Exam 3 Retail
Access/participation
Allows for the confirmation of information accuracy by consumers
Which of the following statements is true about determining the quality of products or services?
Consumers cannot accurately assess the quality of service due to their intangibility
Which of the following is the information in a customer database that contains the demographic and psychographic data describing the customer that can be used in developing market segments?
Descriptive information
The sales of staple merchandise categories cannot be affected by factors such as the opening and closing of stores and the price set for the merchandise in the category
False
True or False: Customer loyalty cannot be enhanced by offering store brand or by providing convenient locations to customers
False
True or False: Programs that merely offer price discounts encourage customers to always develop a relationship with one retailer rather than look for the best deal
False
True or False: Programs that simply offer customers price discounts always provide a sustainable advantage since they cannot be copied by competitors
False
True or False: Research indicates that retailers are less profitable when they focus on retaining and increasing sales to their best customers rather than attempting to generate sales from new customers.
False
True or False: Retailers cannot achieve customer alchemy through add-on selling.
False
True or False: To calculate customer lifetime value, retailers cannot use past buying behaviors of customers
False
When editing the assortment, a buyer does not consider the physical characteristics of the store
False
The percentage of complete orders received from a vendor
Fill rate
Merchandise Planning Process
Forecast category sales Develop an assortment plan Determine appropriate inventory level and product availability Develop a plan for managing inventory Allocate merchandise for stores Buy merchandise Monitor and evaluate performance and make adjustments
A(n) ____ ____ agreement occurs when a vendor restricts a retailer to carrying only its products and nothing from competing vendors
Exclusive Dealing
Identify the true statement about frequent-shopper programs.
Frequent-shopper programs are not particularly useful for building long-term customer loyalty.
In which of the following scenarios will a retailer find it most difficult to collect customer information?
Hanna, a university student, purchases a pair of jean at a store using a third-party credit card.
Merchandise Group
Highest classification level of Merchandise Classifications and Organization Chart
Customers belonging to the ______ segment have a customer lifetime value lower than the customer life value of customers belonging to the gold segment and purchase modest amount of merchandise from a retailer.
Iron
Iron
Modest amount of merchandise, but their spending levels, loyalty, and profitability are not substantial enough for special treatment. It is possible to move these consumer to a higher tier for reasons such as limited income, price sensitivity, or shared loyalties with other retailers, additional expenditures on them may not be worth it.
Customers belonging to the ______ segment in the customer pyramid buy a lot of the merchandise sold by a retailer and often place more value on customer service than on price.
Platinum
What is a feature of products that are price elastic?
Products that are expensive relative to a consumer's income are price-elastic
A(n) _______ reader in a store can acquire a customer's personal information from small devices carried by customer and tags on the merchandise they want to purchase
RFID
analysis is a method that uses three factors to evaluate the potential contribution of each customer segment: how recently the customers in the segment made a purchase, how frequently they make purchases, and how much money they have spent.
RFM
Identify the correct statement about negotiations between retailer buyers and vendors from the following.
Retail buyers should rely on objective information to resolve business issues.
Identify the true statement about retailers selling private-label brands.
Retailers are motivated to devote more resources toward selling store brands than they would for selling similar national brands
Identify an advantage for retailers selling national brands.
Retailers are not responsible for developing and producing national-brand merchandise
Which of the following should retailers consider when implementing the leader-pricing strategy?
Retailers do not have to sell a product below cost in order to use a leader-pricing strategy
Identify the accurate statement about foreign suppliers from the following.
Retailers purchasing private-label merchandise from foreign suppliers are most likely to have a low inventory turnover.
Identify the accurate statement about the markdown approach undertaken by retailers
Retailers use promotional markdowns to increase the sale of complementary products
Identify the statement about reverse auction from the following.
Reverse auctions are not popular with most manufacturing firms.
The ______ Act passed in 1936 makes it illegal for vendors to offer different terms and conditions to different retailers for the same merchandise and quantity.
Robinson-Patman
Identify the customer belonging to the platinum segment
Roxanne prefers buying electronics of a specific brand due to its excellent customer service
Retail ______ are applications of statistical techniques and models that seek to improve retail decisions through analysis of customer data.
analytics
second-degree price discrimination
approach offers the same multiple-price schedule to all customers, which encourages price-sensitive customers to take advantage of the lower prices
Category management
approach to managing merchandise assigns one buyer or category manager to oversee all merchandising activities for t he entire category
Matt, the owner of a retail store, is in the process of developing frequent-shopper programs to encourage repeat purchases. he should ensure that the programs
are easy for customer to keep track of their spending and available rewards
Reverse auctions
are mostly used to buy the products and services used in retail operations rather than merchandise for resale
Private-label brands
are store-brand products developed and sold exclusively by a retailer
Product ______ is defined as the percentage of the demand for a particular stock-keeping unit that is satisfied
availability
In the _____ stage, no transactions take place between a retailer and a vendor.
awareness
When developing assortment plans,
buyers need to consider the degree to which categories in a department complement each other
sell-through analysis
compare actual and planned sales to determine whether more merchandise is needed to satisfy demand or whether price reduction (mark-downs) are required
Platinum
composed with customers in the top 25%. Typically the most profitable and loyal customers, and are not concerned with price
A retailer should
consider the physical characteristics of the merchandise and the depth of assortment when making allocation decisions for a category
Seasonal Merchandise
consist of items whose sales fluctuate dramatically depending on the time of the year
Generally in a price-sensitive target market, as the price of a product increases,
fewer customers feel the product is a good value
A _____ group is a small group of respondents interviewed by a moderator using a loosely structured format, in which participants are encouraged to express their views and comment on the views of others in the group
focus
Retailers using a high/low pricing strategy
frequently discount the initial prices for merchandise through sales promotion
In the customer pyramid, the platinum segment is followed by the _______ segment
gold
Using foreign suppliers to purchase private-label merchandise
increases a retailer's inventory carrying costs
Typically, in order to increase the gross margin, retailers are
increasing the price of products
is an example of first-degree discrimination approach
individualized pricing
Perpetual Inventory
information system determines the inventory level at each point in time
Horizontal price fixing
involves agreement retailers that are in direct competition with each other to set the same price
classification
is a group of items targeting the same customer type
Focus group
is a small group of respondents interview by a moderator using a loosely structured format. Participation is encouraged to express their views and comments on the views of others in the group
A product is more likely to be price-sensitive if
it has more substitutes in the market
Cyle Stock
or base stock is when inventory levels go up and down due to the replenishment process
variety
or breadth, of merchandise category is the number of difference merchandising subcategories offered
assortment
or depth, of merchandise is the number of SKUs within a subcategory
Level of Support
or service level is referred to as product availability
Price Elasticity
or the percentage change in quantity sold divided by the percentage change in price
In an inventory management report, the _____ _____ is the number that tells a buyer that when the inventory levels drop to a certain level, additional merchandise should be ordered.
order point
The ____ ____ is the amount of inventory below which the quantity available shouldn't go or the item will be out of stock before the next order arrives
order point
There is a growing consensus that personal information
must be transferred only with the permission of the consumer
markdown
need to make adjustments depend on a variety of factors, including experience with the merchandise in the past, plans for featuring the merchandise in advertising, and the availability from vendors.
A(n) _____ system keeps track of what the present inventory level is, when purchased merchandise is scheduled for delivery, and how much has been sold to customers
open-to-buy
According to the EU directive on consumer privacy, a business
operating in the EU can use consumer information only for the specified purpose
What does the statement "A merchandise category has a high stock-to-sales ratio." indicate?
The merchandise category sells quickly in the market
Identify a feature of customers in the platinum segment of a customer pyramid
They are not overtly concerned about prices and often place more value on customer service
Identify a feature of customers in the gold segment of a customer pyramid
They are not very loyal to a retailer and frequently patronize some of the retailer's competitors
Classification
Third level for categorizing merchandise and organizing merchandise management activities
Buyers must have the ability to sense market trends, analyze sales data continually, and make appropriate adjustments in the price and inventory levels
True
Buyers reduce number of stock-keeping units within a category to increase their inventory turnover
True
Retailers
employ promotional markdowns to promote merchandise and increase customer traffic flow
A(n) _____ brand is a brand that is developed by a national-brand vendor, often in conjuction with a retailer, and sold only by that retailer.
exclusive
T or F: The vendor of a national brand is for developing the merchandise, producing it with consistent quality, and undertaking a marketing program to establish an appealing brand image
True
T or F: Vendors enforce manufacturer's suggested retail prices by withholding benefits such as cooperative advertising
True
The inventory management report provides information about the inventory management for a staple merchandise category
True
True or False: All the elements in the retail mix contribute to the development of customer loyalty and repeat-purchase behavior
True
True or False: For most retailers, a relatively small number of customers account for the majority of their profits
True
Slotting fees are charges imposed by
a retailer to stock a new product in store
Buyers do not have control over
a retailer's operating expenses
reductions
factors that reduce the actual selling price from the initial sale price
In the EDLP strategy, there is a(n):
surety for the customers that they will get the same price all the time
open-to-buy
system used to keep track of the actual merchandise
A retailer needs to carry less backup stock when
the sales are less than average
breaking sizes refers to
the stocking out of a specific size or color stock-keeping unit
Gender-based pricing is an example of
third-degree price discrimination
Fill Rate
percentage of SKY's received complete on a particular order from a vendor
Product availability
percentage of the demand for a particular SKU that is satisfied. 100 people go into PetSmart store to purchase a small portable kennel but only 90 people can make the purchase before the kennel stock is depleted.
prices arises when a dominant retailers sets prices below its cost to drive competitive retailers out of business
predatory
Merchandise Management
process in which retailers attempt to offer the appropriate quantity of the right merchandise, in the right place at the right time, so that it can meet the company's financial goals
The retailer can _____ to liquidate markdown merchandise.
sell merchandise over an online auction
A(n) _____ ____ compares actual and planned sales to determine whether more merchandise is needed to satisfy demand or whether price reductions are required
sell-through analsysi
Retailers can liquidate unsold merchandise by
selling the merchandise to another retailer
The ______ is a factor that affects the sales of staple merchandise and cannot be controlled by a retailer.
special promotional activities by vendors
Janet, a buyer for a department store, is looking for information about the latest fashion trends. She should
spend more time on the selling floor to be attuned to local customers demand
A(n) _______ unit or SKU is the smallest unit available for inventory control
stock-keeping
breaking sizes
stocking out of a specific size or category and the buyer cannot reorder during the season, the buyer will typically discount the entire merchandise type
Buybacks are also known as _____________ or ________________
stocklifts; lift-outs
relationship emerges when a retailer and a vendor are committed to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial to both parties
strategic relationship
A retailer increasing its merchandise's assortment breadth and depth can result in a decrease in the retailers gross margin
true
The use of customer lifetime value to classify customers into the segment in the customer pyramid is based on the profitability of the customers, not sales.
true
is a belief that a partner is honest and benevolent
trust
A(n) ____ ____ exists when a vendor requires that a retailer takes a product it doesn't necessarily desire to ensure hat it can buy a product it does desire.
tying contract
A family brand is also known as a(n) _____ brand
umbrella
A family brand is also known as a(n) _______ brand
umbrella
cost is the retailer's expenses that vary directly with the quantity of the product produced and sold
variable
Category Captain
when a vendor works with a retailer to develop a better understanding of consumer shopping behaviors, create assortments that satisfy consumer needs, and improve the profitability of the merchandise category.
inelastic
when its price elasticity is more positive than -1.0 (e.g., -.50) - that is, when a 1 percent decreases in price results in a 1/2 percent increase in quanity.
elastic
when the elasticity is more negative than -1 (e.g., -2.0), that is, when a 1 percent decrease in price produces a 2 percent increase in quantity sold.
Inventory Turnover
= (1-gross margin percentage) x sales-to-stock ratio
Staple merchandise categories are also called _____ merchandise categories
basic
Assume that a product costs $0.40, and the initial price for the item is $0.80. The initial markup is
0.40
Assume that Fertilizer Inc. incurred a fixed cost of $520,000 to introduce a new fertilizer in the market. If it needs to sell 40,000 bags of fertilizer at $15 per bag to break-even, determine the variable cost of each bag of fertilizer
$2
If an electronic goods retailer buys a gaming console for $300 and sets the retail price at $350, the markup of the gaming console is
$50
The formula price elastcity x cost / price elasticity + 1 can be used to calculate the profit-maximizing price of a product if the price elasticity of the product is
0.75
Assume that a retailer originally priced a private-label DVD player at $90 and then raised the price to $100. Before raising the price, the retailer was selling 1,500 units a week. When the price increased, sales dropped to 1,100 units per week.
(new quantity sold - old quantity) / (old quantity) / (new price - old price) / (old price) 1100 - 1500/1500 / 10-9/9 = -0.2667 / .1111 + -2.4005 Quantity sold usually decreases when the price increases, price elasticity is a negative number.
Retailers can increase value and stimulate more sales (exchanges) by either:
- increasing the perceived benefits offered - reducing the price
Assume that a retailer originally priced a private-label television at $105 and then raised the price to $110. Before raising the price, the retailer was selling 2,000 units a week. When the price increased, sale dropped to 1,800 units a week. Determine the price elasticity of the private-label television.
-2.1
The manufacturing cost of a product is $400. If the product's price elasticity is -1.5, determine its profit-maximizing price.
1,200
Arrange the phases in developing a strategic partnership in order to increasing levels of involvement
1. Awareness 2. Exploration 3. Expansion 4. Committment
Arrange the steps followed in a typically customer relationship management program (CRM)
1. Collect customer data 2. Analyzing customer data and identifying target customers 3. Developing CRM frequent-shopper programs 4. Implementing CRM programs
Arrange the steps that buyers use to evaluate vendors in the correct order
1. Develop a list of issues to consider 2. Determine the importance weights of each issue 3. Make judgments about each individual brand's performance on each issue 4. Develop an overall score by multiplying the importance of each issue by the performance of each brand or its vendor 5. To determine a vendor's overall rating, add the products of each brand for all issues
Pricing Strategies-
1. High/Low Pricing 2. Everyday Low Pricing
Customer Pyramid
1. Platinum 2. Gold 3. Iron 4. Lead
Retailers use to develop forecasts for fashion merchandise categories
1. previous sales data 2. market research 3. fashion and trend services 4. vendors
Issues to consider when pricing services
1. the need to match supply and demand 2, the difficulties customers have in determining service quality
Four factors retailers consider in setting retail prices
1. the price sensitivity of consumers 2. the cost of the merchandise 3. competition 4. legal constraints
A retailer originally priced a private-label at $105 and then raised a price to $110. Before raising the price, the retailer was selling 2,000 units in a week. When the price increased, sales dropped to 1,800 units a week. if the manufacturing cost of each television is $60, determine its approximate profit-maximizing price.
115
Assume that an extreme -value food retailer sets a 40% markup for a pork pie and sells it at $3.60. What is the cost of the pork pie?
2.16
The inventory turnover and stock-sales-ratio of a merchandise category are 4.0 and 5.0, respectively. Determine the gross margin percentage of the merchandise category
20%
Assume that a department store sets a retail price for a loaf of bred at 4. if the store purchased this load of bread for $3, what is the markup percentage of the loaf of bread?
25% (3/4 = 75%; 100- 75 = 25)
The gross margin, average inventory at cost, and net sales of a merchandise category are $250,000, $100,000, and $1,200,000, respectively. Calculate the gross margin return on inventory investment.
250%
THe gross margin percentage and gross margin return on inventory investment of a merchandise category are 75%, and 225% respectively. calculate sales-to-stock ratio
3.0
Calculate the retailer price of a laptop if its cost and markup are $275 and $50, respectively
325
The gross margin return on inventory investment (GMROI) and sales-to-stock ratio of a merchandise category are 175% and 5.0, respectively. Calculate the gross margin percentage.
35%
The inventory turnover and gross margin percentage of a merchandise category are 3.5 and 30%. Calculate the sales-to-stock ratio
5.0
An apparel retailer set the retailer price of a formal shirt at $65. If the markup is $15, the cost of the shirt is
50$
A costume jewelry store purchases earrings from a vendor at $6 per pair and retails the earrings for $15. What is their markup percentage?
60%
For retailers, 80-20 rule is a condition in which
80 percent of the sales or profits comes from 20 percent of the customers
Identify the true statement about the EU directive on consumer privacy
A business can collect consumer information only if it has clearly defined the purpose, such as completing transaction
Identify an example of a buyer in the awareness phase during the development of strategic relationships
A buyer browses through some interesting merchandise at a retailer market
Who among the following buyers is in the expansion phase during the development of strategic relationships?
A buyer develops joint promotional programs with a vendor
Who among the following buyers is in the exploration phase during the development of strategic relationships?
A buyer making small purchase from a vendor to rest the demand for new merchandise
Identify the accurate statement about factors that influence the price elasticity of products.
A product is more likely to be price-inelastic if it has fewer substitutes in the market
Identify the true statement about identifying customers
A retailer cannot identify customers who make purchases using third-party credit cards
Identify an example of a retailer in the commitment phase during the development of strategic relationship
A retailer develops a long-term perspective toward its collaboration with a vendor.
Identify an example of a retailer in the commitment phase during the development of strategic relationships.
A retailer develops a long-term perspective towards its collaborative with a vendor.
A(n) _____ _____ identifies the performance of individual SKUs in the assorted plan
ABC analysis
involves offering and selling more products and services to existing customers to increase the retailer's share of wallet with these customers
Add-on Selling
Identify the statement about the government regulations on customer privacy in the United States.
American customers must explicitly tell retailers not to use or share their personal information for other purposes
In the ______ stage, no transactions take place between a retailer and a vandor
Awareness
The first phase in building partnership relationships is
Awareness
Identify the true statement about using biometrics in retailing
Biometrics provide a cashless method of payment to customers
A retail ____ _____ is a group of customers who are bound together by their loyalty to a retailer and the activities the retailer sponsors and undertakes
Brand community
Gold
Buy significant amount of merchandise from the retailer, they are not as loyal as platinum customers and patronize some of the retailer's competitors. Profit level is less than those of platinum because price plays an important role in their decision making.
Which of the following is an attribute of fashion merchandise categories
Buyers for fashion merchandise categories have must less flexibility in correcting forecasting errors
Identify the correct statement from the following
Carrying over unsold markdown merchandise to the next season is not profitable because of excessive inventory carrying costs.
is the lowest level in the merchandise classification scheme
Category
occurs when a vendor or its agent offers or a buyer asks for "something of value" to influence purchase decisions
Commercial Bribery
factors that affect sales of staple merchandise include the price set for the merchandise in the category and the pricing and promotion of complementary categories
Controllable
Integrity/Security
Controls for the theft and tampering with personal information
are small files stored on a customer's computer that identify customers when they return to a website
Cookies
Brands imitate the manufacturer's brand in appearance and packaging, generally are perceived as lower-quality, and are offered at lower prices.
Copycat
______ merchandise are goods made and sold without the permission of the owner of a trademark or copyright.
Counterfeit
Notice and Awareness
Covers the disclosure of information practices, including a comprehensive statement of information use.
involves spending money to improve products or services
Credible commitments
Identify the true statement about customer loyalty in the retail industry.
Customer loyalty means developing an emotional connection with customers
Which of the following is a difference between the gold segment and the iron segment in the customer pyramid?
Customers in the Iron segment purchase fewer amounts of merchandise compared to customers in the gold segment.
Which of the following is a difference between the platinum segment and the gold segment in the customer pyramid?
Customers in the gold segment have lower customer lifetime value than customers in the platinum segments
Lead
Customers with the lowest CVL can make negative contributions to the firm's income. They often demand a lot of attention but do not buy much from the retailer. Why they do buy, they often buy merchandise that is on sale or abuse return privileges. They may even cause problems by complaining about the retailer to others. As a result, retailers do not direct attention to these customers
is similar to gray-market merchandise except there need not be distribution across international borders.
Diverted merchandise
In terms of the customer pyramid, the process of no longer selling to unprofitable customers - with negative lifetime values - can be referred to as "______"
Getting the lead out
is the disingenuous practice of marketing products or services as being environmentally friendly with the purpose of gaining public approval and sales rather than actually improving the environment.
Greenwashing
Average inventory at cost =
Gross Margin/ Gross Margin return on Inventory investment
Gross Margin Return on Inventory Investment (GMROI)
Gross margin percentage x Sales-to-stock ratio = Gross Margin/Net Sales x Nets Sales/ Average Inventory at Cost = Gross Margin/ Average Inventory At Cost
Gross margin return on inventory investment (GMROI) =
Gross margin percentage x sales-to-stock ratio
Keystoning
Gross margin that is 100 percent of the cost price or 50 percent of the sale price. Any item selling at twice the price for it was bought or produced is said to have a keystone markup.
Choice/Consent
Includes both out out and opt in options and allows customers to have the opportunity to trade information for benefits
Advantages of pricing strategies
Increases Profit Creates excitement Sells slow moving merchandise Assure customers of low prices Reduces advertising and operating expenses Reduces stockouts and improves inventory management
Identify the accurate statement about strategic relationships from the following
It is difficult for retailer-vendor relationships o be as committed as supplied-manufacturer relationships.
Identify the accurate statement about global sourcing from the following.
It is more difficult to perform supply chain activities when sourcing globally.
Which of the following statements is true about diverted merchandise?
It need not be distributed across international borders.
Identify the customer belonging to the iron segment
Jamie is price sensitive and buys a limited number of dresses from a particular apparel store
Identify the reason why most large retail chains use customer relationship management processes to efficiently develop relationships similar to those that many small local retailers have with customers.
Large retail chains do not have the intimate knowledge about the customers who entire their stores
Customers belonging to the _______ segment demand a lot of attention but do not purchase any products from a retailer
Lead
Identify the true statement about customer loyalty
Loyal customers have a bond with the retailer based on an emotional connection
Identify the accurate statement about managing merchandise categories.
Managing merchandise by category can help ensure that a store's assortment includes the best combination of sizes and vendors
Identify the true statement about buying national-brand merchandise.
Meetings between buyers and vendors during a market week are typically more formal than meetings at trade shows.
Fred is one of senior vice presidents of Gray House Inc., a chain of department stores. He makes decisions about the management of inventory and oversees the responsibilities of the divisional merchandise managers and buyers. Fred belongs to the ______ in the organization
Merchandise Group
pricing refers to the practice of using a price that ends in an odd number, typically a 9
Odd
Value
Perceived benefit / Price
Elasticity
Percent change in quantity sold / Percentage change in price
markdowns are used by retailers to generate more sales
Promotional
Enforcement/Redress
Provides a mechanism to ensure compliance by participating companies
Identify the accurate statement about staple merchandise categories
Sales of staple merchandise are relatively steady week to week
Which of the following customers can be categorized in the lead segment of the customer pyramid?
Samuel frequently browses through the fishing equipment at a store but does not purchase any item from that store
Department
Second level of merchandise classification sceme
Continuous Replenishment
Systems involve continuously monitoring merchandise sales and generating replacement orders, often automatically, wen inventory levels drop below predetermined levels
are taxes collected by government on inpout
Tariffs
Identify the accurate statement about editing the assortment
The breadth and depth of the assortment in a merchandise category affects a retailer's brand image
What should a retailer know about managing fashion merchandise categories?
The performance evaluations of a category should not be based solely on GMROI, inventory turnover, and sales forecast.
Identify a disadvantage for a retailer selling store brands.
The retailer has to assume the risk associated with uncertain sales of store brands
Break-even Quantity
Total fixed cost / actual unit sales price - unit variable cost
Which of the following is the information in a customer database that contains a complete history of the purchases made by the customer, including purchase data, the stock-keeping units purchased, the price paid, the amount of profit, and whether the merchandise was purchased in response to a special promotion or marketing activity.
Transactions
Service retailers devise approaches for managing demand for their offering to ensure that demand does not exceed capacity
True
T or F: Buyers and vendors in a relationship need to understand what is dividing each other's business, their roles in the relationship, each firm's strategies, and any problems that arise over the course of the relationship.
True
T or F: Greenwashing is also known as doing a green whitewash
True
T or F: If consumers are unfamiliar with a service or service provider, they may use price to make quality judgements.
True
Identify the true statement about the factors that determine the level of backup stock needed for a particular SKU in the staple merchandise category
Typically, shorter lead times from a vendor results in a lower level of backup stock required to maintain the same level of product availability
Which of the following is a characteristic of fashion merchandise categories?
Typically, they are in demand only for a relatively short period of time
factors that affect sales of staple merchandise include the weather, general economic conditions, and the new product and pricing activities by competitors
Uncontrollable
Identify the difference between government regulations on customer privacy in the United States and the European Union.
Unlike retailers in the United States, retailers in the European Union must get consumers to agree to share their personal information
Difference between sourcing global and sourcing domestically
When sourcing globally, it is harder to maintain consistent quality standards than it is when sourcing domestically.
market for retail buyers is a concentration of vendors within a specific geographic location, perhaps even under one roof over the Internet
Wholesale market
If the price elasticity of a product is less than -1,
a 1 percent decrease in price results in more than 1 percent increase in quantity sold
maintained markup
actual sales realized for the merchandise minus its cost.
Retailers achieve customer alchemy through
add-on selling
Retailers can reduce markdowns and their inventory carrying costs by
adopting a just-in-time inventory policy
A retailer of today would most likely
aim to develop a base of loyal customers
The high/low pricing strategy
allows retailers to charge a higher price to customers who are not price-sensitive
merchandise category
an assortment of items that customers see as substitutes for one anoter
Frequent-shopper programs
are very expensive to establish and cannot be easily corrected
The ______ of merchandise is the number of stock-keeping units within a subcategory offered by retailers to customers
assortment
Variety of a retailer's merchandise is also known as the ________ of merchandise
breadth
The assortment plan reflects the ______ and ______ of merchandise that the retailer plans to offer in a merchandise category
breadth; depth
A(n) _____________ and _______________ is an unlawful, deceptive practice that lures customers into a store by advertising a product at a lower-than-normal price and then, once they are in the store, induce them to purchase a higher-priced model.
bait and switch
Cycle stock is also called
base stock
A partner is said to be ____ if he is concerned about the other party's welfare.
benevolent
A(n) market occurs when consumer goods are scarce, heavily taxed, or illegal.
black market
Staple Merchandise (basic merchandise)
categories that are in continuous demand over an extended time period.
Backup Stock
called buffer or safety stock is the model stock plan determines product availability
Customers in the lead segment
can make a negative contribution to a retailer's income
Fashion merchandise
categories are in demand only for a relatively short period of time. New products are continually introduced into these categories
A(n) ____ is a practice used by retailers in which they deduct money from the amount they owe a vendor
chargeback
To effectively negotiate with vendors, a retailer should
choose a good place to negotiate
Jerry, a retail buyer, has arranged a meeting with his vendors to discuss the negotiation terms before buying the merchandise. He should
choose a good place to negotiate where supervisory assistance is easily available
The _____ is the third level of categorizing merchandise and organizing merchandise management activities.
classification
The program undertaken by a vendor in which the vendor agrees to pay for all or part of a pricing promotion of a retailer is also known as
co-op advertising
Gary, a retail buyer, is in the exploration if he
collects detailed information about the working style of a vendor
protects the original work or authors, painters, sculptors, musicians, and others who produce works of artistic intellectual merit.
copyright
retail price
cost of merchandise + mark up
retail price
cost of merchandise + markup
offer a discount on the price of specific items when they are purchased
coupons
is the expected contribution from a customer to a retailer's profits over their entire relationship with the retailer.
customer lifetime value
A business philosophy and set of strategies, programs, and system that focus on identifying and building loyalty with a retailer's most valued customers is called _________ ________ management
customer relationship
A customer _______ contains all the information a firm has collected about its customer and is the foundation for subsequent customer relationship management activties
database
_____ the second level in the merchandise classification scheme, are managed by divisional merchandise managers (DMMs)
departments
Identify the accurate statement about multi-unit pricing
depending on the type of product, customer stockpile multiunit-priced items for use at a later time.
To encourage repeat purchases, retailers should __________
develop loyalty programs that reward all purchases made through different channels
inventory strinkage
discounts are given to employees, and some merchandise is lost to theft and accounting errors
From a customer's perspective, one of the main concerns associated with the collection of customer data is the
distribution of data by a retailer to third-party businesses
Retailers who adopt an everyday low-pricing strategy
do not always offer the lowest prices in the market
fixed cost
do not change with the quantity of products produced and sold
Identify the characteristics that separate generic brands from other brands.
do not have a brand name distinguishing them
ROA is not a good measure for evaluating the performance of merchandise managers because they generally
do not have control over all the assets of a retailer
Retailers using the everyday low pricing strategy
do not have to incur the labor costs of changing price tags and putting up sale signs.
the price lining strategy
eliminates the confusion that often arises from multiple-price choices offered by retailers
Typically, strategic relationships
encourage partners to develop and exploit joint opportunities
HIgh/Low pricing
frequently used - often weekly - discount the initial prices for merchandise though sales promotions. However some customers learn to expect frequent sales and simply wait until the merchandise they want goes on sale and then stock up at the low prices
low-price guarantee policy
guarantees customers that the retailer will have the lowest price in a market for products it sells. Usually promises to match or beat any lower price found in the market and might include a provision to refund the difference between the seller's offer price and the lower price
Customers in the iron segment
have limited income and are price sensitive
Typically, reverse auctions
have one buyer and many potential buyers
The illegal practice of _____ is when retailers agree to charge the same price for products or services in an effort to reduce competition.
horizontal pricing
ABC analysis
identifies the performance of individual SKUs in the assortment plan. It determines which SKUs should be in the plan and how many backup stock and resulting product availability are provided for each SKU in the plan
is used to determine which SKUs should be in the assortment plan and how much backup stock and resulting product availability are provided for each SKU in the plan
in-depth
In-depth review
is an unstructured personal interview in which the interviewer uses extensive probing to get individual respondents to talk in detail about a subject. For example, one grocery store chain goes through personal checks received each day to identify customers to interview
Typically, a generic brand
is neither a store brand nor national brand
SKU rationalization programs
is retailer's effort to analyze the benefits they might gain from deleting, adding, or keeping certain items in their assortments.
Order Point
is the amount of inventory below which the quantity available shouldn't go or the item will be out of stock before the next order arrives
Lead time
is the amount of time between recognition that an order needs to be placed and the point at which the merchandise arrives in the store and is ready for sale
mark up
is the difference between the retail price and the cost of an item
markup percentage
is the markup as a percentage of the retail price:
Yield Management
is the practice of adjusting prices up and down in response to demand to control the sales generated.
Keystoning
is the pricing approach that sets the retail price of a product by simply doubling its cost
Value
is the ratio of what customers receive (the perceived benefit of the products and services offered b ythe retailer) to what they have to pay for.
Assortment Plan
is the set of SKUs that a retailer will offer in a merchandise category in each of its stores and from its website
Stock-keeping Unit (SKU)
is the smallest unit available for inventory control
1-to-1 retailing
is used by retailers to develop retail programs for small groups or individual consumers
An advantage of the high/low pricing strategy is that
it allows retailers to get rid of slow-selling merchandise
Which of the following is true of individualized variable pricing?
it can be used as a strategic differentiator
Frequent-shopper programs are also called ______ programs
loyalty
initial markup percentage
maintained mark up percentage + percentage reductions / 100% + percent reductions
gross margin percentage
maintained markup - workroom costs + cash discount / net sales
A drawback of offering large assortments is that they
make the purchase decision more complex and time-consuming and can potentially overwhelm the customer
The funds vendors give retailers to cover lost gross margin dollars due to the price reduction needed to sell unpopular merchandise is called ______ money
markdown
In a _______ ______ analysis, the data mining tools determine which products appear in the market basket that a customer purchases during a single shopping trip.
market basket
At specific times during the year, wholesale centers host _________ ______________ during which buyers make appointments to visit the various vendor show rooms
market weeks
The ______ _____ plan specifies the amount of merchandise in dollars (not units) that need to be delivered during each month, based on the sales forecast, the planned discounts to employees and customers, and the level of inventory needed to support the sales and achieve the desired GMROI objectives.
merchandise budget
The ______ is the highest classification level in the merchandise classification scheme
merchandise group
Multiattribute analysis
method for evaluating vendors uses a weighted-average score for each vendor
The _____ _____ plan is the number of each stock-keeping unit in the assortment plan that the buyer wants to have available for purchase in each store
model stock
Retailers often
negotiate with vendors for an exclusive arrangements to achieve a differential advantage
model stock plan
number of each SKU in the assortment plan that they buyer wants to have available for purchase in each store.
Geoffrey, a multiattribute retailer, is in the process of developing an assortment plan. He should
offer a greater assortment through his internet channel to overcome the space limitations of his store
Frequent-shopper programs should
offer choices to customers in order to be more effective
Retailers practicing the high/low pricing strategy:
offer frequent discounts on the initial prices for merchandise through sales promotions.
Gray-market goods are also known as ____ _____
parallel imports
Every Day low-pricing strategy (EDLP)
particularly home improvement centers, supermarkets, and discount stores adopt this. This strategy emphasizes the continuity of retail prices at a level somewhere between the regular price and the deep-discount sale price of high/low retailers.
The inventory level at each point in time is known as the ______ inventory, is determined by comparing the sales made through the point-of-sale terminals with the shipments received by the store
perpetual
A large chain retailer opened a few months ago in the community where Carl lives. He was pleasantly surprised by how low their prices were compared to the local independently owned shops for the exact same items. Unfortunately, those independently owned retailers have all closed now because they were not able to compete on price with the larger new store. However, Carl has noticed that the newer large store has raised all of its prices up to where the independent stores had their products priced and some products are priced even higher now. This is an example of _____.
predatory pricing
store brands offer the consumer a private label that is comparable to a manufacturer's brand quality, sometimes with modest price savings.
premium
is the practice of offering two or more different products or services for sale at one price
price bundling
for products with a price elasticity less than 1, the price that maximizes profits can be determined by the formula
price elasticity x cost / price elasticity + 1
A product's cost and profit-maximizing price are $200 and $400, respectively. The product's price elasticity is
price elasticity x cost / price elasticity + 1 = -2
A store has coffee makers priced at $9.99, $19.99, and $29.99. Which of the following pricing practices is being utilized?
price lining
software programs use a set of algorithms that analyze past and current merchandise sales and prices, estimate the relationship between prices and sales generated, and then determine the most profitable initial price for the merchandise and not the appropriate size and timing of markdowns
pricing optimization
National brands are:
products designed, produced, and marketed by a vendor and sold to many different retailers
Unlike customers in the lead segment, customers in the platinum segment often
purchase a lot of merchandise sold by a retailer
The objective of the SKU ________ program is to increase inventory turnover by reducing the number of stock-keeping units without reducing sales
rationalization
Vendors set manufacturer's suggested retail prices to
reduce retail price competition among retailers
the factors that decrease the actual selling price from the initial sales price are called
reductions
price is the price against which buyers compare the actual selling price of the product, and thus it facilitates their evaluation process
reference
The buyer of menswear was evaluating the prices of incoming orders. She decided to adjust the price of the incoming pea coats from $120 to $99.99 and use a price tag on the product that showed an original price of $120. The original price of $120 is referred to by retailers as the _____.
reference price
first-degree price discrimination
refers to the practice of charging each individual customer a different price based on their willingness to pay
Organization located in major market centers that provide service to help retailers buy merchandise are known as ____ ______ offices
resident buying
Market up percentage
retail price - cost of merchandise / retail price
initial mark up
retail selling price initially set for merchandise minus the cost of the merchandise
merchandise category consist of items whose sales fluctuate dramatically depending on the time of the year.
seasonal
Retailers use _______ when they offer promotional and clearance markdowns, coupons, pricing bundling, and multi-unit pricing
second-degree price discrimination
approach offers the same multiple-price schedule to all customers, which encourages price-sensitive customers to take advantage of the lower price.
second-degree price discrimination
Retailers use ______ when they offer promotional and clearance markdowns, coupons, price bundling, and multi-unit pricing.
second-degree price discrimnation
When a retailer increases the number of SKUs in its assortment plan
the chances of breaking sizes are greater
Merchandise planning systems for staple merchandise categories often involve continuous replenishment systems because
the demand patterns for staple merchandise are very predictable
Which of the following is a feature of a target market that is price-sensitive?
the price elasticity is more negative than -1
editing the assortment
the process of determining the variety and assortment of a category
Fair _____ refers to a socially responsible movement that ensures that producers receive fair prices for their products
trade
shows, vendors display their merchandise in designated areas and have sales representatives, company executives, and sometime even celebrities available to talk with buyers as they walk through their exhibit area.
trade
pricing is the practice of charging different prices in different stores, markets, or regions
zone