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Chapter 16: Managing Retailing, Wholesaling, and Logistics

GENERAL CONCEPT M$ltiple Choice


1. Intermediaries include retailers, ________, and logistical organizations. a. Internet companies b. wholesalers c. competitors d. box stores e. none of the above Answer: b Page: 1 !ifficult": #as" AA$%&: Anal"tic %'ills (. %ome intermediaries use strategic planning, advanced information s"stems, sophisticated mar'eting tools, measure performance on a return)on)investment basis, segment their mar'ets, improve their target mar'eting and positioning, and ________. a. contend with dwindling customer bases b. aggressivel" *s+ueeze, manufacturer margins c. aggressivel" pursue ta'eover strategies d. dominant the manufacturers the" do business with e. aggressivel" pursue mar'et expansion and diversification strategies Answer: e Page: ( !ifficult": #as" AA$%&: Anal"tic %'ills -. ________ is the cornerstone of all discount operations. a. %elf)service b. %elf)selection c. .imited service d. /ull service e. $ustom service Answer: a Page: ( !ifficult": 0edium AA$%&: 1eflective 2hin'ing . 0a3or retailer t"pes include the following #4$#P2 ________. a. specialt" store b. discount store c. catalog showroom d. the Internet e. superstore Answer: d Page: !ifficult": 0edium

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;. 9igh staffing costs, along with a higher proportion of specialt" goods and slower) moving items and man" services, result in the high cost structure of ________ retailing. a. self)service b. self)selection c. limited service d. full service e. custom service Answer: d Page: !ifficult": 0edium AA$%&: Anal"tic %'ills 5. 1etailers can position themselves as offering one of four service levels. <hich of the following is =>2 one of these levels? a. %elf)selection b. %elf)service c. .imited service d. !irect service e. /ull service Answer: d Pages: (@ - !ifficult": 0edium AA$%&: Anal"tic %'ills A. =onstore retailing falls into four ma3or categories. <hich of the following is =>2 one of the four nonstore retailing categories? a. &u"ing service b. Internet sales c. Automatic vending d. !irect mar'eting e. !irect selling Answer: b Page: !ifficult": 0edium B. A ________ is a storeless retailer serving a specific clienteleCusuall" emplo"ees of large organizationsCwho are authorized to bu" from a list of retailers that have agreed to give discounts in return for inclusion on the list. a. direct)selling vendor b. direct mar'eting vendor c. bu"ing service d. automatic vendor e. corporate retailer Answer: c Page: !ifficult": 0edium AA$%&: Anal"tic %'ills 8. >ne of the advantages of corporate retailing is that corporate retail organizations achieve economies of scale, greater purchasing power, and ________. a. wider brand recognition b. more locations c. branded merchandise d. *fresh, merchandise e. more advertising Answer: a Page: !ifficult": 9ard AA$%&: 1eflective 2hin'ing

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$hapter 15: 0anaging 1etailing, <holesaling, and .ogistics

17. An independent retailer using a central bu"ing organization and 3oint promotion efforts is 'nown as a ________. a. corporate chain store b. voluntar" chain c. retailer cooperative d. merchandising conglomerate e. franchise organization Answer: c Page: ; !ifficult": 9ard 11. In a franchising s"stem, individual franchisees are ________. a. a tightl" 'nit group of enterprises whose s"stematic operations are planned, directed, and controlled b" the franchisor b. regional managers of corporatel" owned facilities c. emplo"ees wor'ing in front)line service roles for the entrepreneur d. independent businesspeople who have the freedom to develop their own processes, brands, and images, facilitated b" a retailing cooperative e. none of the above Answer: a Page: ; !ifficult": 0edium AA$%&: Anal"tic %'ills 1(. /ranchising accounts for more than D1 trillion of annual E.%. sales and nearl" one) third of all retail transactions. /ranchises are distinguished b" three characteristics, which are: F1G 2he franchisee pa"s for the right to be part of the s"stem: F(G the franchisor provides its franchisees with a s"stem for doing businessH and F-G ________. a. the franchisor controls all actions of the franchisee including hiring and mar'eting decisions b. the franchisee has unlimited freedom to change the operation once heIshe pa"s the upfront charges c. the franchisor owns a trade or service mar' and licenses it to franchisees in return for ro"alt" pa"ments d. the franchisor receives a percentage of sales from the franchisee for the right to belong e. none of the above Answer: c Page: ; !ifficult": 9ard AA$%&: Anal"tic %'ills 1-. In the face of increased competition from discount houses and specialt" stores, department stores are waging a comebac' war. 2wo models for department storesJ success seems to be emerging. 2he first is a store that has a strong retail brand approach, as demonstrated b" KohlJs in the Enited %tates. 2he second model is the ________, t"pified b" Laleries .afa"ette in Paris. a. tourist area store b. single brand store c. limited variet" store d. specialt" store e. showcase store Answer: e Page: A !ifficult": 0edium

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1 . 1ecent trends in retailing includes which of the following? a. 1eduction in the level of global competition b. !ecline in the *shop at home, mar'ets c. Lrowth of the *smaller, bouti+ue)t"pe stores d. $ompetition between Internet selling and store)based retailing e. $ompetition between store)based and non)store)based retailing Answer: e Page: A !ifficult": 9ard AA$%&: 1eflective 2hin'ing 1;. 1etailers must ma'e mar'eting decisions in the areas of product assortment and procurement, services and store atmosphere, prices, communications, locations, and ________. a. niche b. st"le c. shoppers d. target mar'et e. procedures Answer: d Page: B !ifficult": 0edium AA$%&: Anal"tic %'ills 15. 2he retailer must decide on product)assortment breadth and ________. a. store location b. la"out c. prices d. selection e. depth Answer: e Page: B !ifficult": B AA$%&: Anal"tic %'ills 1A. After deciding on the product)assortment strateg", the retailer must establish merchandise sources, ________, and practices. a. vendors b. suppliers c. lead times d. policies e. bu"ers Answer: d Page: ;7 !ifficult": #as" 1B. 2he first step to retail categor" management is to ________, which means deciding where to draw the line between product categories. a. set goals b. choose the audience c. figure out tactics d. define the categor" e. figure out the categor"Js role Answer: d Page: 8 !ifficult": 0edium AA$%&: Anal"tic %'ills

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$hapter 15: 0anaging 1etailing, <holesaling, and .ogistics

18. 1etailers are rapidl" improving their s'ills in demand forecasting, merchandise selection, stoc' control, space allocation, and ________. a. advertising b. displa" c. choosing the media mix d. selecting the mar'eting channels e. none of the above Answer: b Page: ;7 !ifficult": #as" (7. According to A.$. =ielsen $ompan", when considering whether to stoc' a new product, store mangers are most influenced b" ________. a. generous financial incentives to the trade b. a well)designed advertising and sales promotion plan c. attractive pac'aging that will catch consumersJ attention d. strong evidence of customer acceptance e. none of the above Answer: d Page: ;7 !ifficult": 9ard AA$%&: Anal"tic %'ills (1. <hen retailers stud" the economics of bu"ing and selling individual products, the" t"picall" find that ________ of their s+uare footage is tied up in products that donJt ma'e an economic profit for them. a. half b. a +uarter c. almost all d. none e. a third Answer: e Page: ;1 !ifficult": 9ard AA$%&: Anal"tic %'ills ((. ________ measures a productJs handling costs from the time the product reaches the warehouse until a customer bu"s it in the retail store. a. &rand management b. %helf management c. Profitabilit" anal"sis d. !irect product profitabilit" anal"sis e. !irect product performance anal"sis Answer: d Page: ;1 !ifficult": 0edium (-. 2he three elements of the services mix for retailers includes ________. a. target mar'eting b. breath and depth c. transition zone d. direct product profitabilit" e. ancillar" services Answer: e Page: ;( !ifficult": #as" AA$%&: Anal"tic %'ills

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( . 0ost retailers will put low prices on some items to serve as traffic builders or _____________. a. loss leaders b. profit leaders c. traffic leaders d. ad items e. none of the above Answer: a Page: ;( !ifficult": #as" AA$%&: Anal"tic %'ills (;. /ine specialt" retailers most li'el" fall into the ________ group with respect to margins and volume. a. mixed mar'up, high)volume b. low)volume, mixed mar'up c. low)volume, low)mar'up d. high)volume, high)mar'up e. high)mar'up, lower)volume Answer: e Page: ;( !ifficult": 0edium (5. ________ isFareG a 'e" positioning factor for retailers and must be decided in relation to the target mar'et, the product)and)service assortment mix, and the competition. a. 9ours of operation b. Advertisement c. .ocations d. Prices e. Assortment Answer: d Page: ;( !ifficult": #as" AA$%&: Anal"tic %'ills (A. #ver" store has a *loo', and a ph"sical la"out that ma'es it hard or eas" to move around. 2hese elements constitute a storeJs ________. a. la"out b. transition zone c. atmosphere d. brands e. none of the above Answer: c Page: ;!ifficult": #as" AA$%&: 1eflective 2hin'ing (B. In the pursuit of higher sales volume, retailers are stud"ing their store environments for wa"s to improve the shopperJs experience. According to Paco Enderhill, one of his suggestions for fine)tuning retail space is to ________. a. ma'e the store *fun, and *interesting, but move the shoppers through it +uic'l" b. honor the *transition zone, and allow the shopper time to *sort out, the stimuli c. place the chec'outs in the rear of the store d. ma'e the store more receptive to *men, shoppers e. ma'e them *hunt, for it Answer: b Page: ; !ifficult": 9ard

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$hapter 15: 0anaging 1etailing, <holesaling, and .ogistics

(8. 2raditional bric')and)mortar retailers are responding to the growth of e)commerce b" providing and emphasizing ________ as a strong differentiator. a. celebrities on the premises b. the shopping experience c. expert advice in selecting merchandise d. a wider selection of merchandise e. the reputation of the retailer Answer: b Page: ; !ifficult": 9ard AA$%&: Anal"tic %'ills -7. 1etailers can locate their stores in the central business district, a regional shopping center, ________, a shopping strip, or within a larger store. a. suburbia b. town centers c. strip malls d. a freestanding location e. a communit" shopping center Answer: e Page: ;; !ifficult": #as" AA$%&: Anal"tic %'ills -1. 1etailers can assess a particular storeJs sales effectiveness b" loo'ing at F1G the number of people passing b" on an average da"H F(G the _________H F-G the percentage of those entering who bu"H and F G the average amount spent per sale. a. percentage of customers who bought merchandise on *sale, b. total units sold per da" c. total dollar sales per da" d. percentage of those who bu" full)price merchandise e. percentage who enter the store Answer: e Page: ;; !ifficult": 9ard AA$%&: 1eflective 2hin'ing -(. A brand developed b" a retailer andIor wholesaler that is available onl" in selected retail outlets is called a _________ brand. a. national b. household c. premium d. selective e. private)label Answer: e Page: ;5 !ifficult": #as" AA$%&: Anal"tic %'ills --. Intermediaries sponsor their own brands because ________. a. private)label brands sell at higher volumes b. private)label brands are recognizable to the consumer as being widel" available from man" different retailers c. private)label brands are alwa"s of better +ualit" than national brands d. private)label brands can be sold at lower prices "et generate a higher profit margin because of their lower cost structure e. all of the above Answer: d Page: ;5 !ifficult": 0edium AA$%&: 1eflective 2hin'ing

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- . ________ are unbranded, plainl" pac'aged, less expensive versions of common products such as spaghetti, paper towels, and canned peaches. a. %lotting fees b. =ational products c. Lenerics d. Private labels e. %hopping strips Answer: c Page: ;A !ifficult": 0edium AA$%&: Anal"tic %'ills -;. &ecause shelf space is scarce, man" supermar'ets now charge a ________ for accepting a new brand, to cover the cost of listing and stoc'ing it. a. generic b. slotting fee c. shopping strip d. promotion allowance e. none of the above Answer: b Page: ;A !ifficult": #as" AA$%&: Anal"tic %'ills -5. &esides the growing power of store brands, other factors wea'ening national brands include the fact that ________. a. national brandsJ +ualit" is superior to store brands b. national manufacturers have increased advertising support for their brands c. national brands have +ualit" control problems not found in store brands d. consumers are more price sensitive e. consumers are more selective on purchases of national brands Answer: d Page: ;A !ifficult": 9ard AA$%&: 1eflective 2hin'ing -A. 2he functions that wholesalers perform include all of the following #4$#P2 ________. a. bul' brea'ing b. bu"ing and assortment building c. financing d. producing e. mar'et information Answer: d Pages: ;B) ;8 !ifficult": 0edium -B. ________ refers to bu"ing large carload lots and dividing them into smaller units before shipping them out to consumers. a. &ul' brea'ing b. $ontainerization c. <holesaling d. <arehousing e. 0ar'et logistics Answer: a Page: ;B !ifficult": #as" AA$%&: Anal"tic %'ills

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$hapter 15: 0anaging 1etailing, <holesaling, and .ogistics

-8. !istributors differ from retailers in a number of wa"s. >ne of these wa"s is that distributor transactions are usuall" ________ than retail transactions. a. more concise b. larger c. more complicated d. more involved e. more limited Answer: b Page: ;B !ifficult": 0edium 7. 0a3or wholesaler t"pes include all of the following #4$#P2 ________. a. full)service wholesalers b. specialized wholesalers c. cash and carr" wholesalers d. merchant wholesalers e. direct)to)consumer wholesalers Answer: e Page: ;8 !ifficult": 0edium AA$%&: Anal"tic %'ills 1. ________ are independentl" owned businesses that ta'e title to the merchandise the" handle. 2he" are full)service and limited)service 3obbers, distributors, and mill suppl" houses. a. &ro'ers b. Agents c. 0erchant wholesalers d. %pecialized wholesalers e. 1etailersJ branches Answer: c Page: ;8 !ifficult": 9ard (. <holesaler)distributors have faced mounting pressure in recent "ears. 2he" have had to develop appropriate strategic responses. >ne ma3or drive has been to increase ________ productivit" b" managing their inventories and receivables better. a. product assortment b. bu"ing practices c. personnel d. asset e. products Answer: d Pages: ;8@ 57 !ifficult": 0edium AA$%&: Anal"tic %'ills -. %uppl" chain management F%$0G starts before ph"sical distribution. It involves procuring the right inputs, _____ them efficientl" into finished products, and then distributing them to the right customers. a. using b. converting c. delivering d. labeling e. procuring Answer: b Page: 51 !ifficult": 0edium AA$%&: Anal"tic %'ills

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. ________ involves planning the infrastructure to meet demand, then implementing and controlling the ph"sical flows of materials and final goods from points of origin to points of use, to meet customer re+uirements at a profit. a. 0ar'et logistics b. %uppl" chain management c. %$0 d. Integrated logistics s"stems e. =one of the above Answer: a Page: 51 !ifficult": 0edium ;. Integrated logistics s"stems FI.%G involves materials management, ________, and ph"sical distribution, aided b" information technolog". a. information flow s"stems b. material flow s"stems c. cash flow s"stems d. product management s"stems e. none of the above Answer: b Page: 5( !ifficult": 0edium AA$%&: Anal"tic %'ills 5. 0aximum customer service implies larger inventories, premium transportation, and multiple warehouses, all of which raise mar'et)logistics costs. 0ar'et)logistics costs interact with mar'eting strateg" and are often ________ related. a. disproportionatel" b. positivel" c. negativel" d. complementaril" e. none of the above Answer: c Page: 5( !ifficult": 9ard AA$%&: 1eflective 2hin'ing A. <hen considering competitorsJ service standards, companies normall" want to match or exceed the competitorsJ service level while simultaneousl" maximizing ________. a. profit b. revenue c. sales d. costs e. all of the above Answer: a Page: 5!ifficult": 0edium AA$%&: Anal"tic %'ills B. /our ma3or decisions must be made with regard to mar'et logistics: order processing, warehousing, inventor", and ________. a. transportation b. purchases c. pricing d. information e. none of the above Answer: a Page: 5 !ifficult": #as"

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$hapter 15: 0anaging 1etailing, <holesaling, and .ogistics

8. 2he elapsed time between an orderJs receipt, deliver", and pa"ment is called the ________. a. variable)costs)to)pa"ment c"cle b. product)to)pa"ment c"cle c. inventor")to)sale c"cle d. order c"cle e. order)to)pa"ment c"cle Answer: e Page: 5 !ifficult": #as" AA$%&: Anal"tic %'ills ;7. ________ cost increases at an accelerating rate as the customer)service level approaches 177M. a. !eliver" b. Promotion c. Inventor" d. 0erchandising e. %torage Answer: c Page: 5 !ifficult": #as" AA$%&: Anal"tic %'ills ;1. At some stoc' level point, management must reorder product to refill the inventor" to an acceptable level. 2his point is called the ________. a. order FreorderG point b. inventor" c. minimum inventor" level d. inventor" carr"ing costs e. none of the above Answer: a Page: 5 !ifficult": 0edium ;(. ________ warehouses store goods for moderate to long periods of time. a. !istribution b. Automated c. %torage d. $ompan")owned e. .ocal Answer: c Page: 5 !ifficult": #as" ;-. Inventor")carr"ing costs represent substantial dollars for manufacturers. 2hese inventor")carr"ing costs include storage charges, cost of capital, taxes and insurance, and depreciation and obsolescence. $arr"ing costs might run as high as ________ of the value of the inventor". a. A7M b. 7M c. (;M d. -7M e. ;7M Answer: d Page: 5 !ifficult": 9ard AA$%&: Anal"tic %'ills

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; . &e"ond the optimal order +uantit", total cost per unit increases because ________. a. inventor")carr"ing cost per unit increases b. inventor")carr"ing cost per unit decreases c. order)processing cost per unit rises d. order)processing cost per unit falls more rapidl" e. order)processing cost per unit falls more slowl" Answer: e Page: 5; !ifficult": 9ard ;;. $ompanies are reducing their inventor" costs b" treating inventor" items differentl", positioning them according to ris' and opportunit". 9igh)ris', low)opportunit" items are 'nown as ________. a. nuisance items b. bottlenec' items c. commodities d. critical items e. containerized items Answer: b Page: 5; !ifficult": 9ard AA$%&: Anal"tic %'ills ;5. ________ consists of putting goods in boxes or trailers that are eas" to transfer between two transportation modes. a. $ontainerization b. Private labeling c. Inventor" carr"ing d. >rder processing e. <arehousing Answer: a Page: 55 !ifficult": #as" AA$%&: Anal"tic %'ills ;A. If the shipper owns its own truc' or air fleet, it becomes a ________. a. containerized carrier b. private carrier c. contract carrier d. common carrier e. diversified carrier Answer: b Page: 55 !ifficult": 0edium ;B. In deciding on the method or means of transportation, shippers consider such criteria as speed, fre+uenc", ________, capabilit", availabilit", traceabilit", and costs. a. air versus ground b. g"ps" truc'ers c. dependabilit" d. branded name truc'ers e. costs per mile Answer: c Page: 55 !ifficult": #as" AA$%&: Anal"tic %'ills

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$hapter 15: 0anaging 1etailing, <holesaling, and .ogistics

;8. 2oda" customers want more fre+uent deliveries, shorter order)c"cle times, direct store deliveries, mixed pallets, tighter promised times, and ________ pac'aging, price tagging, and displa" building. a. colorful b. childproof c. custom d. eas" opening e. theftproof Answer: c Page: 55 !ifficult": 0edium AA$%&: Anal"tic %'ills 57. 0ar'et)logistics strategies must be derived from ________, rather than solel" from cost considerations. a. competitive anal"sis b. low)cost considerations c. cost strategies d. business strategies e. mar'eting strategies Answer: d Page: 55 !ifficult": 0edium AA$%&: 1eflective 2hin'ing

Tr$e%&alse
51. 1etailing includes all the activities involved in selling goods or services directl" to final consumers for personal, nonbusiness use. Answer: 2rue Page: ( !ifficult": #as" AA$%&: Anal"tic %'ills 5(. An" organization selling to the final consumers is doing retailing. 9owever, it matters how the goods or services are sold and where the" are sold. Answer: /alse Page: ( !ifficult": #as" AA$%&: 1eflective 2hin'ing 5-. 1etailers can position themselves as offering one of four levels of service. 9owever, self)selection and self)service are the same in discount retailers. Answer: /alse Page: ( !ifficult": #as" AA$%&: 1eflective 2hin'ing 5 . An off-price retailer is one in which the retailer has a broad selection of high)mar'up, fast)moving, brand)name goods in stoc'. Answer: /alse Page: !ifficult": 0edium AA$%&: Anal"tic %'ills 5;. Full service retailers have salespeople who are read" to assist the customers in ever" phase of their shopping trip. Answer: 2rue Page: !ifficult": 0edium 55. Nonstore retailing has not been growing as fast as traditional store retailing. Answer: /alse Page: !ifficult": 9ard AA$%&: Anal"tic %'ills

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5A. $orporate retail organizations achieve economies of scale, greater purchasing power, wider brand recognition, and better)trained emplo"ees. Answer: 2rue Page: !ifficult": 0edium AA$%&: 1eflective 2hin'ing 5B. All of the benefits in a franchising s"stem accrue to the franchisor because the franchisor is able to concentrate the ris' and effort associated with running a store in the hands of the franchisee. Answer: /alse Page: ; !ifficult": 0edium AA$%&: 1eflective 2hin'ing 58. 2he two models of the traditional department storeJs responses to competition is to develop a store with strong retail brand approaches and the *showcase, store. Answer: 2rue Pages: 5@ A !ifficult": 0edium AA$%&: Anal"tic %'ills A7. !epartment stores toda" are exclusivel" worried about competition from other department stores. >ther retailing forms are not a threat to department storesJ sales and profitabilit". Answer: /alse Page: A !ifficult": #as" AA$%&: 1eflective 2hin'ing A1. >ne of the up and coming trends in retailing is the growth of giant retailers, 'nown as category killers and supercenters. Answer: 2rue Page: A !ifficult": #as" AA$%&: Anal"tic %'ills A(. 2oda", growth in the retail mar'et is centered firml" in the middle mar'et, leaving luxur" retailers and discounting specialists struggling. Answer: /alse Page: A !ifficult": 0edium AA$%&: Anal"tic %'ills A-. 2he retailerJs product assortment does not need to match the target mar'etJs shopping expectations. Answer: /alse Page: B !ifficult": 0edium A . A retailerJs real challenge begins after defining the storeJs product assortment, and that is to develop a product)differentiation strateg". Answer: 2rue Page: ;7 !ifficult": 0edium AA$%&: 1eflective 2hin'ing A;. 1etailers are generall" eager to stoc' new products, ma'ing it difficult for manufacturers to 'eep older, but proven brands on the shelves. Answer: /alse Page: ;7 !ifficult": 0edium AA$%&: 1eflective 2hin'ing A5. &ecause of the high cost of retail space, most retailers are highl" attuned to which of the products the" stoc' generate profit. Answer: /alse Page: ;1 !ifficult": 0edium AA$%&: Anal"tic %'ills AA. Prices are a 'e" positioning factor to retailers and must be decided in relation to the target mar'et. Answer: 2rue Page: ;( !ifficult": 0edium AA$%&: Anal"tic %'ills

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$hapter 15: 0anaging 1etailing, <holesaling, and .ogistics

AB. 2he amount of time shoppers spend in a store is perhaps the single most important factor in determining how much the" will bu". Answer: 2rue Page: ; !ifficult": 0edium AA$%&: Anal"tic %'ills A8. Paco Enderhill suggests that retailers, to increase sales volume, ma'e their shoppers hunt for the merchandise. 9is logic is this: <hile *hunting,, the shopper will be exposed to more and more products, thus the li'elihood increases that the shopper will purchase *impulse, items, thus increasing their overall purchase total. Answer: /alse Page: ; !ifficult": 9ard B7. >ne of a retailerJs most important decisions is *location, location, location., Answer: 2rue Page: ;; !ifficult": 9ard AA$%&: Anal"tic %'ills B1. 2here is generall" a relationship between high customer traffic and high rents in choosing a retail location. Answer: 2rue Page: ;; !ifficult": 9ard AA$%&: 1eflective 2hin'ing B(. Private)label merchandise is also 'nown as store, house, or distributor brands. Answer: 2rue Page: ;5 !ifficult": #as" AA$%&: Anal"tic %'ills B-. 1etailers develop their own *store brands, to differentiate themselves from other retailers and the national branded merchandise. Answer: 2rue Page: ;5 !ifficult": 0edium AA$%&: 1eflective 2hin'ing B . 2he lower price of generics is made possible b" lower)+ualit" ingredients, lower)cost labeling and pac'aging, and minimal advertising. Answer: 2rue Page: ;A !ifficult": 0edium AA$%&: Anal"tic %'ills B;. 2he growing power of store brands is not wea'ening the national brands due to the national brandsJ increases in advertising and research and development. Answer: /alse Page: ;A !ifficult": 9ard AA$%&: 1eflective 2hin'ing B5. <holesaling includes all the activities involved in selling goods or services to those who bu" for resale or business use. <holesaling includes manufacturers and farmers who sell directl" to consumers. Answer: /alse Page: ;B !ifficult": 9ard AA$%&: Anal"tic %'ills BA. <holesaler)distributors have not faced the pressures in recent "ears from new sources of competition, demanding customers, new technologies, or more direct)bu"ing programs. Answer: /alse Page: ;8 !ifficult": 9ard AA$%&: 1eflective 2hin'ing BB. &ecause wholesalers do not actuall" manufacture a product, the" are unable to effectivel" manage asset productivit". Answer: /alse Page: 57 !ifficult": #as" AA$%&: Anal"tic %'ills

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B8. %uppl" chain management starts when the product comes off the factor" floor and enters the distributionItransportation channels. Answer: /alse Page: 51 !ifficult": 0edium AA$%&: Anal"tic %'ills 87. 0ar'et logistics involves planning the infrastructure to meet demand, then implementing and controlling the ph"sical flows of materials and final goods from points of origin to points of use, to meet customer re+uirements at a profit. Answer: 2rue Page: 51 !ifficult": 0edium 81. Integrated logistics s"stems involves materials management, material flow s"stems, and electronic distribution. Answer: /alse Page: 5( !ifficult": 0edium AA$%&: Anal"tic %'ills 8(. 2oda" information s"stems pla" a critical role in managing mar'et logistics, especiall" computers, satellite trac'ing, and electronic funds transfers. Answer: 2rue Page: 5( !ifficult": #as" AA$%&: Ese of I2 8-. $hoosing a mar'et)logistics s"stem calls for examining the total cost F0G associated with different proposed s"stems and selecting the s"stem that minimizes it, where 2 Ftotal freight costsG N /< Ftotal fixed warehouse costG N :< Ftotal variable warehouse costsG is expressed as 0 O 2 N /< N :<. Answer: 2rue Page: 5!ifficult": 9ard AA$%&: Anal"tic %'ills 8 . >ne of the four ma3or decisions that must be made about mar'et logistics is: 9ow much inventor" do we 'eep in the warehouse? Answer: 2rue Page: 5 !ifficult": 9ard AA$%&: 1eflective 2hin'ing 8;. 2he order-to-payment cycle is the elapsed time between an orderJs receipt, deliver", and pa"ment b" the customer. Answer: 2rue Page: 5 !ifficult": #as" AA$%&: Anal"tic %'ills 85. >rder)processing costs must be compared with inventory-carrying costs because as the amount of stoc' carried increases, the higher the inventor")carr"ing costs. Answer: 2rue Page: 5 !ifficult": 0edium AA$%&: 1eflective 2hin'ing 8A. Inventor" costs increases at a decreasing rate as customer)service levels approach 177M fulfillment. Answer: /alse Page: 5 !ifficult": 0edium AA$%&: Anal"tic %'ills 8B. 2he choice of transportation methods of distribution have negligible effects on the prices charged for the product and therefore mar'eters need not be overl" involved in this process. Answer: /alse Page: 5; !ifficult": 0edium AA$%&: 1eflective 2hin'ing

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$hapter 15: 0anaging 1etailing, <holesaling, and .ogistics

88. 2he logistics s"stem must be information intensive and establish electronic lin's among all the significant parties. Answer: 2rue Page: 55 !ifficult": 0edium AA$%&: Anal"tic %'ills 177. In shipping goods to its warehouses, dealers, and customers, the compan" can choose between five transportation modes: rail, air, truc', waterwa", and pipeline. Answer: 2rue Page: 55 !ifficult": #as" AA$%&: Anal"tic %'ills

Essa'
171. 2he *wheel)of)retailing, h"pothesis explains one reason that new store t"pes emerge. #xplain this h"pothesis and delineate the four service levels available to retailers. "$ggested Ans(er: 2he *wheel)of)retailing, h"pothesis states that conventional retail stores t"picall" increase their services and raise their prices to cover the costs. 2hese higher costs provide an opportunit" for new store forms to offer lower prices and less service. =ew store t"pes meet widel" different consumer preferences for service levels and specific services. 2he four levels of service are: F1G self)service, F(G self)selection, F-G limited service, and F G full service. Pages: (@ - !ifficult": 9ard AA$%&: Anal"tic %'ills 17(. Although the overwhelming bul' of goods and services are sold through stores, nonstore retailing has been growing much faster than store retailing. =onstore retailing falls into four ma3or categories. .ist and briefl" define each categor". "$ggested Ans(er: 2he four categories are: F1G direct selling that includes multilevel selling and networ' mar'eting firms such as 2upperware and Amwa"H F(G direct mar'eting, including catalog sales and direct mailH F-G automatic vending that includes vending machinesH and F G bu"ing service that is usuall" a storeless retailer that serves a specific clienteleCusuall" emplo"ees of large organizations. Page: !ifficult": 9ard 17-. In what wa"s does franchising benefit the franchisor? In what wa"s does it benefit the franchisee? "$ggested Ans(er: /ranchising benefits both the franchisor and the franchisee. /rancisors gain the motivation and hard wor' of emplo"ees who are entrepreneurs rather than *hired hands,, the franchiseesJ familiarit" with local communities and conditions, and the enormous purchasing power of being a franchisor. /ranchisees benefit from bu"ing into a business with a well)'nown and accepted brand name. 2he" find it easier to borrow mone" for their business from financial institutions, and the" receive support in areas ranging from mar'eting and advertising to site selection and staffing. Pages: ;@ 5 !ifficult": 9ard AA$%&: Anal"tic %'ills

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17 .

2he trends in retailing include new retail forms and combinations. .ist the six other trends in retailing discussed in the chapter. "$ggested Ans(er: &esides new retail forms and combinations, the other six retail trends are: F1G growth of intert"pe competitionH F(G competition between store)based and non)store)based retailingH F-G growth of giant retailersH F G decline of middle)mar'et retailersH F;G growing investment in technolog"H and F5G new retail forms and combinations. Pages: 5@ A !ifficult": 9ard AA$%&: Anal"tic %'ills

17;.

1etailers are facing increasing competition from other manufacturer)to)consumer distribution channels. A retailer must develop a product)differentiation strateg". 2he author suggests seven product)differentiation strategies. .ist and explain these seven. "$ggested Ans(er: 2he seven possibilities are: F1G /eature exclusive national brands that are not available at competing retailersH F(G feature mostl" private) label merchandiseH F-G feature bloc'buster distinctive merchandise eventsH F G feature surprise or ever)changing merchandiseH F;G feature the latest or newest merchandise firstH F5G offer merchandise)customizing servicesH and FAG offer a highl" target assortment. Page: ;7 !ifficult": 9ard

175.

Paco Enderhill, managing director of the retail consultanc" #nvirosell Inc., offers several tips for fine)tuning retail space in order to 'eep shoppers spending. .ist three of them. "$ggested Ans(er: Paco Enderhill offers the following advice: F1G Attract shoppers and 'eep them in the storeH F(G honor the *transition zone,H F-G donJt ma'e consumers huntH F G ma'e merchandise available to the reach and touchH F;G note that men do not as' +uestionsH F5G remember that women need spaceH and FAG ma'e chec'out eas". Page: ; !ifficult": 9ard AA$%&: Anal"tic %'ills

17A.

2he growth of *house brands, has s'"roc'eted in recent "ears. <h" do intermediaries bother to sponsor their own brands? "$ggested Ans(er: /irst, these brands can be more profitable. Intermediaries search for manufacturers with excess capacit" that will produce the private label at a low cost. >ther costs, such as 1P!, advertising, sales promotion, and ph"sical distribution are also much lower. %econd, retailers develop exclusive store brands to differentiate themselves from competitors. Page: ;5 !ifficult": 9ard AA$%&: 1eflective 2hin'ing

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17B.

In the confrontation between manufacturersJ and private brands, retailers have man" advantages and increasing mar'et power. <hat are some of the other factors affecting or wea'ening the national brands? "$ggested Ans(er: $onsumers are more price sensitive toda". $onsumers are noting the better +ualit" as competing manufacturers and national retailers cop" and duplicate the +ualities of the best brands. 2he continuous barrage of coupons and price specials has trained a generation of shoppers to bu" on price. 2he fact that companies have reduced advertising to -7M of their total promotion budget has in some cases wea'ened their brand e+uit". 2he stead" stream of brand extensions and line extensions has blurred brand identit" and led to a confusing amount of product proliferation. Page: ;A !ifficult": 9ard AA$%&: 1eflective 2hin'ing

178.

In general, wholesalers are efficient in performing specific functions. .ist these nine functions. "$ggested Ans(er: 2hese nine are: F1G selling and promotingH F(G bu"ing and assortment buildingH F-G bul' brea'ingH F G warehousingH F;G transportationH F5G financingH FAG ris' bearingH FBG mar'et informationH and F8G management services and counseling. Pages: ;B@ ;8 !ifficult": 0edium AA$%&: Anal"tic %'ills

117.

2oda", stronger demands for logistical support from large customers will increase suppliersJ costs. <hat are the demands that retailers are re+uiring of manufacturers? "$ggested Ans(er: $ustomers want more fre+uent deliveries so that the" do not have to carr" as much inventor". 2he" want shorter order)c"cle times, which means that suppliers will have to carr" high in)stoc' availabilit". $ustomers often want direct store deliver" rather than shipments to distribution centers. 2he" want mixed pallets rather separate pallets. 2he" want tighter promised deliver" times. 2he" ma" want custom pac'aging, price tagging, and displa" building. Page: 55 !ifficult": 9ard AA$%&: 1eflective 2hin'ing

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APPL#CAT#ON M$ltiple Choice


111.

!E"T#ON"

$ustomers who li'e to be waited on prefer to shop in stores that offer ________. a. limited service b. self)service c. full service d. part)time service e. events and experiences Answer: c Page: !ifficult": #as" AA$%&: 1eflective 2hin'ing 11(. Qou and "our best friend are considering opening a retail store. Qou have identified "our target mar'et and location. =ow "ou must decide on the format. Qou are pressing for a store that offers leftover goods, overruns, and irregular merchandise sold at less than full retail. 2his is a description of aFnG _________ retailer. a. off)price b. self)service c. discount d. limited)service e. none of the above Answer: a Page: !ifficult": 0edium AA$%&: Anal"tic %'ills 11-. Qou have ideas of owning a %ubwa" after graduation. In owning a %ubwa" location, "ou are entering a ________ agreement. a. voluntar" b. self)service c. franchise d. merchandising e. none of the above Answer: c Page: !ifficult": 0edium 11 . In "our restaurant "ou offer a wide variet" of dishes and are open for brea'fast, lunch, and dinner. In terms of product assortment, "ou can claim that "our restaurant has a product assortment that has ________. a. a narrow focus and narrow target mar'et b. appeal to all consumers c. location and variet" d. variet" and long hours e. breadth and depth Answer: e Page: B !ifficult": 9ard AA$%&: Anal"tic %'ills

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11;.

Esing direct product profitabilit" anal"sis, man" users are learning, to their surprise, that the gross margin on a product ________ the direct product profit. a. is highl" correlated with b. is negligible compared to c. often bears little relation to d. is often significantl" less than e. is exactl" the same as Answer: c Page: ;1 !ifficult": 0edium AA$%&: Anal"tic %'ills 115. 0ass merchandisers and discount stores t"picall" fall into the ________ group with respect to margins and volume. a. mixed mar'up, high)volume b. low)volume, mixed mar'up c. low)volume, low)mar'up d. high)volume, low)mar'up e. high)mar'up, lower)volume Answer: d Page: ;( !ifficult": #as" AA$%&: Anal"tic %'ills 11A. In "our neighborhood there is a small menJs store that has a limited selection of clothing, but the selection that is carried is of ver" high +ualit" and price. %ervices include free alterations and tailoring, personalized record 'eeping, and free dr" cleaning. 2he inside of the store has deep leather chairs and couches and thic' pile carpet. Epon entering the store, one feels *special and rich., In terms of differentiation, what is this retailer tr"ing to communicate b" its decorations and service level? a. !ifferentiation based upon services mix and atmosphere b. !ifferentiation based upon prepurchase services c. !ifferentiation based upon postpurchase services and atmosphere d. !ifferentiation based upon ancillar" services and atmosphere e. =one of the above Answer: a Pages: ;(@ ;- !ifficult": 0edium AA$%&: 1eflective 2hin'ing 11B. =atural advantages of bric')and)mortar over e)commerce retailers include ________. a. products that shoppers can actuall" see b. real)life customer service c. no deliver" lag time for small or medium)sized purchases d. a shopping experience e. all of the above Answer: e Page: ; !ifficult": #as"

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118.

As a mar'eting intern, "our 3ob is to *hang out at the mall, and note the percentage of people who enter a particular store versus those who pass b" it. 2his is an example of _________ for retailers. a. measuring advertisement effectiveness b. measuring foot traffic at the mall c. measuring consumer shopping patterns d. measuring retail sales effectiveness e. measuring retail locations Answer: d Page: ;; !ifficult": 0edium 1(7. <al)0artJs >lJ1o" dog food has surpassed =estlRJs Purina brand as the top) selling dog chow. >lJ1o" is an example of a ________. a. generic b. national brand c. franchise d. cop")cat brand e. private)label brand Answer: e Page: ;5 !ifficult": 0edium AA$%&: Anal"tic %'ills 1(1. As a sales representative for a ma3or food manufacturer, "our largest customer has as'ed "ou to provide him with a product that meets the following definition: It must not contain an" brand name, be plainl" pac'aged, use less expensive ingredients, use lower)+ualit" raw products in its ma'eup, and not allocate an" funds for advertising and promotion. <hat t"pe of product is "our bu"er describing that he wants from "ou? a. 1eseller brand b. %tore brand c. Private label d. 9ouse brand e. Leneric Answer: e Page: ;A !ifficult": 0edium 1((. Agricultural assemblers, petroleum bul' plants and terminals, and auction companies are examples of ________. a. full)service wholesalers b. specialized wholesalers c. limited)service wholesalers d. merchant wholesalers e. bro'ers Answer: b Page: ;8 !ifficult": 9ard AA$%&: Anal"tic %'ills

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$hapter 15: 0anaging 1etailing, <holesaling, and .ogistics

1(-.

<hich of the following is true of bro'ers? a. &ro'ers represent bu"ers or sellers on a semipermanent basis. b. 0ost bro'ers are small businesses with a few s'illed salespeople. c. &ro'ers bring bu"ers and sellers together and assist in negotiation . d. %elling bro'ers have contractual authorit" to sell a manufacturerJs entire output. e. Purchasing bro'ers ma'e purchases for bu"ers and often receive, inspect, warehouse, and ship merchandise. Answer: c Page: ;8 !ifficult": 9ard AA$%&: Anal"tic %'ills 1( . Qou are interviewing for a 3ob after graduation with a wholesaler. In "our preparation for the interview, "ou discover that the wholesaler carries over 17,777 stoc''eeping units, maintains a sales force, ma'es store door deliveries, and provides management and research assistance to retailers. Qou are interviewing with a ________ wholesaler. a. specialized b. rac' 3obber c. full)service d. cash and carr" e. merchant Answer: c Page: ;8 !ifficult": 0edium AA$%&: Anal"tic %'ills 1(;. 2he compan" that "ou wor' for has outlined the following to its customers: >ur on)time deliveries will be set at 8;MH ordering and billing accurac" will be at a minimum of 8BMH and we will establish four warehouses to serve the Enited %tates. 2hese policies relate to ________. a. customer responsiveness b. targeted mar'eting c. integrated logistics s"stems d. mar'et logistics e. suppl" chain management Answer: d Page: 51 !ifficult": 0edium 1(5. ________ encompass sales forecasting, production planning, and inbound materials transportation. a. 0ar'et logistics b. $ontainerization c. %uppl" chain management d. =onstore retailing e. <holesaling Answer: a Page: 5( !ifficult": 0edium AA$%&: Anal"tic %'ills

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1(A.

A stoc' reorder point of 17 means reordering the product ________. a. ever" 17 da"s b. when stoc' falls to 17 units c. ever" 17 units d. when stoc' falls to 8 units e. none of the above Answer: b Page: 5 !ifficult": 0edium AA$%&: Anal"tic %'ills 1(B. $ompanies are reducing inventor" costs b" treating inventor" items differentl". $ritical items defined as high ris', high opportunit" and commodities defined as low ris', high opportunit". 1ecentl", "our compan" has introduced a product that is considered b" the distributor a *bottlenec', item. <hat is the ris'Ireward relationship for bottlenec' items? a. .ow ris', mediocre opportunit" b. .ow ris', high opportunit" c. .ow ris', low opportunit" d. 9igh ris', high opportunit" e. 9igh ris', low opportunit" Answer: e Page: 5; !ifficult": 9ard 1(8. >ptimal order +uantities exist when the order)processing cost per unit and inventor")carr"ing cost per unit curves ________. a. increase to 1 b. decrease to less than 1 c. intersect d. e+ual each other e. e+ual zero Answer: c Page: 5; !ifficult": 0edium AA$%&: Anal"tic %'ills 1-7. 2he truc'ing firm hired b" "our transportation manager provides service between the =ortheast and the %outheast on a regular schedule. 9iring this shipper is available to all at standard rates. Qour transportation manager has hired a _____________. a. common carrier b. contract carrier c. private carrier d. pigg"bac'ed carrier e. g"ps" carrier Answer: a Page: 55 !ifficult": 0edium AA$%&: Anal"tic %'ills

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$hapter 15: 0anaging 1etailing, <holesaling, and .ogistics

"hort Ans(er
1-1. !irect mar'eting has its roots in direct)mail and catalog mar'eting. <hat other 'inds of direct mar'eting exist? "$ggested Ans(er: !irect mar'eting includes telemar'eting, television direct) response mar'eting, and electronic shopping. Page: !ifficult": 0edium AA$%&: Anal"tic %'ills 1-(. Identif" and describe three of the six ma3or t"pes of corporate retail organizations. "$ggested Ans(er: 2he six ma3or t"pes of corporate retail organizations are: F1G corporate chain storeH F(G voluntar" chainH F-G retailer cooperativeH F G consumer cooperativeH F;G franchise organizationH and F5G merchandising conglomerate. Page: ; !ifficult": 0edium AA$%&: Anal"tic %'ills 1--. Identif" the three characteristics that distinguish franchises from other forms of corporate retailing. "$ggested Ans(er: /ranchises are distinguished b" three characteristics: F1G 2he franchisor owns a trade or service mar' and licenses it to franchisees in return for ro"alt" pa"mentsH F(G the franchisee pa"s for the right to be part of the s"stemH and F-G the franchisor provides its franchisees with a s"stem for doing business. Page: ; !ifficult": 0edium AA$%&: 1eflective 2hin'ing 1- . In the past, retailers secured customer lo"alt" b" offering convenient locations, special or uni+ue assortments of goods, greater or better services than competitors, and store credit cards. 9ow has this changed? "$ggested Ans(er: 1etail)store assortments have grown more ali'e as national) brand manufacturers place their branded goods in more and more places. %ervice differentiation has eroded. 0an" department stores have trimmed services, and man" discounters have increased theirs. $ustomers have become smarter shoppers. 2he" donJt want to pa" more for identical brands, especiall" when service differences have diminishedH nor do the" need credit from a particular store, because ban' credit cards are almost universall" accepted. Page: 5 !ifficult": 0edium 1-;. 9ow has the growth of giant retailers threatened traditional retailers? "$ggested Ans(er: 2hrough their superior information s"stems, logistical s"stems, and bu"ing power, giant retailers such as <al)0art are able to deliver good service and immense volumes of product at appealing prices to masses of consumers. Page: A !ifficult": 0edium AA$%&: 1eflective 2hin'ing

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1-5.

<h" must retailers begin b" defining their target mar'et before ma'ing an" other mar'eting decisions? "$ggested Ans(er: Entil the target mar'et is defined and profiled, the retailer cannot ma'e consistent decisions on product assortment, store dRcor, advertising messages and media, price, and service levels. Page: B !ifficult": 0edium AA$%&: 1eflective 2hin'ing

1-A.

Identif" the seven steps involved in retail categor" management. "$ggested Ans(er: 2he seven steps of retail categor" management are: F1G !efine the categor"H F(G figure out its roleH F-G assess performanceH F G set goalsH F;G choose the audienceH F5G figure out tacticsH and FAG implement the plan. Page: 8 !ifficult": 9ard AA$%&: Anal"tic %'ills

1-B.

2he real challenge of retail categor" management begins after defining the storeJs product assortment, and that is to develop a product)differentiation strateg". Live three possible retailing product)differentiation strategies. "$ggested Ans(er: %tudents ma" choose three of the following strategies presented in the text: F1G /eature exclusive national brands that are not available at competing retailersH F(G feature mostl" private)label merchandiseH F-G feature bloc'buster distinctive merchandise eventsH F G feature surprise or ever)changing merchandiseH F;G feature the latest or newest merchandise firstH F5G offer merchandise)customizing servicesH and FAG offer a highl" targeted assortment. Page: ;7 !ifficult": 9ard

1-8.

1etailers examining their product mix find that a third of their products are not profitable or do not ma'e economic sense. Qet these products still ta'e up retail shelf space. <h" does this continue and what techni+ues are retailers using to *tighten, this process? "$ggested Ans(er: 0ost retailers do not 'now which third of the products are unprofitable in their mix and which third are generating profits. =ewer sophisticated techni+ues such as direct product profitabilit" F!PPG ma" provide retailers with more definitive answers to these +uestions. Page: ;1 !ifficult": 0edium AA$%&: 1eflective 2hin'ing

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$hapter 15: 0anaging 1etailing, <holesaling, and .ogistics

1 7.

2he services mix afforded to retailers is a 'e" tool for differentiating one store from another. &riefl" explain the three services mixes available to retailers. "$ggested Ans(er: 2he three services mixes to offer customers are: F1G prepurchase services including accepting telephone and mail orders, advertising, window and interior displa"H F(G postpurchase services including shipping and deliver", gift wrapping, ad3ustments and returns, alterations, and tailoringH and F-G ancillar" services including chec' cashing, par'ing, rest rooms, restaurants, and credit services. Page: ;( !ifficult": 0edium AA$%&: Anal"tic %'ills

1 1.

#xplain what is meant b" the term *store atmosphere, and wh" it is important for retailers to have a distinctive atmosphere. "$ggested Ans(er: A retailerJs atmosphere is another tool in a storeJs arsenal for establishing a differentiation strateg" in the consumerJs mind. Page: ;!ifficult": 0edium AA$%&: 1eflective 2hin'ing

1 (.

1etailers can place their stores in a variet" of locations. Live three examples of shopping venues in which retailers can place their stores. "$ggested Ans(er: 1etailers can place their stores in the following locations: F1G central business districtsH F(G regional shopping centersH F-G communit" shopping centersH F G shopping stripsH or F;G a location within a larger store. Page: ;; !ifficult": #as" AA$%&: Anal"tic %'ills

1 -.

As part of "our internship with a mar'eting research firm, "ou have been as'ed to evaluate the relationship between high traffic and high rents for a retailer client who is thin'ing about moving his location. <hat methods for evaluating this relationship are available to "ou? "$ggested Ans(er: Qou can use a variet" of methods to assess locationsCtraffic counts, surve"s of consumer shopping habits, and anal"sis of competitive locations. Qou can assess a particular storeJs sales effectiveness b" loo'ing at the number of people passing b" on an average da", the percentage of people who enter the storeH the percentage of those entering who bu"H and the average amount spent per sale. Page: ;; !ifficult": 9ard AA$%&: 1eflective 2hin'ing

9ow do generics differ from private)label brands? "$ggested Ans(er: A private)label brand is a brand that retailers and wholesalers develop. Lenerics are unbranded. Pages: ;5@ ;A !ifficult": 0edium AA$%&: 1eflective 2hin'ing

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1 ;.

0anufacturers t"picall" do not sell directl" to retailers or final consumers. 2he" choose to use wholesalers because wholesalers are more efficient at certain functions. <hat functions are these? "$ggested Ans(er: <holesalersIdistributors are most efficient than firms in performing the following functions: F1G selling and promotingH F(G bu"ing and assortment buildingH F-G bul' brea'ingH F G warehousingH F;G transportationH F5G financingH FAG ris' bearingH FBG mar'et informationH and F8G management services and counseling. Pages: ;B@ ;8 !ifficult": 0edium AA$%&: Anal"tic %'ills

1 5.

%uppl" chain management is the broader concept of ph"sical distribution. #xplain the concept of *suppl" chain management., "$ggested Ans(er: %uppl" chain management involves procuring the right inputs Fraw materialsG, converting them efficientl" into finished products, and dispatching them to the final destinations. 2he suppl" chain perspective can help a compan" identif" superior suppliers and distributors and help them improve productivit", which ultimatel" brings down the compan"Js costs. Page: 51 !ifficult": 0edium AA$%&: Anal"tic %'ills

1 A.

Qour division has a new general manager. As part of his stated tas's, he believes in *getting the right goods to the right places at the right time for the least cost., As "our compan"Js logistics manager, "ou 'now that this ob3ective provides little practical guidance and could in fact be detrimental to the compan" ob3ectives. 9ow would "ou formulate a response to the new general manager to convince him to change his *position, regarding customer service? "$ggested Ans(er: I would note that no s"stem can simultaneousl" maximize customer service and minimize distribution cost. 0aximum customer service implies large inventories, premium transportation, and multiple warehouses. 0ar'et)logistics costs interact and are often negativel" related. Page: 5( !ifficult": 9ard AA$%&: 1eflective 2hin'ing

1 B.

Qour compan"Js order)to)pa"ment c"cle is ;7 da"s. 2he average for "our industr" is ; da"s. Qour boss has as'ed "ou to reduce this c"cle to the industr"Js average. 2o accomplish this goal, "ou begin to outline the *processes, in the order)to) pa"ment c"cle to find out where improvements can be made. .ist the processes that ma'e up the order)to)pa"ment c"cle. "$ggested Ans(er: 2he order)to)pa"ment c"cle is the elapsed time between an orderJs receipt, deliver", and its pa"ment. 2his c"cle involves man" steps, including order transmission b" the salesperson, order entr", and customer credit chec', inventor" and production scheduling, order and invoice shipment, and receipt of pa"ment. Page: 5 !ifficult": #as" AA$%&: Anal"tic %'ills

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1 8.

As a brand manager wh" should "ou be concerned with the transportation decisions regarding "our product? "$ggested Ans(er: 2ransportation choices will affect the productJs pricing, on) time deliver" performance, and the condition of the goods when the" arrive at their final destination. #ach of these factors affects customer satisfaction, which is m" primar" responsibilit" as a brand manager. Page: 5; !ifficult": 0edium AA$%&: 1eflective 2hin'ing

1;7.

#xplain wh" the mar'et)logistics strategies must be derived from business strategies, rather than solel" from cost considerations. "$ggested Ans(er: 2he logistics s"stem must be information intensive and establish electronic lin's among all the significant parties. 2he compan" should set its logistics goals to match or exceed competitorsJ service standards and should involve members of all relevant teams in the planning processes. Page: 55 !ifficult": 9ard AA$%&: 1eflective 2hin'ing

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18(