Multiple Choice:
1. Which of the following is NOT a major merchandising decision that must be made during the development of the merchandise budget?
a. What additional purchases must be made during the season?
b. What will be the anticipated sales for the department, division, or store?
c. What markups from the original retail price must be made in order to dispose of all of the merchandise brought into the store?
d. What gross margin should the department, division, or store contribute to the overall profitability of the company?
e. All of the above answers are major merchandising decisions that must be made in the development of the merchandise budget.
2. When determining planned sales for an upcoming season, the retailer must consider:
a. changes in the economic conditions of the target market.
b. changes in the number and size of competitors.
c. past trends in sales.
d. changes in the population size of the trading area.
e. All of the above must be considered.
3. Which of the following is NOT a type of retail reduction?
a. Discounts to employees
b. Stock shortages due to customer theft
c. Markdowns taken on sale items
d. Markdowns on discontinued items
e. All of the above are types of retail reductions.
4. When physical inventory value exceeds book inventory value a retailer is said to have __________.
a. excess profits
b. shortages
c. overages
d. markups
e. gross margin surpluses
5. The __________ method of inventory record keeping allows for more "inventory profits" during inflationary periods.
a. cost
b. retail
c. LIFO
d. FIFO
e. inflationary accounting
6. Inventory planning based on the weeks' supply method would be most appropriate for a __________, where inventories are planned on a weekly basis and where sales do not fluctuate substantially.
a. supermarket
b. furniture store
c. toy store
d. sporting goods store
e. campus bookstore
7. The three dimensions of the optimal merchandise mix are:
a. breadth, depth, and concentration.
b. merchandise lines, breadth, and density.
c. variety, density, and merchandise lines.
d. breadth, consistency, and depth.
e. variety, breadth, and depth.
8 . Which of the following retailers would be most likely to have the least amount of breadth?
a. Wal-Mart
b. Macy's
c. 7-Eleven
d. Foot Locker
e. Kroger
9. In retailing, a battle of brands occurs:
a. when two national brands compete for a retailer's shelf space.
b. when three or more national brands compete for a retailer's shelf space.
c. when retailers have their own products competing with the manufacturer's products for shelf space and control over display location.
d. when slotting fees are used by the manufacturers of national brands to purchase shelf space and control display location.
e. when retailers increase their breadth by adding "fourth-" and "fifth-tie" brands.
10. To minimize cargo theft a retailer should:
a. eliminate the retailer's name from the side of the container carrying the cargo.
b. install electronic monitoring devices on all shipment vehicles.
c. carefully screen all internal transportation personnel as well as third-party logistics personnel in each global market.
d. hire security personnel for each shipment.
e. All of the above precautions should be taken.
11. Even if the merchandise, store decor, and personnel remain unchanged, a change in pricing policy will significantly alter the retailer's __________.
a. credit policy
b. rent
c. overall store image
d. promotional expenditures
e. None of the above answers are correct.
12. A skimming strategy will work best for a retailer when:
a. competition is high because it "skims" right above the retailer's costs.
b. revenues are equal to expenses.
c. the retailer has a temporary monopoly with its product line.
d. the retailer has excess capacity in its building.
e. demand is less than supply.
13. A __________ is least apt to use an above-market pricing policy.
a. small neighborhood drugstore
b. top-of-line apparel retailer, such as Neiman Marcus
c. mom-and-pop grocery store
d. warehouse club
e. fast food restaurant located on a turnpike
14. An example of a retailer using customary pricing would be:
a. a local barber shop maintaining the price of a haircut at $9.00.
b. a local hardware store promising to undersell the competition by at least 1%.
c. Wal-Mart promising to always have the lowest prices in town.
d. setting a price at $4.99 instead of $5.00.
e. charging different consumers different prices.
15. Walt's Flowers offers bouquets of red roses for $24.99 during the month of January. On Valentine's Day, Walt's offers the same type of bouquet for $49.99. This is an example of:
a. below-market pricing.
b. customary pricing.
c. variable pricing.
d. flexible pricing.
e. price lining.
16. Which of the following is NOT true regarding promotional activities for a retail store?
a. Promotion can help build store traffic
b. Promotion can be used to increase short-run cash flow
c. All promotion activities should avoid giving too much information to the customer
d. Retailers should use appeals that are of interest to its target market
e. Retailers should make sure their promotion objectives are obtainable
17. Which of the following is NOT a good guideline to follow when developing a promotional campaign?
a. Try to utilize promotions that are consistent with your store image
b. Review the success or failure of last year's promotions before developing this year's promotions
c. Remember that consumers always love a sweepstakes with a big grand prize; thus, never use price promotions when a sweepstakes is available
d. Use appeals that are of interest to your target market and that are realistic to obtain
e. Make sure your objectives are measurable
18. The manager of a neighborhood hobby shop has decided that this year, due to an adverse local economy, she can only afford to spend $1,200 promoting through newspaper and radio advertisements. The manager is utilizing the __________ method in determining the shop's advertising budget.
a. percentage of sales
b. task and objective
c. affordable
d. competitive parity
e. maximization
19. Cooperative advertising:
a. is always a good deal for retailers since either the manufacturer or another retailer will pay for part of their advertising costs.
b. requires that retailers "cooperate" with advertising media when scheduling the ads.
c. is a practice used only in the apparel market today.
d. involves manufacturers or other retailers sharing a retailer's advertising expense.
e. is used to determine what part of the ad budget will be spent in each medium.
20. Which of the following statements about the Internet is FALSE?
a. The Internet is the leading form of miscellaneous advertising used by retailers today
b. The Internet is playing an important promotional role for retailers
c. A key aspect of the Internet is its ability to provide customers with information
d. The communication elements of advertising, sales promotion, and public relations are all strategic options a retailer can use when communicating with its various publics through the Internet
e. The Internet provides a platform for a retailer to employ a relatively low-cost integrated marketing communications mix