MKT 444 --- CH 5

A pharmacy (due to increased competition from a neighboring supermarket) has now added an exclusive line of cosmetics, and has expanded its line of greeting cards and gift wrapping items. This strategy illustrates ________. A) scrambled merchandising B) the wheel of retailing C) the retail life cycle D) rationalized retailing

a

A merger benefits the affected retailers through ________. A) increased bargaining power B) greater store name awareness C) more efficient ordering systems D) higher return on investment

a

A retailer can become a ________ through low prices, specialized products, a large selection, and superb customer service. A) destination retailer B) relationship retailer C) parasite store D) value-based retailer

a

According to the wheel of retailing theory, retail innovators first appear as ________. A) low-price operators with low costs B) power retailers C) firms that provide a wide complement of customer services D) firms that offer wide selections of highly specialized goods and services

a

According to the wheel of retailing theory, retail innovators have what major advantage over traditional retailers? A) being a low-cost provider B) a more convenient location C) superior service D) exclusive merchandise lines

a

An advantage of the self-service concept as applied to both food-oriented and general merchandise retailers is ________. A) increased impulse purchases B) lower space requirements C) improved pilferage control D) lower fixturing expenses

a

An important advantage of scrambled merchandising to consumers is ________. A) one-stop shopping B) self-service merchandising C) increased customer service D) lower prices

a

In scrambled merchandising, a retailer ________. A) adds goods and services that may be unrelated to each other and to the firm's original business B) trades up its customer services to attract a new target market C) attempts to reduce its out-of-stock inventory D) attempts to become a "category killer" retailer through its extensive assortment of

a

Opportunistic buying is a key aspect of the retail strategy of ________. A) warehouse stores and off-price chains B) box (limited-line) stores and conventional supermarkets C) supercenters and factory outlets D) supercenters and vending machines

a

Sales of fill-in merchandise are particularly important to which food-oriented retailer? A) convenience store B) conventional supermarket C) food-based superstore D) box (limited line) store

a

The retail life cycle stage corresponding to an innovative retailer's first becoming vulnerable to a new retailer with a lower cost structure is ________. A) maturity B) decline C) accelerated development D) innovation

a

Through ________, retailers seek to jointly maximize resources, enlarge their customer base, and improve productivity and bargaining power. A) mergers B) diversification C) downsizing D) rightsizing

a

Two types of retail institutions satisfy the definition of a department store: the traditional department store and the ________. A) full-line discount store B) supercenter C) variety store D) hypermarket

a

Which retail institution is not included in the traditional definition of a supermarket? A) convenience store B) food-based superstore C) warehouse store D) box (limited-line) store

a

A category killer store is a form of which retail institution? A) variety store B) specialty store C) department store D) off-price chain

b

A combination store combines ________ into one facility. A) multiple leased departments B) a supermarket and a general merchandise retail operation C) a department store and a full-line discount house D) a warehouse store and a specialty store

b

A destination retailer ________. A) is patronized because of convenience B) has a large proportion of outshoppers C) is a parasite D) uses price as its major component in the retailing mix

b

A huge form of combination store is a ________. A) convenience store B) supercenter C) box (limited-line) store D) warehouse store

b

A manufacturer sells its goods through both department stores and factory outlets. This illustrates a(n) ________. A) independent vertical marketing system B) dual marketing system C) partially integrated system D) fully integrated system

b

A retailer should limit its investment in essential expenditures during which stage of the retail life cycle? A) maturity B) decline C) growth D) introduction

b

A retailer that concentrates on selling one goods or service line is a ________ store. A) full-line discount B) specialty C) variety D) department

b

A significant factor in the growth of factory outlets is the ________. A) growth of off-price chains B) desire of suppliers to control where their discounted merchandise is sold C) desire for independent vertical systems by manufacturers D) ability of outlets to purchase merchandise for cash

b

An advantage to a retailer's reaching destination retailer status is its ability to ________. A) charge higher prices for its goods B) attract shoppers from a larger geographic area C) attract a better work force D) develop its own line of private label goods

b

Department stores are now facing increased competition from off-price chains, factory outlets, membership clubs, and flea markets. This illustrates ________. A) scrambled merchandising B) the wheel of retailing C) rationalized retailing D) the retail life cycle

b

Progressive firms expand their geographic bases of operations and newer companies enter the marketplace at which retail life cycle stage? A) introduction B) growth C) maturity D) decline

b

Retailers reduce both initial investments and ongoing costs through ________. A) adaptation strategies B) a cost-containment approach C) positioned retailing D) mass merchandising

b

The food-oriented retailer with the greatest width of assortment is the ________. A) conventional supermarket B) supercenter C) combination store D) food-based superstore

b

The use of nontraditional sites is generally associated with which retail institution? A) retail cooperative B) flea market C) factory outlet D) membership club

b

The use of standardized store layouts, second-use locations, and buying refurbished equipment are characteristics of ________. A) adaptation strategies B) a cost-containment approach C) positioned retailing D) mass merchandising

b

The wheel of retailing suggests that ________. A) consumers desire customer service over price B) established retailers should be cautious in changing their strategy from low end to high end C) retail consumers are store loyal D) retailers that move up the wheel typically can keep their price-conscious customers

b

Which food-based retail institution depends on aggressively priced private-label or controlled brands and cut-case displays? A) food-based superstore B) box (limited-line) store C) convenience store D) conventional supermarket

b

Which food-based retail institutions best fit the scrambled merchandising concept? A) warehouse store and conventional supermarket B) combination store and food-based superstore C) warehouse store and box (limited-line) store D) convenience store and conventional supermarket

b

Which retail institutions best fit the innovator stage of the wheel of retailing theory? A) convenience stores, food-based superstores, and supercenters B) category killer stores, factory outlets, and Web-based direct marketers C) food-based superstores, box (limited-line) stores, and combination stores D) vending machines, direct selling, and direct marketing

b

A departmentalized self-service food store with minimum annual sales of $2 million is a ________. A) convenience store B) specialty store C) supermarket D) food-based superstore

c

A retailer can reduce dependency on its core operations through ________. A) a cost-containment strategy B) downsizing C) diversification D) mergers

c

A retailer that believes that a retail life cycle resembles a fad should use ________. A) rationalized retailing B) positioned retailing C) a cost-containment approach D) mass merchandising

c

According to the wheel of retailing theory, which pricing strategy is used by a retailer during the innovation phase? A) pricing above the market B) pricing at the market C) pricing below the market D) skimming pricing

c

In the long-run, scrambled merchandising is ________ in nature. A) low-end B) nondistinctive C) contagious D) self-defeating

c

In which stage of the retail life cycle theory does a company alter at least one element of the strategy mix from that of its traditional competitors? A) maturity B) decline C) introduction D) growth

c

Low operating costs characterize which of the following retailing institutions? A) conventional supermarket, convenience store, and food-based superstore B) variety store, specialty store, and full-line discount store C) factory outlet, membership club, and warehouse store D) box (limited line) store, membership club, and variety store

c

Manufacturers often prefer to sell their closeouts, canceled orders, and out-of-season merchandise to factory outlets rather than to off-price chains because ________. A) factory outlets generate cash flow for use in manufacturing B) manufacturer-owned outlets can generate high profit margins C) manufacturers can control where branded products are ultimately sold D) off-price chains have too much bargaining power

c

The average gross margins (selling prices less merchandising costs) for conventional supermarkets have averaged about what percent of sales? A) 5-6 B) 10-12 C) 20-22 D) 40-42

c

The beginning stage of the wheel of retailing theory (when low-price institutions first appear) corresponds to which stage of the retail life cycle stage? A) maturity B) decline C) introduction D) growth

c

The difference between a retail merger and diversification is based on the ________. A) identity of the new business B) size of the acquisition C) similarity of the acquired business to the original business D) source of capital for the acquisition

c

The major difference between a combination store and a food-based superstore is based on the ________. A) size of the average unit in square feet B) use of individual versus centralized checkouts C) percent of sales from general merchandise D) percent of private-label sales

c

The retail life cycle stage characterized by market saturation is ________. A) introduction B) growth C) maturity D) decline

c

Which retail institution has separate units responsible for buying, promotion, customer service, and control? A) full-line discount store B) factory outlet C) department store D) variety store

c

Which retail institution is an example of vertical integration? A) membership club B) off-price chain C) factory outlet D) warehouse store

c

While traditional department stores and full-line discount stores are both classified as department stores, full-line discount stores are more likely than traditional department stores to ________. A) allow customers to return and exchange merchandise on a decentralized basis B) use credit sales C) use centralized checkouts D) use catalog-based ordering

c

A destination retailer can be differentiated from other retailers on the basis of its ________. A) high overall value orientation B) small trading area C) low overall prices D) high consumer loyalty

d

A narrow, deep product mix characterizes which retail institution? A) department store B) off-price chain C) variety store D) specialty store

d

According to the wheel of retailing theory, as retail innovators mature, they ________. A) increase their market share at the expense of high-cost, full-service retailers B) reduce customer services to concentrate on the price-conscious customer segment C) further reduce price levels to maintain their low-cost competitive advantage D) increase their services which leads to higher prices

d

According to the wheel of retailing, retail institutions become vulnerable when ________. A) the innovator's strategy is no longer considered unique by its target market B) consumers do not accept the retailer's new price-conscious image C) competitors can match the innovator's low-price strategy D) new institutions have a significant cost advantage due to the innovator's upgrading its image and costs

d

Dollar discount stores and closeout chains are successful spinoffs of the ________. A) full-line discount store B) specialty store C) department store D) variety store

d

Scrambled merchandising is most similar to which retail institution format? A) retail cooperative B) chain C) franchising D) leased department

d

The evolution of the conventional supermarket into a combination store, food-based superstore, and supercenter can be explained by which retail concept? A) wheel of retailing B) the retail life cycle C) rationalized retailing D) scrambled merchandising

d

The food-oriented retailer with the narrowest width and depth of assortment is the ________. A) conventional supermarket B) food-based superstore C) box (limited-line) store D) convenience store

d

Which food-oriented retailer concentrates on the sale of fill-in items? A) conventional supermarket B) food-based superstore C) box (limited-line) store D) convenience store

d

Which institution sells goods to both final consumers and retailers? A) retail cooperative B) flea market C) factory outlet D) membership club

d

Which of the following allows a retailer to accomplish one-stop shopping? A) franchising B) licensing C) independent vertical marketing systems D) food-based superstores

d

Which retail institution has the greatest assortment? A) variety store B) full-line discount store C) factory outlet D) department store

d

Which retail institution has the most selection of any general merchandise retailer? A) full-line discount store B) factory outlet C) variety store D) department store

d

Which retail institution purchases brand-name merchandise on an opportunistic basis? A) warehouse store B) full-line discount store C) flea market D) off-price chain

d

Which theory asserts that retail institutions pass identifiable stages ranging from innovation to decline? A) scrambled merchandising B) the wheel of retailing C) rationalized retailing D) the retail life cycle

d

A combination store consists of a supermarket and a leased department general merchandise store operator.

false

A destination retailer has a relatively small trading area.

false

A fundamental assumption of the wheel of retailing theory is high customer loyalty.

false

A fundamental assumption of the wheel of retailing theory is that innovation is on the basis of a change in at least one component of the retail mix.

false

An appropriate retailer action in the maturity stage of the retail life cycle is to establish a preemptive market position by leasing ideal locations to lock out competition.

false

Conventional supermarkets can be profitable at gross margins that are far lower than warehouse stores.

false

Increased consumer price consciousness explains much of the popularity of scrambled merchandising.

false

Off-price chains typically purchase their merchandise through traditional wholesale channels.

false

The evolution of the combination store and food-based superstore from the conventional supermarket can be best explained by the wheel of retailing theory.

false

The growth of scrambled merchandising means that manufacturers will have to increasingly utilize selective distribution.

false

The largest food-based retailer in terms of average store size is the supermarket.

false

The major competitive advantage of category killer stores is their high level of customer service.

false

The vulnerability of a low-cost retailer in the wheel of retailing theory due to trading up corresponds to the accelerated development stage of the retail life-cycle theory.

false

Destination retailers are sought after as tenants by shopping center developers because of their large customer following.

true

Flea market operators can utilize the Web to supplement their traditional locations.

true

High channel control is associated with the use of factory outlets as retail channels.

true

Many retail analysts have begun to question the long-term viability of the department store. According to one scenario, department stores are now out-priced by off-price chains, out-merchandised by category killer stores, and out-serviced by specialty stores.

true

Prototype stores are often used as a cost-containment approach.

true

Retail institutions evolving from introduction to growth require a high level of investment to sustain growth.

true

Supermarkets have responded to the growth of the convenience store by being open for 24 hours and by installing express lanes for small purchases.

true

The rapid initial growth of the warehouse store and the off-price chain can be explained by the wheel of retailing theory.

true

The use of prototype stores, second-use locations, and the buying of refurbished equipment are all an example of a cost-containment approach.

true

Two extreme cases of the wheel of retailing are the low-end and the high-end strategy.

true

A category killer store is ________. A) an especially large specialty store B) an especially aggressive department store C) a large combination store D) any retail store that dominates a geographic market in terms of market share

a

A central aspect of the retail strategy of warehouse stores is ________. A) special purchases of popular brands B) a concentration on private label or controlled brands C) use of high-rent retail locations D) a focus on fill-in merchandise

a

A factory outlet is an example of which form of vertical marketing system? A) fully integrated system B) partially integrated system C) independent vertical marketing system D) diversified vertical marketing system

a