CH16: Managing Retailing

Question 1

retailing

Answer 1

all the activities in selling goods or services directly to final consumers for personal, nonbusiness use

Question 2

the new factors in the modern retail marketing environment

Answer 2

• new retail forms and combinations
• retailer consolidation
• growth of mobile retailing
• growth of omnichannel retailing
• growth of fast retailing
• increasing role of technology
• decline of middle-market retailers

Question 3

goals for product assortment and procurement

Answer 3

• match shopper expectations for breadth and depth
• develop a product differentiation strategy

Question 4

destination category

Answer 4

categories that, after controlling for location, prices, and feature advertising, increase a shopper’s probability of choosing a store

Question 5

the 3 levels of service in retailing

Answer 5

• self-service (e.g. discount stores)
• limited service (e.g. Macy’s)
• full service (e.g. Tiffany, Omega)

Question 6

store atmosphere

Answer 6

the controllable characteristics of retail space that entice customers to enter the store, shop, and purchase

Question 7

the 2 main types of retail pricing strategies

Answer 7

• high markup, low volume
• low markup, high volume

Question 8

price image

Answer 8

reflects the overall perception that consumers have about the level of prices at a given retailer

Question 9

everyday low pricing

Answer 9

EDLP; charging a constant low price with little or no price promotion or special sales; eliminates price uncertainty

Question 10

high-low pricing

Answer 10

charging higher prices on an everyday basis, but running frequent promotions featuring temporarily lower prices (lower than EDLP level)

Question 11

geofencing

Answer 11

targeting customers with a mobile promotion when they are within a defined geographic space, typically near or in a store

Question 12

shopper marketing

Answer 12

the use of stocking, displays, and promotions to affect consumers actively shopping for a product (in-store marketing)

Question 13

omnichannel retailing

Answer 13

a strategy in which retailers engage customers through multiple digital and physical touchpoints; all channels work together to make the sale

Question 14

the most common brick-and-mortar stores

Answer 14

• department stores
• specialty stores
• supermarket
• convenience store
• drug store
• mass merchandisers
• category killers
• extreme value or hard-discount stores
• off-price retailer
• warehouse clubs
• automatic vending

Question 15

supermarket

Answer 15

large, low-cost, low-margin, high-volume self-service store designed to meet the total needs for food and household products

Question 16

category killer

Answer 16

narrow but deep assortment in one category

Question 17

off-price retailer

Answer 17

leftover goods, overruns, irregular merchandise sold at less than retail (e.g. outlets)

Question 18

types of locations for B&M retailers

Answer 18

• central business districts
• regional shopping centers
• community shopping centers
• shopping strips
• location within a larger store (e.g. Starbucks inside Target)
• stand-alone stores

Question 19

advantages for online retailers

Answer 19

• no cost for retail floor space and staff
• facilitates sales of low-volume products to niche markets

Question 20

private label

Answer 20

store brand; a proprietary brand that retailers and wholesalers develop; up to 40% of all sales are private label

Question 21

the main advantages of private brands

Answer 21

• more profitable
• allow for differentiation

Question 22

generics

Answer 22

unbranded, plainly packaged, less expensive versions of common products (e.g. ibuprofen, spaghetti, paper towels, etc.)

Question 23

the 4 main strategies for dealing with private labels

Answer 23

• fight selectively when the mfg can add value
• partner effectively by seeking win-win relationships (e.g. retailer-specific lines)
• innovate brilliantly with new products to beat private labels
• create willing value props; symbolic brand imagery and functional quality

Question 24

wholesaling

Answer 24

includes all the activities in selling goods or services to those who buy for resale or business use

Question 25

the 3 main ways that wholesalers differ from retailers

Answer 25

• pay less attention to promotion, atmosphere, and location since they are dealing with business customers
• transactions are usually larger; wholesalers cover a larger trade area than retailers do
• subject to different legal regulations and taxes

Question 26

merchant wholesalers

Answer 26

typically buy directly from the manufacturer, take title to the merchandise they handle, store the product, and then sell it to the customer; can be full service or limited service

Question 27

brokers

Answer 27

bring buyers and sellers together and assist in negotiation; they are paid by the party hiring them

Question 28

agents

Answer 28

represent buyers or sellers on a more permanent basis and aim to facilitate buying and selling, on commission typically based on the selling price

Question 29

the 9 main functions of wholesalers

Answer 29

• provide access to individual retailers
• buying and assortment building
• bulk breaking
• warehousing
• transportation
• financing
• risk bearing
• market research
• management services and consulting