Kotler Mm13e Tif 16

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Chapter 16: Managing Retailing, Wholesaling, and Logistics

GENERAL CONCEPT !E"T#ON"

M$ltiple Choice

1. Intermediaries include retailers, ________, and logistical organizations.a. Internet companiesb. wholesalersc. competitorsd. box storese. 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 basesb. aggressivel" *s+ueeze manufacturer marginsc. aggressivel" pursue ta'eover strategiesd. dominant the manufacturers the" do business withe. 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)serviceb. %elf)selectionc. imited serviced. /ull servicee. $ustom service

Answer: a Page: ( !ifficult": 0edium AA$%&: eflective 2hin'ing

. 0a3or retailer t"pes include the following #4$#P2 ________.a. specialt" storeb. discount store

c. catalog showroomd. the Internete. superstore

Answer: d Page: - !ifficult": 0edium

15 $op"right 6 (778 Pearson #ducation, Inc. Publishing as Prentice 9all


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Part 5: !elivering alue

;. 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)serviceb. self)selection

c. limited serviced. full servicee. custom service

Answer: d Page: - !ifficult": 0edium AA$%&: Anal"tic %'ills5. etailers can position themselves as offering one of four service levels. 2one of these levels?a. %elf)selectionb. %elf)servicec. imited serviced. !irect service

e. /ull serviceAnswer: d Pages: (@- !ifficult": 0edium AA$%&: Anal"tic %'ills

. =onstore retailing falls into four ma3or categories. 2one of the four nonstore retailing categories?a. &u"ing serviceb. Internet salesc. Automatic vendingd. !irect mar'etinge. !irect selling

Answer: b Page: !ifficult": 0edium

B. A ________ is a storeless retailer serving a specific clienteleCusuall" emplo"ees oflarge organizationsCwho are authorized to bu" from a list of retailers that haveagreed to give discounts in return for inclusion on the list.a. direct)selling vendorb. direct mar'eting vendorc. bu"ing serviced. automatic vendore. corporate retailer

Answer: c Page: !ifficult": 0edium AA$%&: Anal"tic %'ills

8. >ne of the advantages of corporate retailing is that corporate retail organizationsachieve economies of scale, greater purchasing power, and ________.a. wider brand recognitionb. more locationsc. branded merchandised. *fresh merchandisee. more advertising

Answer: a Page: !ifficult": 9ard AA$%&: eflective 2hin'ing

15; $op"right 6 (778 Pearson #ducation, Inc. Publishing as Prentice 9all


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$hapter 15: 0anaging etailing,


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1. ecent trends in retailing includes which of the following?a. eduction in the level of global competitionb. !ecline in the *shop at home mar'etsc. Lrowth of the *smaller bouti+ue)t"pe storesd. $ompetition between Internet selling and store)based retailing

e. $ompetition between store)based and non)store)based retailingAnswer: e Page: !ifficult": 9ard AA$%&: eflective 2hin'ing

1;. etailers must ma'e mar'eting decisions in the areas of product assortment andprocurement, services and store atmosphere, prices, communications, locations, and________.a. nicheb. st"lec. shoppersd. target mar'ete. procedures

Answer: d Page: B !ifficult": 0edium AA$%&: Anal"tic %'ills

15. 2he retailer must decide on product)assortment breadth and ________.a. store locationb. la"outc. pricesd. selectione. depth

Answer: e Page: B !ifficult": B AA$%&: Anal"tic %'ills

1. After deciding on the product)assortment strateg", the retailer must establishmerchandise sources, ________, and practices.a. vendorsb. suppliersc. lead timesd. policiese. bu"ers

Answer: d Page: ;7 !ifficult": #as"

1B. 2he first step to retail categor" management is to ________, which means decidingwhere to draw the line between product categories.a. set goalsb. choose the audiencec. figure out tacticsd. define the categor"e. figure out the categor"Js role

Answer: d Page: 8 !ifficult": 0edium 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 leadersb. profit leadersc. traffic leaders

d. ad itemse. none of the aboveAnswer: a Page: ;( !ifficult": #as" AA$%&: Anal"tic %'ills

(;. /ine specialt" retailers most li'el" fall into the ________ group with respect tomargins and volume.a. mixed mar'up, high)volumeb. low)volume, mixed mar'upc. low)volume, low)mar'upd. high)volume, high)mar'upe. high)mar'up, lower)volume

Answer: e Page: ;( !ifficult": 0edium

(5. ________ isFareG a 'e" positioning factor for retailers and must be decided in relationto the target mar'et, the product)and)service assortment mix, and the competition.a. 9ours of operationb. Advertisementc. ocationsd. Pricese. Assortment

Answer: d Page: ;( !ifficult": #as" AA$%&: Anal"tic %'ills

(. #ver" store has a *loo' and a ph"sical la"out that ma'es it hard or eas" to movearound. 2hese elements constitute a storeJs ________.a. la"outb. transition zonec. atmosphered. brandse. none of the above

Answer: c Page: ;- !ifficult": #as" AA$%&: eflective 2hin'ing

(B. In the pursuit of higher sales volume, retailers are stud"ing their store environmentsfor wa"s to improve the shopperJs experience. According to Paco Enderhill, one ofhis 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 stimulic. place the chec'outs in the rear of the stored. ma'e the store more receptive to *men shopperse. ma'e them *hunt for it

Answer: b Page: ; !ifficult": 9ard



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-. ________ are unbranded, plainl" pac'aged, less expensive versions of commonproducts such as spaghetti, paper towels, and canned peaches.a. %lotting feesb. =ational productsc. Lenerics

d. Private labelse. %hopping stripsAnswer: c Page: ; !ifficult": 0edium AA$%&: Anal"tic %'ills

-;. &ecause shelf space is scarce, man" supermar'ets now charge a ________ foraccepting a new brand, to cover the cost of listing and stoc'ing it.a. genericb. slotting feec. shopping stripd. promotion allowancee. none of the above

Answer: b Page: ; !ifficult": #as" AA$%&: Anal"tic %'ills

-5. &esides the growing power of store brands, other factors wea'ening national brandsinclude the fact that ________.a. national brandsJ +ualit" is superior to store brandsb. national manufacturers have increased advertising support for their brandsc. national brands have +ualit" control problems not found in store brandsd. consumers are more price sensitivee. consumers are more selective on purchases of national brands

Answer: d Page: ; !ifficult": 9ard AA$%&: eflective 2hin'ing

-. 2he functions that wholesalers perform include all of the following #4$#P2________.a. bul' brea'ingb. bu"ing and assortment buildingc. financingd. producinge. mar'et information

Answer: d Pages: ;B);8 !ifficult": 0edium

-B. ________ refers to bu"ing large carload lots and dividing them into smaller unitsbefore shipping them out to consumers.a. &ul' brea'ingb. $ontainerizationc.


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. ________ involves planning the infrastructure to meet demand, then implementingand controlling the ph"sical flows of materials and final goods from points of originto points of use, to meet customer re+uirements at a profit.a. 0ar'et logisticsb. %uppl" chain management

c. %$0d. Integrated logistics s"stemse. =one of the above

Answer: a Page: 51 !ifficult": 0edium

;. Integrated logistics s"stems FI%G involves materials management, ________, andph"sical distribution, aided b" information technolog".a. information flow s"stemsb. material flow s"stemsc. cash flow s"stemsd. product management s"stems

e. none of the aboveAnswer: b Page: 5( !ifficult": 0edium AA$%&: Anal"tic %'ills

5. 0aximum customer service implies larger inventories, premium transportation, andmultiple warehouses, all of which raise mar'et)logistics costs. 0ar'et)logistics costsinteract 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$%&: eflective 2hin'ing

.


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;. &e"ond the optimal order +uantit", total cost per unit increases because ________.a. inventor")carr"ing cost per unit increasesb. inventor")carr"ing cost per unit decreasesc. order)processing cost per unit risesd. 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" itemsare 'nown as ________.a. nuisance itemsb. bottlenec' itemsc. commoditiesd. critical itemse. 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 transferbetween two transportation modes.a. $ontainerizationb. Private labelingc. Inventor" carr"ingd. >rder processinge.


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5. $orporate retail organizations achieve economies of scale, greater purchasing power,wider brand recognition, and better)trained emplo"ees.

Answer: 2rue Page: !ifficult": 0edium AA$%&: eflective 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 inthe hands of the franchisee.Answer: /alse Page: ; !ifficult": 0edium AA$%&: eflective 2hin'ing

58. 2he two models of the traditional department storeJs responses to competition is todevelop a store with strong retail brand approaches and the *showcase store.

Answer: 2rue Pages: 5@ !ifficult": 0edium AA$%&: Anal"tic %'ills

7. !epartment stores toda" are exclusivel" worried about competition from otherdepartment stores. >ther retailing forms are not a threat to department storesJ salesand profitabilit".

Answer: /alse Page: !ifficult": #as" AA$%&: eflective 2hin'ing

1. >ne of the up and coming trends in retailing is the growth of giant retailers,'nownascategory killersandsupercenters.

Answer: 2rue Page: !ifficult": #as" AA$%&: Anal"tic %'ills

(. 2oda", growth in the retail mar'et is centered firml" in the middle mar'et, leavingluxur" retailers and discounting specialists struggling.

Answer: /alse Page: !ifficult": 0edium AA$%&: Anal"tic %'ills-. 2he retailerJs product assortment does not need to match the target mar'etJs shopping

expectations.Answer: /alse Page: B !ifficult": 0edium

. A retailerJs real challenge begins after defining the storeJs product assortment, andthat is to develop a product)differentiation strateg".

Answer: 2rue Page: ;7 !ifficult": 0edium AA$%&: eflective 2hin'ing

;. etailers are generall" eager to stoc' new products, ma'ing it difficult formanufacturers to 'eep older, but proven brands on the shelves.

Answer: /alse Page: ;7 !ifficult": 0edium AA$%&: eflective 2hin'ing

5. &ecause of the high cost of retail space, most retailers are highl" attuned to which ofthe products the" stoc' generate profit.

Answer: /alse Page: ;1 !ifficult": 0edium AA$%&: Anal"tic %'ills

. Prices are a 'e" positioning factor to retailers and must be decided in relation to thetarget mar'et.

Answer: 2rue Page: ;( !ifficult": 0edium AA$%&: Anal"tic %'ills



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B8. %uppl" chain management starts when the product comes off the factor" floor andenters the distributiontransportation 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 frompoints 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 associatedwith different proposed s"stems and selecting the s"stem that minimizes it, where 2Ftotal freight costsG N /< Ftotal fixed warehouse costG N < Ftotal variablewarehouse costsG is expressed as 0 O 2 N /< N rder)processing costs must be compared with inventory-carrying costsbecause asthe amount of stoc' carried increases, the higher the inventor")carr"ing costs.

Answer: 2rue Page: 5 !ifficult": 0edium AA$%&: eflective 2hin'ing

8. Inventor" costs increases at a decreasing rate as customer)service levels approach177M fulfillment.

Answer: /alse Page: 5 !ifficult": 0edium AA$%&: Anal"tic %'ills

8B. 2he choice of transportation methods of distribution have negligible effects on theprices charged for the product and therefore mar'eters need not be overl" involved inthis process.

Answer: /alse Page: 5; !ifficult": 0edium AA$%&: eflective 2hin'ing



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17. 2he trends in retailing include new retail forms and combinations. ist the sixother trends in retailing discussed in the chapter.

"$ggested Ans(er: &esides new retail forms and combinations, the other sixretail 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 FG declineof middle)mar'et retailersH F;G growing investment in technolog"H and F5G newretail forms and combinations.Pages: 5@ !ifficult": 9ard AA$%&: Anal"tic %'ills

17;. etailers are facing increasing competition from other manufacturer)to)consumerdistribution channels. A retailer must develop a product)differentiation strateg".2he author suggests seven product)differentiation strategies. ist and explainthese 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 FGfeature surprise or ever)changing merchandiseH F;G feature the latest or newestmerchandise firstH F5G offer merchandise)customizing servicesH and FG offer ahighl" target assortment.Page: ;7 !ifficult": 9ard

175. Paco Enderhill, managing director of the retail consultanc" #nvirosell Inc., offersseveral tips for fine)tuning retail space in order to 'eep shoppers spending. istthree of them.

"$ggested Ans(er: Paco Enderhill offers the following advice: F1G Attractshoppers and 'eep them in the storeH F(G honor the *transition zoneH F-G donJtma'e consumers huntH FG ma'e merchandise available to the reach and touchH F;Gnote that men do not as' +uestionsH F5G remember that women need spaceH and FGma'e chec'out eas".Page: ; !ifficult": 9ard AA$%&: Anal"tic %'ills

17. 2he growth of *house brands has s'"roc'eted in recent "ears.


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APPL#CAT#ON !E"T#ON"

M$ltiple Choice

111. $ustomers who li'e to be waited on prefer to shop in stores that offer ________.a. limited serviceb. self)servicec. full serviced. part)time servicee. events and experiences

Answer: c Page: - !ifficult": #as" AA$%&: eflective 2hin'ing

11(. Qou and "our best friend are considering opening a retail store. Qou haveidentified "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)priceb. self)servicec. discountd. limited)servicee. 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)servicec. franchised. merchandisinge. 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 "ourrestaurant has a product assortment that has ________.a. a narrow focus and narrow target mar'et

b. appeal to all consumersc. location and variet"d. variet" and long hourse. breadth and depth

Answer: e Page: B !ifficult": 9ard AA$%&: Anal"tic %'ills

1B- $op"right 6 (778 Pearson #ducation, Inc. Publishing as Prentice 9all


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118. As a mar'eting intern, "our 3ob is to *hang out at the mall and note thepercentage of people who enter a particular store versus those who pass b" it. 2hisis an example of _________ for retailers.a. measuring advertisement effectivenessb. measuring foot traffic at the mall

c. measuring consumer shopping patternsd. measuring retail sales effectivenesse. measuring retail locations

Answer: d Page: ;; !ifficult": 0edium

1(7. lJo" dog food has surpassed =estlRJs Purina brand as the top)selling dog chow. >lJo" is an example of a ________.a. genericb. national brandc. franchised. cop")cat brand

e. private)label brandAnswer: e Page: ;5 !ifficult": 0edium AA$%&: Anal"tic %'ills

1(1. As a sales representative for a ma3or food manufacturer, "our largest customer hasas'ed "ou to provide him with a product that meets the following definition: Itmust not contain an" brand name, be plainl" pac'aged, use less expensiveingredients, use lower)+ualit" raw products in its ma'eup, and not allocate an"funds for advertising and promotion.


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1(. A stoc' reorder point of 17 means reordering the product ________.a. ever" 17 da"sb. when stoc' falls to 17 unitsc. ever" 17 unitsd. when stoc' falls to 8 units

e. none of the aboveAnswer: 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 aslow ris', high opportunit". ecentl", "our compan" has introduced a product thatis considered b" the distributor a *bottlenec' item. ptimal order +uantities exist when the order)processing cost per unit andinventor")carr"ing cost per unit curves ________.a. increase to 1b. decrease to less than 1c. intersectd. e+ual each othere. 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 betweenthe =ortheast and the %outheast on a regular schedule. 9iring this shipper isavailable to all at standard rates. Qour transportation manager has hired a_____________.a. common carrierb. contract carrierc. private carrierd. pigg"bac'ed carriere. g"ps" carrier

Answer: a Page: 55 !ifficult": 0edium AA$%&: Anal"tic %'ills

1B $op"right 6 (778 Pearson #ducation, Inc. Publishing as Prentice 9all


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1-5.


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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 certainfunctions.


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Kotler Mm13e Tif 16

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