a retail price strategy is

developing objectives

Compensation includes both __________ payments (such as salaries, commissions, and bonuses) and _____ payments (such as paid vacations, health and life insurance benefits, and retirement plans).

direct monetary, indirect

A major problem with the ________________ method for planning variable markups is the complexity of assigning costs.

direct product profitability

A retailer with a(n) __________ uses low prices as the major competitive advantage.

discount orientation

A _________ is a multi-line firm operating under central ownership.

diversified retailer

When small percentage changes in price result in substantial changes in the number of units purchased, demand is considered to be

elastic.

The buying organization in which department stores try to achieve the benefits of both centralization and decentralization is the _______________.

equal store organization

The department store organizational plan which tries to achieve the benefits of both centralization and decentralization is the

equal store.

A retailer still has a risk of nonpayment for merchandise in a debit-card system.

f

A traditional job description enumerates the relationship of each job to overall goals.

f

Computerized checkouts are more advanced than electronic point-of-sale systems.

f

During recruitment, a retailer's major goal is to generate a list of three to five qualified applicants.

f

In general, prototype stores make construction and centralized management control more difficult.

f

Many small retailers use organizational arrangements that are a modification of the Mazur plan.

f

Operations blueprints are ideal for self-service-based retailers.

f

Rationalized retailing programs provide decentralized management controls.

f

The basic Mazur plan groups all retail activities into one functional area.

f

The top-down space management approach starts at the individual product level.

f

The training method characterized by no active participation by trainees is the case study method.

f

The training programs used by retailers should be geared only to new employees.

f

Tradeoffs between faster delivery times and higher shipping costs are considered as part of energy management.

f

With cross-training, the tasks of personnel with similar positions in different departments are rather uniform.

f

In a _____ classification, jobs are divided among areas such as sales promotion, buying, and store operations; a _____ classification divides jobs on a goods or service basis; and a ______ classification is useful for chains operating in different areas.

functional, product, geographic

In credit management, the retailer

generally needs to balance the ability of credit to increase revenues against the cost of processing credit payments and bad debts.

Retailers should specify a ____________ category, the line of business, in which to operate.

goods/service

An advantage of a late markdown policy is

greater opportunity is given to sell merchandise at original prices.

The ________________ outlines the job interactions within a company by describing the reporting relationships among employees.

hierarchy of authority

Through __________, a retailer seeks to maintain a proper merchandise assortment while ensuring that operations are efficient and effective.

inventory management

The tradeoffs between faster delivery times from suppliers and higher shipping costs is studied as part of

inventory management.

With __________, the tasks of personnel with similar positions in different departments are rather uniform

job standardization

A retailer can deploy employees with greater flexibility through the use of __________ and ____________.

job standardization, cross-training

The job descriptions in a multi-department retailer are uniform for a given position (such as a cashier) in

job standardization.

During each stage in the development of a retail strategy, retail managers should

look for both positive and negative feedback

The department store organizational plan in which most authority remains at the headquarters location is the

main store control.

A pricing approach that is appropriate when a target market is price sensitive is

market penetration pricing.

In ________, a retailer sets prices by adding per-unit merchandise costs, retail operating expenses, and desired profit.

markup pricing

A discount store attempting to sell its goods and services to a broad spectrum of consumers is employing a strategy of

mass marketing

The basic Mazur plan divides all retail activities into four functional areas: _____, _____, __________, and ____________.

merchandising, publicity, store management, accounting/control

Loss leaders are prohibited by

minimum-price laws

When retailers identify specific customer segments and develop unique strategies to meet the desires of these segments, they are using

niche retailing

A retail strategy is the overall plan or framework of action that guides a retailer. Ideally, this plan will be at least __________ in duration and will outline the mission, goals, consumer market, overall and specific activities, and control mechanisms of the retailer.

one year

A retailer can standardize the running of its business (such as order taking and food service delivery for a fast-food franchise) through using a(n)

operations blueprint.

A retailer needs to list all of the operating functions to be performed with __________.

operations blueprints

An __________ is a retailer's commitment to a type of business and to a distinctive role in the marketplace.

organizational mission

A retailer's commitment to a type of business and to a distinctive role in the marketplace is its

organizational mission.

The use of an outside organization to develop and maintain a retailer's Web site illustrates _____.

outsourcing

An appliance retailer decides to have an independent trucker handle delivery of its appliances. This strategy illustrates

outsourcing.

Status-oriented consumers

perceive competing retailers as quite different.

Store security involves both _____ and ______ security.

personal, merchandise

Cross-training can be best defined as

personnel learning tasks associated with more than one job.

A(n) ____________________ performs all of the tasks of a computerized checkout and also verifies check and charge transactions, provides instantaneous sales reports, monitors and changes prices, sends intra- and inter-store messages, evaluates personnel profitability, and stores data.

point-of-sale system

Minimum-price laws were intended to protect small retailers from __________ by larger competitors.

predatory pricing

The ______________________ relates to the sensitivity of buyers to price changes in terms of the quantities they will buy

price elasticity of demand

With __________, various retailers continually lower prices below regular amounts and sometimes below merchandise costs to lure consumers from competitors.

price wars

The _______________ is a concept stating that many consumers feel high prices connote high quality and low prices connote low quality.

price-quality association

The job classification method that divides jobs on a goods or service basis is

product.

t

product/trademark franchising, franchisee makes their own hours, is pretty independent (auto dealers and gasoline servie stations) business format franchisees are more personal with franchisor. common for resaurants

When chain retailers have each outlet conform to relatively uniform construction, layout, and operations standards, they are likely to use

prototype stores.

____ include stockholders, customer, suppliers, employees, and government.

publics

The opposite strategy to having a distinctive merchandising approach is ___________.

rationalized retailing

tThe highest degree of centralized management control occurs in __________.

rationalized retailing

Most aspects of a chain's operations are performed with strict operating procedures for each phase of business with

rationalized retailing.

The highest degree of uniformity in operations is associated with

rationalized retailing.

High employee turnover leads to increased ____, _____, and ______ costs.

recruitment, training, supervision

A __________ is an unincorporated retail firm owned by two or more persons, each with a financial interest.

retail partnership

Retailers with large capital expenditures in land, buildings, and equipment often specify _______________ as a goal.

return on investment

The training method that places trainees into real-life situations and has them act out conflicts is

role playing.

Under the Robinson-Patman Act, a manufacturer can legally practice price discrimination through

selling products that are physically different to different retailers.

The training method that uses extensive interaction and is good for supervisors as a tool for understanding employees is

sensitivity training.

After situation analysis, a firm

sets its objectives

The first step in retail strategy development is __________.

situation analysis

With a _________ plan, a worker is paid a fixed amount per hour, week, month, or year.

straight salary

A motivated employee requires fulfillment of both minimum expectations ("dissatisfiers") and desired goals ("satisfiers").

t

A retailer can reduce its vulnerability to insurance claims through no-slip carpeting, and frequent mopping and inspecting of wet floors.

t

A retailer can reduce the adverse effect of a crisis with a good contingency plan.

t

A retailer's discontinuing its own credit card in favor of Visa and MasterCard illustrates outsourcing.

t

An application blank should be used in conjunction with a job description.

t

Human resource management is required of all retailers.

t

Job standardization, cross-training, and self-service merchandising can all improve personnel productivity.

t

Labor costs can amount to over 50 percent or more of a retailer's operating expenses.

t

Personnel productivity can be improved through shifting responsibilities to consumers through the use of self-service facilities.

t

Rationalized retailing programs better enable shoppers to find merchandise in chain stores they have not shopped in before.

t

Retailers often rely on employee recommendations or advertisements to recruit entry-level personnel.

t

Store maintenance encompasses all the activities in managing physical facilities.

t

Store security includes both personal security and merchandise security.

t

The equal-store organization is a popular arrangement today for chain retailers.

t

The quality of store maintenance affects consumer perceptions of the retailer, the life span of facilities, and operating costs.

t

The special human resource environment complicate employee hiring, staffing, and supervision.

t

There are major store security issues that need to be resolved by retailers that plan to use self-scanning.

t

With a straight commission plan, employee earnings are directly tied to productivity.

t

With computerized systems, operators can adjust temperature, lighting, heat, and air-conditioning in multiple store units from one central office location.

t

job analysis is used for selecting personnel, establishing performance standards, and assigning salaries.

t

An organization with several levels of managers that is characterized by close supervision and with fewer workers reporting to each manager is called a

tall organization.

A retailer should carry out a task only if it is desired by the __________.

target market

The greatest impact of computers on retail operations has been on

the checkout process.

The sensitivity of buyers to price changes in terms of the quantities they will buy is referred to as

the price elasticity of demand.

Prestige pricing is based on

the price-quality association.

Vertical price fixing was developed by manufacturers to protect

the reputations of their brands based on repeated price cutting by discount retailers.

The __________ on retail owners are influenced both by consumers' shopping patterns and by the owners' or managers' ability to automate operations or delegate activities to others.

time demands

With the __________ space management approach, a retailer starts with its total available store space, divides the space into categories, and then works on product layouts.

top-down

While a _______________ contains each position's title, relationships, and the specific roles and tasks to be performed on an ongoing basis, a(n) _____________________ enumerates basic functions, the relationship of each job to overall goals, the interdependence of positions, and information flows.

traditional job description, goal-oriented job description

The aim of __________ legislation is to enable consumers to compare the prices of products available in many sizes.

unit pricing

With a(n) ________________, a retailer purposely adjusts markups by merchandise category.

variable markup policy

Under __________, a retailer alters prices to coincide with fluctuations in costs or consumer demand

variable pricing

The required number and type of employees needed can be pre-determined using a(n) __________.

workload forecast