Chapter 11

Marketing: An Introduction, 11e (Armstrong)
Chapter 11 Retailing and Wholesaling

1) ________ includes all the activities involved in selling products or services directly to final
consumers for their personal, nonbusiness use.
A) Sole sourcing
B) Retailing
C) Manufacturing
D) Supplying
E) Segmentation
Answer: B
Page Ref: 324
Difficulty: Easy
Chapter LO: 1
Course LO: Describe how retailers and wholesalers create value
2) ________ refers to using point-of-purchase promotions and advertising to extend brand equity
to "the last mile" and encourage favorable point-of-purchase decisions.
A) Internal marketing
B) Sole sourcing
C) Warehousing
D) Test marketing
E) Shopper marketing
Answer: E
Page Ref: 325
Difficulty: Easy
Chapter LO: 1
3) Which of the following conditions would increase the chances of a retailer opting to be
categorized as a self-service retailer?
A) when the product assortment comprises shopping goods about which consumers need
information
B) when the customers are willing to conduct the locate-compare-select autonomously to save
money
C) when the store is a first-class store in its category selling the finest goods
D) when the customers are looking for a narrow product line with a deep assortment
E) when the store has been converted into a designer shop from a departmental store
Answer: B
Page Ref: 325
Difficulty: Moderate
Chapter LO: 1
1
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
4) Stores that provide moderate sales assistance because they carry shopping goods about which
customers need a moderate level of information are called ________.
A) self-service retailers
B) full-service retailers
C) off-price retailers
D) limited-service retailers
E) convenience retailers
Answer: D
Page Ref: 325
Chapter LO: 1
5) Which of the following types of stores usually carries more specialty goods for which
customers like to be "waited on" and have much higher operating costs that are passed along to
the customer?
A) self-service stores
B) convenience stores
C) full-service stores
D) discount stores
E) off-price stores
Answer: C
Page Ref: 326
Chapter LO: 1
6) Flax is a chain of stores that carries several product lines including clothing, home furnishing,
and household goods, with each line operated as a separate department dedicated to the motto of
customer satisfaction. Flax is most likely a(n) ________.
A) self-service retailer
B) limited-service retailer
C) full-service retailer
D) basic-service retailer
E) off-price retailer
Answer: C
Page Ref: 326
Chapter LO: 1
AACSB: Analytic skills
2
7) Customers at Carat, a premium jewelry store, are encouraged to call and take an appointment
before a visit so that a customer service representative is assigned to them. These representatives
help every customer make a purchase that meets his or her needs and budget after considering
numerous options. The different styles, carat values, and special features of the jewelry are
explained to each customer to aid the purchase decision. Carat is a ________.
A) self-service retailer
B) limited-service retailer
C) full-service retailer
D) basic-service retailer
E) value-retail store
Answer: C
Page Ref: 326
Chapter LO: 1
8) ________ are flourishing due to increased use of market segmentation and market targeting.
A) Convenience stores
B) Specialty stores
C) Department stores
D) Discount stores
E) Off-price stores
Answer: B
Page Ref: 326
Difficulty: Easy
Chapter LO: 1
9) GameStop sells video games and systems, offering a narrow product line with a deep
assortment within that line. GameStop is a(n)________.
A) department store
B) convenience store
C) specialty store
D) discount store
E) off-price retailer
Answer: C
Page Ref: 326
Chapter LO: 1
3
10) Specialty stores are characterized by the ________.

A) sale of convenience and staple items
B) narrow product lines with deep assortments
C) wide range of products and categories
D) lowest prices for a wide range of goods
E) practice of everyday low pricing
Answer: B
Page Ref: 326
Chapter LO: 1
11) A department store is characterized by a ________.
A) narrow product line
B) product line that primarily stocks specialty goods
C) predatory pricing strategy
D) deep assortment in every single product category
E) product line-up of clothing, home furnishings, and household goods
Answer: E
Page Ref: 326
Chapter LO: 1
12) "All Needs" is a convenience store that has recently begun to redesign and restock its stores
to offer a more upscale environment and products, such as house wines, special types of cheese
and fresh foods. "All Needs" has changed product mix and positioning to become a ________.
A) wholesaler club
B) designer shop
C) factory outlet
D) retailer cooperative
E) supercenter
Answer: B
Page Ref: 326
Chapter LO: 2
4
13) A convenience store is most likely to be ________.

A) operating in commercial centers away from residential hubs
B) stocking a narrow product line with deep assortment
C) carrying a limited line of high-turnover daily needs products
D) charging consumers significantly lower prices than retail stores
E) providing consumers full service in making purchase decisions
Answer: C
Page Ref: 327
Chapter LO: 1
14) Jack and Judith recently moved into a new city and discovered that some of their home
appliances and electronic gadgets had been damaged in transit. Their new neighbor, Will,
suggested that they go to All Needs Depot to pick up replacements for their damaged goods. Will
informed them that this store stocked several hundred product categories with a very deep
assortment in every single product line. From the information provided in the scenario, All Needs
Depot is most likely a ________.
A) designer shop
B) pop-up store
C) category killer
D) lifestyle center
E) factory outlet
Answer: C
Page Ref: 328
Difficulty: Challenging
Chapter LO: 1
15) Which of the following statements is true with regard to retailing?
A) All retail stores are full-service retail stores.
B) A department store has a narrow product line with a deep assortment.
C) The largest type of retail outlets is the supermarkets.
D) Services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed.
E) A feature common to all types of retail stores is the use of the everyday low pricing strategy.
Answer: D
Page Ref: 328
Chapter LO: 1
5
16) Which of the following types of stores is much larger than regular supermarkets and offers a
large assortment of routinely purchased food products, nonfood items, and services?
A) discount stores
B) specialty stores
C) factory outlets
D) superstores
E) off-price outlets
Answer: D
Page Ref: 328
Difficulty: Easy
Chapter LO: 1
17) Which of the following types of stores carries a deep assortment of goods in each category,
has knowledgeable staff, and is often viewed as a very large specialty store?
A) category killers
B) convenience stores
C) factory outlets
D) department stores
E) independent stores
Answer: A
Page Ref: 328
Difficulty: Easy
Chapter LO: 1
18) ________ sell standard merchandise at lower prices by accepting lower margins and selling
higher volume.
A) Convenience stores
B) Discount stores
C) Full-service retailers
D) Designer shops
E) Specialty stores
Answer: B
Page Ref: 328
Difficulty: Easy
Chapter LO: 1
6
19) ________ have filled the ultralow-price, high-volume gap by buying at less than regular
wholesale prices and charging consumers less than retail.
A) Off-price retailers
B) Specialty stores
C) Convenience stores
D) Designer shops
E) Full-service retailers
Answer: A
Page Ref: 330
Difficulty: Easy
Chapter LO: 1
20) Independent retailers are most likely to be ________.
A) running specialty stores and designer shops
B) divided into supercenters and category killers
C) charging prices that are higher than retail prices to maintain their profit margins
D) categorized as one of the three variants of off-price retailers
E) providing full-service to all consumers
Answer: D
Page Ref: 330
Chapter LO: 1
21) Allstocks.com, a Web seller that buys furniture, clothing, electronics, and more from a
variety of producers at less-than-regular wholesale prices and then charges customers less than
retail, is a(n) ________.
A) specialty retailer
B) independent off-price retailer
C) departmental retailer
D) full-service retailer
E) category killer
Answer: B
Page Ref: 330
Chapter LO: 1
7
22) An off-price retailing operation that is owned and operated by a manufacturer and normally
carries the manufacturer's surplus, discontinued, or irregular goods is called a ________.
A) category killer
B) factory outlet
C) specialty store
D) superstore
E) power center
Answer: B
Page Ref: 330
Difficulty: Easy
Chapter LO: 1
23) Which of the following differentiates between an outlet mall and a value-retail center?
A) An outlet mall stocks convenience goods, while a value-retail center sells luxury goods.
B) An outlet mall sells its products on par with the retail prices, while a value-retail center
charges rates that are slightly below the retail prices.
C) An outlet mall consists primarily of the manufacturers' outlets, while a value-retail center
combines manufacturers' outlets with off-price retail stores and department store clearance
outlets.
D) An outlet mall is managed by buying and selling agents, while a value-retail center has
employees who belong to the manufacturer's organization as bonafide employees.
E) An outlet mall is a type of off-price retailing, while a value-retail center is an example of
designer shops that have high markups and low volume.
Answer: C
Page Ref: 330
Chapter LO: 1
24) Dina loves branded apparel and accessories but cannot afford to buy them too often.
Fortunately, Dina lives close to an off-price retailing outlet that is owned and operated by a
famous brand. The company utilizes this store to sell all its surplus, discontinued, or irregular
goods at significantly lower costs. This outlet is an example of a ________.
A) category killer
B) factory outlet
C) specialty store
D) superstore
E) power center
Answer: B
Page Ref: 330
Chapter LO: 1
8
25) Dina loves branded apparel and accessories but cannot afford to buy them too often.
Fortunately, Dina lives close to an off-price retailing outlet that has dozens of stores that offer
prices as much as 50 percent below retail on a wide range of mostly surplus, discounted, or
irregular goods. This outlet is an example of a ________.
A) category killer
B) factory outlet
C) specialty store
D) designer shop
E) value-retail center
Answer: B
Page Ref: 330
Chapter LO: 1
26) McPherson's, an ice cream joint, recently entered into an agreement by which it allowed
independent businesspeople at select stores and locations across the country to sell its famous ice
creams and milk shakes for a monetary consideration. This agreement created a(n) ________
type of contractual retail association.
A) corporate chain
B) voluntary chain
C) franchise organization
D) independent intermediary
E) retailer cooperative
Answer: C
Page Ref: 330
Chapter LO: 1
9
27) McPherson's, an ice cream joint, recently entered into an agreement by which it allowed
independent businesspeople at select stores and locations across the country to sell its famous ice
creams and milk shakes for a monetary consideration. The argument that the agreement was a
franchise agreement is strengthened by the fact that ________.
A) McPherson's is a part of a corporate chain that prevents it from forming business alliances
autonomously
B) McPherson's is a department store that is trying to avoid the wheel-of-retailing
C) McPherson's products are in the introductory stage of the product life cycle
D) McPherson's is a company that enjoys substantial goodwill and security in the market
E) McPherson's competitors have entirely different product lines and mixes
Answer: D
Page Ref: 330
Chapter LO: 1
AACSB: Reflective thinking skills
28) In the case of ________ customers pay annual membership fees and are able to purchase
goods at deep discounts.
A) warehouse clubs
B) independent off-price retailers
C) factory outlets
D) specialty stores
E) superstores
Answer: A
Page Ref: 331
Difficulty: Easy
Chapter LO: 1
29) ________ are two or more outlets that are commonly owned and controlled.
A) Corporate chains
B) Factory outlets
C) Specialty stores
D) Designer shops
E) Power centers
Answer: A
Page Ref: 331
Difficulty: Easy
Chapter LO: 1
10
30) As a result of the great success of corporate chains, many independent stores chose to band
together in one of two forms of contractual associations: a voluntary chain or a(n) ________.
A) factory outlet
B) retailer cooperative
C) independent off-price retailer
D) warehouse club
E) value retail center
Answer: B
Page Ref: 332
Difficulty: Easy
Chapter LO: 1
31) Which of the following contractual systems is distinguished by the fact that it is normally
based on some unique product or service?
A) voluntary chain
C) franchise
D) independent
E) warehousing
Answer: C
Page Ref: 332
Difficulty: Easy
Chapter LO: 1
32) McDonald's, Subway, and Pizza Hut are all examples of ________ organizations.
A) voluntary
C) franchise
D) no-service
E) corporate chain
Answer: C
Page Ref: 332
Difficulty: Easy
Chapter LO: 1
11
33) For a retailer to be able to differentiate himself from competitors and match target shoppers'
expectations, the product assortment retailed should be ________.
A) identical to the product assortment retailed by its competitors
B) devoid of any blockbuster goods as they divert the attention of consumers
C) highly targeted or focused on a niche market of potential consumers
D) constituted by private-label brands, rather than national or exclusive brands
E) devoid of any seconds, overstocks, and closeouts as this damages the perception of the retailer
Answer: C
Page Ref: 334
Chapter LO: 2
34) Campbell is one of the oldest retailers in the country. While the service offered at the stores
is fairly mediocre, Campbell is famous for surprise offerings of seconds, overstocks, and
closeoutsoccasionally including expensive gadgets and jewelry. On the other hand, Posco Retail
is a new chain of retail stores that is known for encouraging customers to ask questions or
consult service representatives in the process of making purchase decisions. From the scenario, it
is evident that ________.
A) Posco Retail fails to differentiate itself from its competitors on the basis of the variable of
services mix
B) Campbell Retail requires no efforts to differentiate itself from others as it is an established
retail chain
C) the only attempt that Campbell Retail makes to differentiate themselves is through
experiential retailing
D) Campbell Retail has not been able to differentiate itself on the basis of the variable of product
assortment
E) the variable of services mix is better utilized by Posco Retail to differentiate itself when
compared to Campbell Retail
Answer: E
Page Ref: 334
Chapter LO: 2
12
35) Campbell Retail is one of the oldest retailers in the country with a characteristic no-frills look
to all its stores. While the service offered at Campbell stores is fairly mediocre, Campbell Retail
is famous for surprise offerings of seconds, overstocks, and closeoutsoccasionally including
expensive gadgets and jewelry. Which of the following statements, if true, would strengthen the
argument that Campbell Retail should use product assortment, rather than the variables of
services mix and store atmosphere to differentiate its services?
A) Campbell Retail is the only company that offers limited-service retailing among its
competitors.
B) Campbell has stores in 132 locations across the country with many of these locations housing
multiple stores.
C) Campbell Retail believes that modifying its stores to incorporate the notion of experiential
retailing is imperative because all of its new competitors have better ratings on the variable for
store atmosphere.
D) Campbell Retail has numerous private-label brands that enjoy substantial brand loyalty in the
minds of its customers.
E) Campbell Retail possesses highly qualified manpower that helps its limited service approach
to retailing.
Answer: D
Page Ref: 334
Chapter LO: 2
36) Toby's chain of department stores carries a wide range of product lines, including clothing,
jewelry, kitchenware, and home furnishings. The stores typically charge a relatively high
markup, but also hold frequent sales and price promotions, in particular, offering discounts to
customers who use Toby's frequent user card. Toby's uses ________ here.
A) self-service retailing
B) experiential retailing
C) high-low pricing
D) everyday low pricing
E) price fixing
Answer: C
Page Ref: 337
Chapter LO: 2
13
37) Barry's is a chain of retail stores that stocks a large variety of goods and practices high-low
prices. This means that Barry's is most likely to ________.
A) have low volume and low markups
B) charge low prices constantly
C) offer numerous sales or discounts
D) compete on the basis of price, rather than product or service quality
E) use predatory pricing to eliminate competition
Answer: C
Page Ref: 337-338
Chapter LO: 2
38) Why do stores cluster together?
A) to decrease competition
B) to increase their customer pulling power
C) to take advantage of tax breaks
D) to create franchise organizations
E) to standardize product assortment
Answer: B
Page Ref: 338
Chapter LO: 2
39) Which of the following statements is true with regard to shopping centers?
A) Shopping centers function at the neighborhood level, rather than at the regional or community
level.
B) Shopping centers typically contain provisions for many nonretail activities, such as a
playground, skating rink, hotel, dining establishments, and a movie theater.
C) Shopping centers are groups of retail businesses built on a site that is planned, developed,
owned, and managed as a unit.
D) Shopping centers usually contain exclusive brands and specialty stores, rather than
convenience stores or department stores.
E) Shopping centers are identical to lifestyle centers in terms of their size, services, and nature.
Answer: C
Page Ref: 338
Chapter LO: 2
14
40) A ________ contains between 15 and 50 retail stores, including a department or variety store,
a supermarket, specialty stores, professional offices, and sometimes a bank.
A) community shopping center
B) warehouse club
C) franchise organization
D) lifestyle center
E) power center
Answer: A
Page Ref: 338
Difficulty: Easy
Chapter LO: 2
41) Power centers are characterized by the ________.
A) lack of an anchor store
B) sale of exclusive brands only
C) provision of individual entrances to each store
D) provision of high-end stores and nonretail luxury activities
E) absence of any pricing strategies for differentiation
Answer: C
Page Ref: 338
Chapter LO: 2
42) A ________ is a smaller mall with upscale stores, convenient locations, and nonretail
activities such as a playground, dining, and a movie theater. It is typically located near affluent
residential neighborhoods.
A) regional shopping center
B) lifestyle center
C) community shopping center
D) wholesaling center
E) warehouse club
Answer: B
Page Ref: 338
Difficulty: Easy
Chapter LO: 2
15
43) Which of the following statements reflects the wheel-of-retailing concept?

A) All new types of retailing forms begin as low-margin and high-price ventures.
B) Initially, all retail stores have high-status operations characterized by features of experiential
retailing.
C) Eventually, all new retailers evolve into higher-priced and higher-service operations, much
like the retailers they replaced.
D) Retailers that begin as low-cost, low margin, and low-status operations continue to remain so
throughout their years of operation.
E) New forms of retail typically avoid providing any nonretail services and this differentiates
them from conventional retailers.
Answer: C
Page Ref: 340
Chapter LO: 3
44) Which of the following examples reflects the wheel-of-retailing concept?
A) Akido, started as a retail store for luxury clothing and accessories in Japan, was recently in
the news for being acquired by an Italian designer label.
B) Marty's, one of the country's largest retailers, has scaled its operations down and is running as
a chain of department stores owing to scarcity of funds.
C) Wills and McCoons, started as a large-scale store retailing upmarket brands, has included
local brands and unbranded goods following the recession.
D) Val-You, a chain of retail stores that started with small stores charging modest prices for its
products, has become a full-service retail chain with high operating costs and prices.
E) Lee Retailers, a super specialty retail chain stocking fine wines, cheese, and other goods has
included a large number of quick-selling processed foods to retain its fast-depleting market
share.
Answer: D
Page Ref: 340
Chapter LO: 3
45) Retail convergence directly leads to ________.
A) reduced differentiation
B) reduced competition
C) increased sales
D) increased profit margins
E) reduced need for product assortment
Answer: A
Page Ref: 340
Chapter LO: 3
16
46) Touch-screen kiosks, customer-loyalty cards, handheld shopping assistants, and self-scanning
checkout systems are all examples of how retailers use technology to ________.
A) maintain inventory costs
B) send information between stores
C) interact with suppliers
D) decrease the need for promotions
E) meet consumers' technological expectations
Answer: E
Page Ref: 342
Difficulty: Easy
Chapter LO: 3
47) ________ includes all activities involved in selling goods and services to those buying for
resale or business use.
A) Wholesaling
B) Sole sourcing
C) Franchising
D) Crowdsourcing
E) Differentiating
Answer: A
Page Ref: 344
Difficulty: Easy
Chapter LO: 4
48) Which of the following channel functions of wholesalers is demonstrated when a
wholesaler's sales force helps a manufacturer reach many small customers at a low cost?
A) bulk breaking
B) selling and promoting
C) buying and assortment building
D) warehousing
E) risk bearing
Answer: B
Page Ref: 345
Chapter LO: 4
17
49) Which of the following channel functions of wholesalers is demonstrated when a wholesaler
reduces inventory holding costs and risks to suppliers and customers?
A) bulk breaking
B) buying and assortment building
C) warehousing
D) financing
E) transporting
Answer: C
Page Ref: 345
Chapter LO: 4
50) Which of the following channel functions of wholesalers is demonstrated when a buyer
receives quicker delivery because wholesalers are located closer than are producers?
A) buying and assortment building
B) financing
C) transportation
D) risk bearing
E) warehousing
Answer: C
Page Ref: 345
Difficulty: Easy
Chapter LO: 4
51) Bruce Wayne's wholesale company fulfills many channel functions for its customers. In
particular, the company differentiates itself by offering ________, such as helping retailers train
salesclerks, improve store layouts and displays, and set up inventory control systems.
A) buying and assortment building
B) selling and promotion services
C) risk bearing services
D) market information services
E) management services and advice
Answer: E
Page Ref: 345
Chapter LO: 4
18
52) ________ are the largest group of wholesalers and can be divided into two broad types of
wholesalers: full-service and limited-service.
A) Brokers
B) Retailers
C) Agents
D) Merchant wholesalers
E) Specialty wholesalers
Answer: D
Page Ref: 345-346
Difficulty: Easy
Chapter LO: 4
53) Which of the following types of limited-service wholesalers is owned by farmers who
assemble farm produce to sell in local markets?
A) cash-and-carry wholesalers
B) drop shippers
C) rack jobbers
D) producers' cooperatives
E) truck jobbers
Answer: D
Page Ref: 346
Difficulty: Easy
Chapter LO: 4
54) Which of the following types of wholesalers would fall under the category of full-service
wholesalers?
A) producers' cooperatives
B) industrial distributors
C) cash-and-carry wholesalers
D) rack jobbers
E) drop shippers
Answer: B
Page Ref: 346
Difficulty: Easy
Chapter LO: 4
19
55) When compared to merchant wholesalers, brokers or agents ________.

A) perform greater functions
B) do not take title to goods
C) deal only in services, and not products
D) do not engage in any negotiation regarding the wholesale deals
E) work on multiple product lines and rarely specialize in working in one product category
Answer: B
Page Ref: 347
Chapter LO: 4
56) A ________ brings buyers and sellers together and assists in negotiations.
A) distributor
B) broker
C) retailer
D) wholesaler
E) supplier
Answer: B
Page Ref: 347
Difficulty: Easy
Chapter LO: 4
57) ________ represent buyers or sellers on a more permanent basis than brokers.
A) Distributors
B) Franchisees
C) Agents
D) Retailers
E) Intermediaries
Answer: C
Page Ref: 347
Difficulty: Easy
Chapter LO: 4
20
58) Jacob Kendler works in the wholesale business for specific types of industrial goods needed
in the automobile industry. Jacob's job involves locating and contacting potential buyers and
sellers and facilitating the negotiation process. Which of the following, if true, would strengthen
the argument that Jacob works as an agent, and not a merchant wholesaler?
A) Jacob runs an independently owned business.
B) Jacob is an employee of an organization producing automobiles.
C) Jacob represents his company but is not liable for any damage or low-quality goods.
D) Jacob works in a highly specialized market and does not venture into other product
categories.
E) Jacob provides a full set of services ranging from locating sellers to delivering goods.
Answer: C
Page Ref: 347
Chapter LO: 4
59) Jacob Kendler works in the wholesale business for specific types of industrial goods needed
in the automobile industry. Jacob's job involves locating and contacting potential buyers and
sellers and facilitating the negotiation process. Which of the following, if true, would strengthen
the argument that Jacob works as a merchant wholesaler, and not an agent?
A) Jacob has no defined role in the distribution mechanism of the goods he purchases for the
company.
B) Jacob runs an independently owned business that requires him to take title to all merchandise
handled.
C) Jacob receives commission for bringing together buyers and sellers for negotiations as and
when required.
D) Jacob is a part of the buyer's organization but lacks the contractual authority to sell the entire
output at his disposal.
E) Jacob is allowed to take physical, but not legal possession of the merchandise he handles.
Answer: B
Page Ref: 347
Chapter LO: 4
21
60) Purchasing officers differ from purchasing agents in that ________.

A) purchasing officers handle nonperishable items only
B) purchasing agents take title to the goods
C) purchasing officers are a part of the buyer's organization
D) purchasing agents are not obliged to negotiate for best prices of goods
E) purchasing agents have the contractual authority to sell a manufacturer's entire output
Answer: C
Page Ref: 347
Chapter LO: 4
61) Will Jenks is a wholesaler who sells the produce of farmers who do not want to sell their own
output. He transports large amounts of agricultural commodities to a central market, sells it for
the best price, deducts an amount for his effort and expenses, and remits the balance to the
producers. Will Jenks is a(n) ________.
A) cash-and-carry wholesaler
B) full-service wholesaler
C) commission merchant
D) no-service retailer
E) industrial distributor
Answer: C
Page Ref: 347
Chapter LO: 4
62) Manufacturers' agents are ________.
A) exclusively hired in agricultural marketing by farmers who do not want to sell their own
output
B) employed by the buyer's organization and authorized to take title to goods
C) wholesalers who carry a limited line of fast-moving goods and sell to small retailers for cash
without providing delivery
D) hired by two or more manufacturers of complementary lines who cannot afford their own
field sales forces
E) a type of limited-service wholesalers for goods requiring minimal consumer information
Answer: D
Page Ref: 347
Chapter LO: 4
22
63) Today's large and progressive wholesalers have successfully reacted to rising costs by
________.
A) relocating in low-rent, low-tax areas
B) investing in information technology systems
C) eliminating the need for brokers and agents
D) increasing their markup and lowering their status of operations
E) reducing promotional activities
Answer: B
Page Ref: 349
Chapter LO: 4
64) JP Wholesalers is one of the largest wholesalers of wooden furnishings in the country.
Recently, the company opened a chain of stores called JP Designer Homes that became popular
owing to the good reputation the company had as a wholesaler. The company then began
acquiring smaller retail chains and consolidated its position in the market. Which of the
following trends is reflected in this scenario?
A) the movement toward self-service retailing
B) the decline of superstores
C) the decline of the voluntary chain
D) the rise of franchise organizations
E) the blurring of distinctions between retailers and wholesalers
Answer: E
Page Ref: 349
Chapter LO: 4
65) Retailing includes all the activities involved in selling products or services for industrial and
business use.
Answer: FALSE
Page Ref: 324
Difficulty: Easy
Chapter LO: 1
66) Shopper marketing involves focusing the entire marketing processfrom product and brand
development to logistics, promotion, and merchandisingtoward turning shoppers into buyers at
the point of sale.
Answer: TRUE
Page Ref: 325
Difficulty: Easy
Chapter LO: 1
23
67) PennyLane Retailers believe in a do-it-yourself approach and their stores are designed for
consumers who are willing to perform their own locate-compare-select process. PennyLane
Retailers provide an example of full-service retailers.
Answer: FALSE
Page Ref: 325
Chapter LO: 1
68) Specialty stores carry several product lines, while a narrow product line with a deep
assortment is a feature of discount stores.
Answer: FALSE
Page Ref: 326
Chapter LO: 1
69) Venns is a chain of department stores that has become more focused and stocks only
exclusive labels of designer home accessories now. Venns has transformed itself into a chain of
pop-up stores.
Answer: FALSE
Page Ref: 326
Chapter LO: 1
70) In recent years, convenience stores have redesigned their stores to closely focus on serving
their primary target market which includes young, blue-collar men.
Answer: FALSE
Page Ref: 327
Chapter LO: 1
71) Category killers carry a deep assortment of a particular product line and have a
knowledgeable staff.
Answer: TRUE
Page Ref: 328
Difficulty: Easy
Chapter LO: 1
24
72) Off-price retailers buy at less-than-regular wholesale prices and charge consumers less than
retail.
Answer: TRUE
Page Ref: 330
Chapter LO: 1
73) Independent off-price retailers purchase merchandise at rates that are susbtantially higher
than the regular wholesale rates.
Answer: FALSE
Page Ref: 330
Difficulty: Easy
Chapter LO: 1
74) Whereas value-retail centers consist primarily of manufacturers' outlets, outlet malls combine
manufacturers' outlets with off-price retail stores and department store clearance outlets.
Answer: FALSE
Page Ref: 330
Chapter LO: 1
75) Corporate chains are located near a residential area and are open long hours, seven days a
week; they carry a limited line of high-turnover goods.
Answer: FALSE
Page Ref: 331
Difficulty: Easy
Chapter LO: 1
76) In a retailer cooperative, independent retailers contract with each other to set up a central
buying operation and conduct joint promotional efforts.
Answer: TRUE
Page Ref: 332
Difficulty: Easy
Chapter LO: 1
77) Retailers must first segment and define their target markets and then decide how they will
position themselves in these markets.
Answer: TRUE
Page Ref: 333
Difficulty: Easy
Chapter LO: 2
25
78) The retailer's product assortment should differentiate the retailer while matching target
shoppers' expectations.
Answer: TRUE
Page Ref: 334
Difficulty: Easy
Chapter LO: 2
79) Bensons is a specialty store selling the finest home linen made from raw materials imported
from Asian countries. Bensons pricing decision would be aimed at low markups on a high
volume of products they retail.
Answer: FALSE
Page Ref: 337
Chapter LO: 2
80) Casey's is a large supermarket that practices everyday low pricing and thus, consumers
should expect few discounts or sales if shopping at Casey's regularly.
Answer: TRUE
Page Ref: 338
Chapter LO: 2
81) The wheel-of-retailing concept deals mainly with wholesalers rolling out reduced service
levels.
Answer: FALSE
Page Ref: 340
Difficulty: Easy
Chapter LO: 3
82) Retail convergence means greater competition for retailers and greater difficulty in
differentiating offerings.
Answer: TRUE
Page Ref: 340
Difficulty: Easy
Chapter LO: 3
26
83) Wholesalers absorb risk by taking title and bearing the cost of theft, damage, spoilage, and
obsolescence.
Answer: TRUE
Page Ref: 345
Difficulty: Easy
Chapter LO: 4
84) Wholesome Corn assembles all the corn produced in its jurisdiction for sale in local markets
that use the corn directly or process it to create final products. Wholesome Corn represents a
class of wholesalers called producers' cooperatives.
Answer: TRUE
Page Ref: 346
Chapter LO: 4
85) Cash-and-carry wholesalers provide full service, beginning from sourcing the raw material
and ending with delivery.
Answer: FALSE
Page Ref: 346
Chapter LO: 4
86) A broker brings buyers and sellers together and assists in negotiation.
Answer: TRUE
Page Ref: 347
Difficulty: Easy
Chapter LO: 4
87) Brokers and agents typically work across multiple and often unrelated product lines as their
job does not require technical knowledge of the product or service they are dealing with.
Answer: FALSE
Page Ref: 347
Chapter LO: 4
27
88) In an automated warehouse, orders are fed directly from the retailer's information system to
the wholesaler's, and the items are picked up by mechanical devices and taken to a shipping
platform where they are assembled.
Answer: TRUE
Page Ref: 349
Chapter LO: 4
AACSB: Use of information technology
89) The distinction between large retailers and large wholesalers has become more concrete in
recent years.
Answer: FALSE
Page Ref: 349
Difficulty: Easy
Chapter LO: 4
90) What is retailing? Explain the concept of shopper marketing.
Answer: Retailing includes all the activities involved in selling products or services directly to
final consumers for their personal, nonbusiness use. Many institutionsmanufacturers,
wholesalers, and retailersdo retailing. But most retailing is done by retailers, businesses whose
sales come primarily from retailing.
The concept of shopper marketing refers to the using point-of-purchase promotions and
advertising to extend brand equity to "the last mile" and encourage favorable point-of-purchase
decisions. Shopper marketing involves focusing the entire marketing process, from product and
brand development to logistics, promotion, and merchandising, toward turning shoppers into
buyers at the point of sale.
Page Ref: 324-325
Difficulty: Easy
Chapter LO: 1
28
91) How are retailers classified based on the amount of service? Give examples.
Answer: Different types of customers and products require different amounts of service. To meet
these varying service needs, retailers may offer one of three service levels: self-service, limited
service, and full service.
Self-service retailers serve customers who are willing to perform their own locate-compareselect process to save time or money. Self-service is the basis of all discount operations and is
typically used by retailers selling convenience goods (such as supermarkets) and nationally
branded, fast-moving shopping goods (such as Target or Kohl's). Limited-service retailers, such
as Sears or JCPenney, provide more sales assistance because they carry more shopping goods
about which customers need information. Their increased operating costs result in higher prices.
Full-service retailers, such as high-end specialty stores (for example, Tiffany or WilliamsSonoma) and first-class department stores (such as Nordstrom or Neiman Marcus) assist
customers in every phase of the shopping process. Full-service stores usually carry more
specialty goods for which customers need or want assistance or advice. They provide more
services, which results in much higher operating costs. These higher costs are passed along to
customers as higher prices.
Page Ref: 325-326
Chapter LO: 1
92) Compare and contrast specialty stores and convenience stores.
Answer: Specialty stores carry narrow product lines with deep assortments within those lines.
The increasing use of market segmentation, market targeting, and product specialization has
resulted in a greater need for stores that focus on specific products and segments. Convenience
stores are small stores that carry a limited line of high-turnover convenience goods. The majority
of their revenues come from sales of gasoline, cigarettes, and beverages. Many convenience store
chains have tried to expand beyond their primary market of young, blue-collar men by
redesigning their stores to attract female shoppers. They are shedding the image of a "truck stop"
where men go to buy gas, beer, cigarettes, or shriveled hotdogs on a roller grill and are instead
offering freshly prepared foods and cleaner, safer, more-upscale environments.
Page Ref: 326-327
Chapter LO: 1
29
93) Describe superstores, category killers, and service retailers.

Answer: Superstores are much larger than regular supermarkets and offer a large assortment of
routinely purchased food products, nonfood items, and services. Walmart, Target, Meijer, and
other discount retailers offer supercenters, very large combination food and discount stores.
Recent years have also seen the rapid growth of superstores that are actually giant specialty
stores, the so-called category killers (e.g., Best Buy, Home Depot, and PetSmart). They feature
stores the size of airplane hangars that carry a very deep assortment of a particular line. Category
killers are found in a wide range of categories, including electronics, home improvement
products, books, baby gear, toys, linens and towels, party goods, sporting goods, and even pet
supplies. Finally, for many retailers, the product line is actually a service. Service retailers
include hotels and motels, banks, airlines, restaurants, colleges, hospitals, movie theaters, tennis
clubs, bowling alleys, repair services, hair salons, and dry cleaners.
Page Ref: 328
Chapter LO: 1
94) Describe the differences between discount stores and off-price retailers.
Answer: A discount store buys at regular wholesale prices but sells standard merchandise at
lower prices by accepting lower margins and selling higher volume. The early discount stores cut
expenses by offering few services and operating in warehouse-like facilities in low-rent, heavily
traveled districts. Today's discounters have improved their store environments and increased their
services, while at the same time keeping prices low through lean, efficient operations.
Off-price retailers can be found in all areas, from food, clothing, and electronics to no-frills
banking and discount brokerages. Off-price retailers buy at less-than-regular wholesale prices
and charge consumers less than retail.
Page Ref: 328; 330
Chapter LO: 1
30
95) Crunch and Munch is the country's favorite fast-food vendor selling fried chicken. Over the
years, the company has diversified into providing a larger variety of snacks like hot dogs,
burritos, and burgers, but consumers still consider it to be the best seller of fried chicken. Many
parties have approached Crunch and Munch with offers to buy the company, but Crunch and
Munch continues to operate through its stores and franchise outlets. Would you consider
franchising as a good contractual system for Crunch and Munch? If yes, why?
Answer: A franchise is a contractual association between a manufacturer, wholesaler, or service
organization and an independent businessperson who buys the right to own and operate one or
more units within the franchise system. The main difference between franchise organizations and
other contractual systems (voluntary chains and retail cooperatives) is that franchise systems are
normally based on some unique product or service; a method of doing business; or the trade
name, goodwill, or patent that the franchisor has developed. Franchising has been prominent in
fast-food restaurants, motels, health and fitness centers, auto sales and service dealerships, and
real estate agencies. Since Crunch and Munch enjoys the position of being a favorite among
consumers, franchising is a good tool to capitalize its reputation without losing its identity.
Page Ref: 332
Chapter LO: 1
96) Describe the differences between corporate chains and franchises.
Answer: Corporate chains consist of two or more outlets that are commonly owned and
controlled. Chain stores have the advantage of buying in larger quantities at lower prices and
sharing resources to hire specialists to help with decisions in pricing, promotion, merchandising,
inventory, and sales forecasting. Franchises are not commonly owned and controlled. A franchise
is a contractual association between a manufacturer, wholesaler, or service organization and an
independent businessperson who buys the right to own and operate one or more units within the
franchise system.
Page Ref: 331-332
Chapter LO: 1
31
97) Posco Retail is a limited-service retail chain with over a hundred stores across the country
which is seeking to improve its standing in the market. Since its operations are widespread,
altering the store atmosphere significantly may not be feasible because of the costs involved.
Similarly, upgrading the stores to a full-service retail chain requires large investments of time,
effort, and lost man hours in training. Assuming that many of Posco Retail's private-label brands
are bringing in large revenues, what strategy could Posco Retail use to differentiate itself while
matching target shoppers' expectations?
Answer: (Students' answers may vary. The answer given below is indicative.)
Posco Retail should use its product assortment to differentiate its stores while matching target
shoppers' expectations. One strategy is to offer merchandise that no other competitor carries,
such as store brands or national brands on which it holds exclusive rights. Posco Retail has
private-label brands which are doing well in the market and the company should capitalize on
them. While the services mix and store atmosphere can also help set one retailer apart from
another, these measures are not feasible in the current situation for Posco Retail.
Page Ref: 334; 336
Chapter LO: 2
98) Describe the promotion tools used by retailers.
Answer: Retailers use any or all of the five promotion tools-advertising, personal selling, sales
promotion, public relations (PR), and direct marketing-to reach consumers. They advertise in
newspapers and magazines and on radio, television, and the Internet. Advertising may be
supported by newspaper inserts and catalogs. Store salespeople greet customers, meet their
needs, and build relationships. Sales promotions may include in-store demonstrations, displays,
sales, and loyalty programs. PR activities, such as new-store openings, special events,
newsletters and blogs, store magazines, and public service activities, are also available to
retailers. Most retailers have also created Web sites that offer customers information and other
features while selling merchandise directly.
Page Ref: 338
Difficulty: Easy
Chapter LO: 2
32
99) Three types of shopping centers are regional shopping centers, community shopping centers,
and neighborhood shopping centers/strip malls. Describe how they are different from each other.
Answer: Regional shopping centers are the largest and most dramatic shopping centers. They
contain from 50 to more than 100 stores. They are like covered mini-downtowns and attract
customers from a wide area. Smaller than regional shopping centers, community shopping
centers contain between 15 and 50 stores. They normally contain a branch of a department store
or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank.
Smaller still are neighborhood shopping centers/strip malls, which generally contain 5 to 15
stores. They are close and convenient for consumers, usually containing a supermarket, a
discount store, and several service stores.
Page Ref: 338
Chapter LO: 2
100) Explain the wheel-of-retailing concept.
Answer: Many retailing innovations are partially explained by the wheel-of-retailing concept.
According to this concept, many new types of retailing forms begin as low-margin, low-price,
and low-status operations. They challenge established retailers that have become "fat" by letting
their costs and margins increase. The new retailers' success leads them to upgrade their facilities
and offer more services. In turn, their costs increase, forcing them to increase their prices.
Eventually, the new retailers become like the conventional retailers they replaced. The cycle
begins again when still newer types of retailers evolve with lower costs and prices. The wheelof-retailing concept seems to explain the initial success and later troubles of department stores,
supermarkets, and discount stores and the recent success of dollar stores and off-price retailers.
Page Ref: 340
Difficulty: Easy
Chapter LO: 3
33
101) Amex Retail, the country's largest and oldest retail chain, has been voted as one of the most
influential companies of the country recently. The company aims to capitalize this opportunity
and make some significant marketing moves that will capture the attention of consumers,
politicians, and environmentalists. The company was one of the first to do away with plastic bags
and the Public Relations division is contemplating taking this dimension of their retailing
practice further. Would this move reflect sound business tactics? What measures can Amex Retail
take in this direction?
Answer: (Students' answer may vary. The answer given below is indicative.)
Today's retailers are increasingly adopting environmentally sustainable practices. They are
greening up their stores and operations, promoting more environmentally responsible products,
launching programs to help customers be more responsible, and working with channel partners to
reduce their environmental impact. At the most basic level, most large retailers are making their
stores more environmentally friendly through sustainable building design, construction, and
operations. Retailers are also greening up their product assortments. Many retailers have also
launched programs that help consumers make more environmentally responsible decisions.
Finally, many large retailers are joining forces with suppliers and distributors to create more
sustainable products, packaging, and distribution systems. Green retailing yields both top- and
bottom-line benefits. Sustainable practices lift a retailer's top line by attracting consumers
looking to support environmentally friendly sellers and products. They also help the bottom line
by reducing costs. Keeping all these benefits and measures in mind, the desicion of Amex Retail
to go green would make tremendous positive impact.
Page Ref: 342-344
Chapter LO: 3
34
102) Explain how wholesalers add value for a producer.

Answer: Wholesalers add value by performing one or more of the following channel functions:
Selling and promoting: Wholesalers' sales forces help manufacturers reach many small
customers at a low cost. The wholesaler has more contacts and is often more trusted by the buyer
than the distant manufacturer.
Buying and assortment building: Wholesalers can select items and build assortments needed by
their customers, thereby saving much work.
Bulk breaking: Wholesalers save their customers money by buying in carload lots and breaking
bulk (breaking large lots into small quantities).
Warehousing: Wholesalers hold inventories, thereby reducing the inventory costs and risks of
suppliers and customers.
Transportation: Wholesalers can provide quicker delivery to buyers because they are closer to
buyers than are producers.
Financing: Wholesalers finance their customers by giving credit, and they finance their suppliers
by ordering early and paying bills on time.
Risk bearing: Wholesalers absorb risk by taking title and bearing the cost of theft, damage,
spoilage, and obsolescence.
Market information: Wholesalers give information to suppliers and customers about competitors,
new products, and price developments.
Management services and advice: Wholesalers often help retailers train their salesclerks,
improve store layouts and displays, and set up accounting and inventory control systems.
Page Ref: 345
Chapter LO: 4
35
103) Describe the different types of limited-service wholesalers.

Answer: Limited-service wholesalers offer fewer services than full-service wholesalers.
Limited-service wholesalers are of several types:
1. Cash-and-carry wholesalers: Carry a limited line of fast-moving goods and sell to small
retailers for cash. Normally do not deliver.
2. Truck wholesalers (or truck jobbers): perform primarily a selling and delivery function. Carry
a limited line of semiperishable merchandise (such as milk, bread, snack foods), which is sold for
cash as deliveries are made to supermarkets, small groceries, hospitals, restaurants, factory
cafeterias, and hotels.
3. Drop shippers: do not carry inventory or handle the product. On receiving an order, drop
shippers select a manufacturer, who then ships the merchandise directly to the customer. Drop
shippers operate in bulk industries, such as coal, lumber, and heavy equipment.
4. Rack jobbers: serve grocery and drug retailers, mostly in nonfood items. Rack jobbers send
delivery trucks to stores, where the delivery people set up toys, paperbacks, hardware items,
health and beauty aids, or other items. Rack jobbers price the goods, keep them fresh, set up
point-of purchase displays, and keep inventory records.
5. Producers' cooperatives: Farmer-owned members that assemble farm produce for sale in local
markets. Producers' cooperatives often attempt to improve product quality and promote a co-op
brand name, such as Sun-Maid raisins, Sunkist oranges, or Diamond nuts.
6. Mail-order or Web wholesalers: send catalogs to or maintain Web sites for retail, industrial,
and institutional customers featuring jewelry, cosmetics, specialty foods, and other small items.
Its primary customers are businesses in small outlying areas.
Page Ref: 346
Chapter LO: 4
104) Explain how wholesalers have been able to use technology to cut costs.
Answer: Many wholesalers have invested in automated warehouses and information technology
systems. Delivery time can be cut as orders are fed from the retailer's information system directly
into the wholesaler's. Automated warehouses increase efficiencies and drive down costs, as
mechanical devices can automatically pick up items and take them to a shipping platform to be
assembled. Wholesalers can also use technology for accounting, billing, inventory control, and
forecasting. These computerized, automated, and Web-based systems help wholesalers contain
the costs of ordering, shipping, and inventory holding.
Page Ref: 349-350
Chapter LO: 4
AACSB: Use of information technology
36

Chapter 11

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Marketing: An Introduction, 11e (Armstrong)

Chapter 11 Retailing and Wholesaling

10) Specialty stores are characterized by the ________.

13) A convenience store is most likely to be ________.

43) Which of the following statements reflects the wheel-of-retailing concept?

55) When compared to merchant wholesalers, brokers or agents ________.

60) Purchasing officers differ from purchasing agents in that ________.

93) Describe superstores, category killers, and service retailers.

102) Explain how wholesalers add value for a producer.

103) Describe the different types of limited-service wholesalers.

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