1. The _______ is a method of rank-ordering SKUs based on performance measures, to make inventory stocking decisions.
A. product rating system
B. sell-through analysis
C. inventory turnover ranking
D. ABC analysis
2. How do buying staple merchandise categories differ from buying fashion merchandise categories?
A. Standard statistical techniques are used when buying fashion merchandise categories.
B. Buyers forecast sales at the category level for staple merchandise.
C. The staples buying system requires more experienced buyers.
D. Monitoring sales and generating replacement orders with continuous replenishment is used for staple merchandise.
3. Which of the following statements does not describe trade-offs that buyers should consider for merchandise assortment planning?
A. Increasing sales by offering more breadth and depth can potentially reduce inventory turnover.
B. Increasing breadth and depth can increase the need to put more merchandise on sale and thus negatively affect the gross margin.
C. Multichannel retailers offer a greater variety through their Internet channels than they do in their stores.
D. Increasing sales by offering more breadth and depth can potentially reduce GMROI by stocking more SKUs.
4. Louise runs a successful shop in Chicago featuring one-of-a-kind dolls from Western Europe. Louise speaks German and a little Dutch, but no Italian, French or Spanish. How can she best buy dolls from all European nations, and maintain her unique assortments?
A. Louise can establish a time for vendors to visit her in her own office.
B. Louise can visit wholesale market centers throughout the year.
C. Louise can utilize a resident buying office when she visits Europe to buy.
D. Louise can attend trade shows in the United States and meet vendors there.
5. Frankie is a buyer for a department store and is buying some handbags at a cost of $30 from a vendor. He desires to have a 60 percent markup to meet the financial goals of this category. What will the retail price be of these handbags?
A. $40
B. $75
C. $60
D. $50
6. Which of the following statements about markdowns is false?
A. A buyer's objective is to minimize markdowns.
B. Markdowns are part of the cost of doing business, and thus, buyers plan for them.
C. Buyers set the initial markup price high enough that, even after markdowns and other reductions have been taken, the planned maintained markup is still achieved.
D. Buyers employ markdowns to promote merchandise and increase sales.
7. The purpose of an open-to-buy system is to
A. avoid seasonal buying.
B. decrease operating expenses.
C. maintain a steady average inventory.
D. record how much is spent each month and how much is left to spend.
8. A retailer's magazine advertising campaign builds an image of elegance and high fashion, yet the store's sales promotions emphasize low prices. Because of the inconsistencies, consumers are left confused about the retailer's image and tend to shop elsewhere. To resolve the problem of inconsistency with the communication mix, the manager should
A. develop an integrated marketing communication program.
B. reexamine the elements of the mix that can be eliminated.
C. determine which communication program works best for her local market.
D. retrain associates to support the image of elegance and fashion.
9. Charging each individual customer a different price based on their willingness to pay is called
A. self-selected variable pricing.
B. price bundling.
C. second-degree price discrimination.
D. first-degree price discrimination.
10. Best Buy originally priced a private-label portable DVD player at $99, and then sold 1,200 units per week. After raising the price to $120, sales dropped to 1,000 units per week. What would the item's price elasticity be?
A. 2.4005
B. -2.4005
C. -3
D. -0.7855
11. A retailer selling products at a price lower than their competitor for the purpose of causing their competitor to go out of business is using
A. MSRP pricing.
B. horizontal price fixing.
C. predatory pricing.
D. vertical price fixing.
12. When four people were injured and one person died after an "out-of-control" mob of frenzied shoppers smashed through a Walmart store's front doors the day after Thanksgiving, _______ were needed to manage and head off unfavorable stories about the retailer.
A. brand placements
B. public relations
C. cooperative advertisements
D. brand images
13. Eunice has bought a worm farm. She plans to sell a small carton of worms to people who want to fish for $3. Her fixed costs are $1,201, and her variable cost for each carton sold is $0.74. When Eunice's sales reach _______ cartons of worms, she will have reached her break-even point.
A. 400
B. 534
C. 321
D. 2712
14. What is the first step in merchandise management planning?
A. Determine the appropriate inventory levels
B. Develop a business plan
C. Developing a forecast for sales
D. Execution of the plan
15. For most of the past century, Sears enjoyed the success of Craftsman brand tools. Since Sears communicates the brand's durability through advertisement, performance and guarantees, Craftsman is the leading brand of choice for consumers interested in purchasing tools. Which of the following statements best describes Sears' communication program?
A. Sears created and maintained a long-term communication program about the Craftsman brand.
B. Sears created a short-term objective of increasing sales.
C. Advertising alone was the strategy for Craftsman's success.
D. Positive publicity single-handedly lifted Sears out of the marketing slump it had been experiencing for the past decade.
16. Cliff struggled with the price of produce at his well-established produce markets. The reputation of the markets has attracted repeat customers from a 50-mile radius. Recently, local farmers have been increasing produce prices for him due to the upsurge in gas prices. Now Cliff feels it is time to pass the costs onto his customers. What should Cliff predict in regards to how his customers will respond?
A. Increasing prices will increase sales because the produce will be perceived as better quality.
B. The customers will think the produce quality is worth the price.
C. Nothing will keep sales down and business will continue as usual.
D. Sales may decrease.
17. In the late 1990s, Sears spent much of its communication budget advertising the "Softer Side of Sears" End of exam campaign since it felt the customer knew very little of Sears' apparel assortments and thus there would be a substantial return from advertising apparel versus advertising the more known appliances. What principle for budget allocation was Sears potentially using?
A. Asset principle
B. Rule of thumb method
C. High-assay principle
D. Percentage of sales method
18. An appliance store wants to get customers who are buying an upright freezer to trade up to the more expensive self-defrosting model with a special section for ice cream. Which of the following practices can be used by the store to achieve this goal?
A. Price lining
B. Price bundling
C. Odd pricing
D. Horizontal price fixing
19. Which of the following is a drawback for a retailer when offering national brands?
A. Retailers must discount some national brands to attract customers to their stores.
B. Significant investment is needed to develop relationships with national brands' vendors.
C. National brands aren't good quality and give retailers bad reputations with customers.
D. Retailers view national brands as a threat to private labels.
20. Competing retailers agreeing to sell products at set prices so as not to compete is using
A. vertical price fixing.
B. MSRP pricing.
C. predatory pricing.
D. horizontal price fixing.