Chapter 12: Buying Merchandise

counterfeit merchandise

goods that are made and sold without permission of the owner of a trademark, a copyright, or a patented invention that is legally protected in the country where it is marked

for a retailer, negotiating for a longer period in which to pay for merchandise can _____.

improve the retailer's cash flow

property that is intangible and created by mental effort as opposed to physical effort is referred to as _____ property.

intellectual

building partnering relationships

(tend to go through a series of phases characterized by increasing levels of involvement) 1. awareness 2. exploration 3. expansion 4. commitment

national brands (manufacturer's brands)

a line of products designed, produced, and marketed by a vendor

green

a marketing strategy that promotes environmentally safe or beneficial products or services

chargeback

a practice used by retailers in which they deduct money from the amount they owe a vendor

umbrella (family brand)

a product's brand name associated with the company's name

cooperative (co-op) advertising

a program undertaken by a vendor in which the vendor agrees to pay all or part of a promotion for its products

copyright

a regulation that protects original works of authors, painters, sculptors, musicians, and others who product works of artistic or intellectual merit

a(n) _____ protects the original work of authors, painters, sculptors, musicians, and others who product works of artistic or intellectual merit.

copyright

tips for effective negotiating

- have at least as many negotiators as the vendor - choose a good place to negotiate - be aware of real deadlines - separate the people from the problem - insist on objective information - invent options for mutual gain - let them do the talking - know how far to go - don't burn bridges - don't assume

trust

a belief that a partner is honest (reliable, stands by its word, sincere, fulfills obligations) and benevolent (concerned about the other party's welfare)

exclusive brand

a brand developed by a national brand vendor, often in conjunction with a retailer, and sold exclusively by the retailer

copycat brands

a brand that imitates the manufacturer's brand in appearance and trade dress but generally is perceived as lower quality and is offered at a lower price

premium store brands

a branding strategy that offers the consumer a private label at a comparable manufacturer-brand quality, usually with a modest price savings

wholesale market

a concentration of vendors within a specific geographic location, perhaps even under one roof or over the internet

buybacks (stocklifts or lift-outs)

a strategy vendors and retailers use to get products into retail stores, either when a retailer allows a vendor to create a space for goods by "buying back" a competitor's inventory and removing it from a retailer's system or when the retailer forces a vendor to buy back slow-moving merchandise

tariffs (duties)

a tax placed by a government on imports

trade shows

a temporary concentration of vendors that provides retailers opportunities to place orders and view what is available in the market place

commercial bribery

a vendor's offer of money or gifts to a retailer's employee for the purpose of influencing purchasing decisions

large retailers usually have a department that is dedicated to the development of its store brands. what activities do people in these departments handle? (select all that apply) a. design and specify products b. select manufacturers to make the products c. secure manufacturing facilities d. identify trends

a. design and specify products b. select manufacturers to make the products d. identify trends

what two factors affect the price and gross margin of a merchandise category? a. margin guarantees b. slotting allowances c. exclusive dealing agreements d. tying contracts

a. margin guarantees b. slotting allowances

in negotiating, the best way to separate the people from the business issues is to _____. a. only use information that is objective b. negotiate in unfamiliar surroundings c. rely on the use of threats d. insist on receiving favors from the person

a. only use information that is objective

select from the following those items that are foundations of successful strategic relationships. a. open communication b. credible commitments c. individual goals d. mutual trust e. speculation

a. open communication b. credible commitments d. mutual trust

_____ are taxes collected by a government on imports. a. tariffs b. backsourcing c. remittances d. embargoes

a. tariffs

tying contract

an agreement between a vendor and a retailer requiring the retailer to take a products it does not necessarily desire (the tied product) to ensure that it can buy a product it does desire (the tying product)

resident buying office

an organization located in a major buying center that provides services to help retailers buy merchandise

trademark

any mark, work, picture, or design associated with a particular line of merchandise or product

reserve auctions

auction conducted by retailer buyers. known ad reverse auctions because there is one buyer and many potential sellers. in reverse auctions, retail buyers provide a specification for what they want to a group of potential vendors. the competing vendors then bid down the price at which they are willing to sell until the buyer accepts a bid

the first phase in building partnerships is _____.

awareness

select from the following the alternative names for private-label brands a. sub-brands b. own brands c. store brands d. house brands e. family brands

b. own brands c. store brands d. house brands

buybacks are also known as _____. (select all that apply) a. slotting fees b. stocklifts c. lift-outs d. chargebacks

b. stocklifts c. lift-outs

a(n) _____ market occurs when consumer goods are scarce, heavily taxed, or illegal.

black

brands that imitate the manufacturer's brand in appearance and packaging, are generally perceived as lower-quality, and are offered at lower prices, are called _____ brands.

copycat

a partner is said to be _____ if he is concerned about the other party's welfare. a. loyal b. honest c. benevolent d. skilled

c. benevolent

retailers often use a _____ when a vendor does not meet the agreed-on terms. a. markdown b. stocklift c. chargeback d. buyback

c. chargeback

using foreign suppliers to purchase private-label merchandise _____. a. increases the cost of acquisition b. lowers the level of inventory needed in stores c. increases a retailer's inventory carrying costs d. lowers the transportation costs

c. increases a retailer's inventory carrying costs

national brands are also known as _____ brands. a. private-label b. generic c. manufacturer's d. house

c. manufacturer's

select from the following the three types of store brands. a. umbrella b. generic c. premium d. copycat e. exclusive

c. premium d. copycat e. exclusive

when purchasing private-label merchandise from foreign suppliers, _____. a. retailers face shorter lead times from the suppliers b. retailers are most likely to have high inventory turnover c. retailers must maintain larger inventories in their stores d. retailers incur lower inventory carrying costs

c. retailers must maintain larger inventories in their stores

when a vendor or its agent offers or a buyer asks for "something of value" to influence purchase decisions, _____ _____ has taken place.

commercial bribery

in the _____ stage, no transactions can take place between a retailer and a vendor. a. commitment b. exploration c. expansion d. awareness

d. awareness

_____ involve spending money to improve products or services. a. common goals b. open communication beliefs c. mutual beliefs d. credible commitments

d. credible commitments

_____ merchandise is similar to gray-market merchandise except there need not be distribution across international boarders.

diverted

slotting fees (slotting allowances)

fee paid by a vendor for space in a retail store

markdown money

funds a vendor gives the retailer to cover lost gross margin dollars that result from markdowns and other merchandising issues

strategic relationship (partnering relationship)

long-term relationship in which partners make significant investments to improve both parties' profitability

at specific times during the year, wholesale centers host _____ _____ during which buyers make appointments to visit the various vendor showrooms.

market weeks

market weeks

market weeks, often located in wholesale market centers, are a specific period of time in which buyers meet with vendors in their showrooms

diverted merchandise

merchandise that is diverted from its legitimate channel of distribution; similar to gray-market goods, except there need not be distributed across international boundaries

gray-market goods (parallel imports)

merchandise that possesses a valid U.S. registered trademark and is made by a foreign manufacturer but is imported into the United States without permission of the U.S. trademark owner

gray-market goods are also known as _____ _____.

parallel imports

subbrand

part of a branding strategy in which a product's brand name is associated with the description of the product, such as Frosted Flakes, where the family brand is Kellogg's

a strategic relationship is also called a _____ relationship.

partnering

store brand (private-label brand, house brand, or own brand)

products developed and marketed by a retailer and available for sale only by that retailer

intellectual property

property that is intangible and created by intellectual (mental) effort as opposed to physical effort

fair trade

purchasing practices that require producers to pay workers a living wage, well more than the prevailing minimum wage, and offer other benefits, like onsite medical treatment

organizations located in major market centers that provide services to help retailers buy merchandise are known as _____ _____ offices.

resident buying

exclusive dealing agreement

restriction a manufacturer or wholesaler places on a retailer to carry only its products and no competing vendors' products

black market

the availability of merchandise at a high price when it is difficult or impossible to purchase under normal market circumstances; commonly involves illegal transactions

green washing (green sheen)

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

at _____ shows, vendors display their merchandise in designated areas and have sales representatives, company executives, and sometimes even celebrities available to talk with buyers as they walk through the exhibit area.

trade

fair _____ refers to a socially responsible movement that ensures that producers receive fair prices for their products.

trade

a(n) _____ _____ exists when a vendor requires that a retailer take a product it doesn't necessarily desire to ensure that it can buy a product it does desire.

tying contract

generic brands

unbranded, unadvertised merchandise found mainly in drug, grocery and discount stores

corporate social responsibility (CSR)

voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations and the concerns of its stakeholders

a(n) _____ market for retail buyers is a concentration of vendors within a specific geographic location, perhaps even under one roof or over the internet.

wholesale