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Chapter 18: Retailing and Wholesaling

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Chapter 18: Retailing and Wholesaling

30 problems · 0 figures

Knowledge Check 18.1.1 §18.1 source ↗

Channel members that generally do not manufacture goods but rather buy them from another channel member and sell them to the consumer are said to be practicing ________.
  1. a.
    manufacturing
  2. b.
    wholesaling
  3. c.
    retailing
  4. d.
    inventory

Answer

C. retailing
Retailing is the process of selling goods and services to the consumer.

Knowledge Check 18.1.2 §18.1 source ↗

Which of the following is NOT a function of retailing?
  1. a.
    Buying in large quantities and selling to other businesses for the purpose of reselling them to consumers
  2. b.
    Providing assortment and variety of products
  3. c.
    Holding inventory
  4. d.
    Providing convenient location and store hours

Answer

A. Buying in large quantities and selling to other businesses for the purpose of reselling them to consumers
Wholesalers are in business to buy in large quantities and sell to other businesses.

Knowledge Check 18.1.3 §18.1 source ↗

As a new entrepreneur, you are deciding whether to offer your customers a loyalty card that is linked digitally to technology. Which function of retailing would you be engaged in?
  1. a.
    Providing services to consumers
  2. b.
    Holding inventory
  3. c.
    Providing convenient location and hours of operation
  4. d.
    Providing consumer communication

Answer

D. Providing consumer communication
Loyalty cards are one way retailers can communicate with consumers.

Knowledge Check 18.1.4 §18.1 source ↗

A company that utilizes more than one channel in its distribution is using which type of strategy?
  1. a.
    Direct channel
  2. b.
    Direct-to-consumer channel
  3. c.
    Omnichannel
  4. d.
    None of the above is correct.

Answer

C. Omnichannel
An omnichannel strategy is one that utilizes multiple channels.

Knowledge Check 18.1.5 §18.1 source ↗

Schwan’s Company prepares frozen foods to be delivered to the door of the consumer. Which of the following is the most likely distribution channel for Schwan’s?
  1. a.
    Manufacturer – Agent – Wholesaler – Retailer – Consumer
  2. b.
    Manufacturer – Retailer
  3. c.
    Manufacturer – Consumer
  4. d.
    Manufacturer – Wholesaler – Retailer

Answer

C. Manufacturer – Consumer
Schwan’s eliminates the intermediaries and sells directly to the consumers.

Knowledge Check 18.2.1 §18.2 source ↗

After class, Drue realized that the cafeteria was closed, so instead he purchased a candy bar and soft drink from a vending machine. Which type of retailing did Drue utilize?
  1. a.
    Factory outlet
  2. b.
    Automatic vending
  3. c.
    Warehouse club
  4. d.
    Direct mail

Answer

B. Automatic vending
Automatic vending includes vending machines, in which there is no buyer-seller interaction.

Knowledge Check 18.2.2 §18.2 source ↗

Of the following, which retailing strategy would be most appropriate for customers who are neither tech-savvy nor able to shop at store retailers?
  1. a.
    Automatic vending
  2. b.
    Television home shopping
  3. c.
    Warehouse clubs
  4. d.
    Online retailing

Answer

B. Television home shopping
Television home shopping would be the most likely retailing strategy to reach this target market. Consumers can call a toll-free number to place an order without ever leaving their home.

Knowledge Check 18.2.3 §18.2 source ↗

After school, Adrian decides to stop at the local Costco. Unfortunately, the store won’t allow him in unless he first purchases a membership. Which type of retailer has Adrian entered?
  1. a.
    Factory outlet
  2. b.
    Warehouse club
  3. c.
    Discount store
  4. d.
    Superstore

Answer

B. Warehouse club
Warehouse clubs sell in bulk to consumers who purchase memberships.

Knowledge Check 18.2.4 §18.2 source ↗

Retailers providing high-quality goods at discounted prices are called ________
  1. a.
    superstores
  2. b.
    discount stores
  3. c.
    off-price retailers
  4. d.
    warehouse clubs

Answer

C. off-price retailers
Off-price retailers are those providing high-quality goods at discounted prices.

Knowledge Check 18.2.5 §18.2 source ↗

Some manufacturers operate their own retail locations; when they are left with excess inventory, they often provide these to what type of retail locations?
  1. a.
    Factory outlets
  2. b.
    Warehouse clubs
  3. c.
    Department stores
  4. d.
    Discount stores

Answer

A. Factory outlets
Factory outlets are retailers that are operated by manufacturers to sell overstock items at discounted prices.

Knowledge Check 18.3.1 §18.3 source ↗

After trying to sell a line of clothing at your retail location, you decide to change the price from $25 to $15. Which pricing strategy have you used?
  1. a.
    Markup
  2. b.
    Original markup
  3. c.
    Maintained markup
  4. d.
    Markdown

Answer

D. Markdown
A markdown is a price decrease for a product that is at the end of its life cycle or season.

Knowledge Check 18.3.2 §18.3 source ↗

A superstore chain is planning to open an establishment in the town Levi lives in. Which of the following would be the most likely location for this superstore?
  1. a.
    Central business district
  2. b.
    Strip mall
  3. c.
    Freestanding location
  4. d.
    Regional shopping district

Answer

C. Freestanding location
Superstores generally choose a freestanding location.

Knowledge Check 18.3.3 §18.3 source ↗

You are interested in opening a small retail location that sells handmade jewelry in the small, rural town you reside in. Which of the following would be your best choice of location?
  1. a.
    Department store
  2. b.
    Regional shopping center
  3. c.
    Central business district
  4. d.
    Automatic vending

Answer

C. Central business district
A small, rural town is most likely to have a central business district, or “downtown.”

Knowledge Check 18.3.4 §18.3 source ↗

Pablo is trying to determine their gross margin at the end of the quarter. Which is the correct equation?
  1. a.
    Units sold times selling price
  2. b.
    Units purchased times purchase price
  3. c.
    Net sales less cost of goods sold
  4. d.
    Unit cost plus the sale price

Answer

C. Net sales less cost of goods sold
Gross margin = net sales – cost of goods sold

Knowledge Check 18.3.5 §18.3 source ↗

Which of the following has had the most impact on a customer’s access to product, brand visibility, and personalization?
  1. a.
    Omnichannel marketing
  2. b.
    Freestanding retail locations
  3. c.
    Retail communication
  4. d.
    Strip malls

Answer

A. Omnichannel marketing
Omnichannel marketing increases customer’s access to product, brand visibility, and personalization because it utilizes multiple channels to reach the customer.

Knowledge Check 18.4.1 §18.4 source ↗

Which of the following trends in retailing grew considerably during the COVID-19 pandemic?
  1. a.
    Social commerce
  2. b.
    Online stores in offline spaces
  3. c.
    Digital wallets
  4. d.
    All of the above trends grew considerably.

Answer

D. All of the above trends grew considerably.
All of the trends grew considerably.

Knowledge Check 18.4.2 §18.4 source ↗

Cam posts numerous times on TikTok and Instagram. As a result, she is asked to work as an influencer for a major retailer. Which trend in retailing is Cam a part of?
  1. a.
    Online stores in offline spaces
  2. b.
    E-commerce
  3. c.
    Social commerce
  4. d.
    Same-day delivery

Answer

C. Social commerce
Social commerce is a blend of e-commerce and social media, where retailers often use influencers to market products.

Knowledge Check 18.4.3 §18.4 source ↗

Software-based systems that allow for secure transactions by storing passwords and payment information are known as ________.
  1. a.
    e-commerce
  2. b.
    online stores in offline spaces
  3. c.
    social commerce
  4. d.
    digital wallets

Answer

D. digital wallets
Digital wallets store consumers’ passwords and payment information for safety and ease of ordering online.

Knowledge Check 18.4.4 §18.4 source ↗

Of the following, which is the most likely reason for an increase in online shopping?
  1. a.
    A pandemic
  2. b.
    The shift from two-income to one-income families
  3. c.
    More people retiring than ever before
  4. d.
    The rise in regional shopping centers

Answer

A. A pandemic
Pandemics, such as the one in COVID-19 pandemic, forced many consumers to stay home. This caused a significant rise in online shopping.

Knowledge Check 18.4.5 §18.4 source ↗

Which of the following is TRUE of social commerce?
  1. a.
    Social media is on the decline.
  2. b.
    Very few brands and companies utilize social media.
  3. c.
    Social media is one way to incorporate omnichannel marketing.
  4. d.
    Social media decreases personalization with customers.

Answer

C. Social media is one way to incorporate omnichannel marketing.
Social media is one way in which companies can utilize an omnichannel marketing strategy, one in which utilizes many different channels to reach customers.

Knowledge Check 18.5.1 §18.5 source ↗

Which of the following best describes wholesalers?
  1. a.
    Businesses that buy in bulk at discounted prices and sell to retailers
  2. b.
    Online stores in offline spaces
  3. c.
    The final link between manufacturers and consumers
  4. d.
    Businesses that produce goods and services

Answer

A. Businesses that buy in bulk at discounted prices and sell to retailers
Wholesalers are businesses that buy products in bulk and sell to retailers.

Knowledge Check 18.5.2 §18.5 source ↗

Your friend Jesus wants to start a retailing business but doesn’t think he can afford space, nor does he wish to travel and make sales calls to retailers. Which of the following might be the best warehousing option for Jesus?
  1. a.
    Rack jobber
  2. b.
    Specialty wholesaler
  3. c.
    Cash-and-carry wholesaler
  4. d.
    Drop shipper

Answer

D. Drop shipper
Retailers use drop shippers to ship products directly to the end consumer.

Knowledge Check 18.5.3 §18.5 source ↗

The type of wholesaler that offers the most complete range of services is known as a ________.
  1. a.
    rack jobber
  2. b.
    cash-and-carry wholesaler
  3. c.
    limited-service wholesaler
  4. d.
    general-merchandise wholesaler

Answer

D. general-merchandise wholesaler
General-merchandise wholesalers offer the most complete range of services.

Knowledge Check 18.5.4 §18.5 source ↗

Which type of wholesaler utilizes independent contractors as liaisons between manufacturers and retailers?
  1. a.
    Manufacturer’s agents
  2. b.
    Rack jobbers
  3. c.
    Truck jobbers
  4. d.
    Full-line wholesalers

Answer

A. Manufacturer’s agents
Manufacturer’s agents are independent contractors who act as salespersons for multiple manufacturers to sell similar (but not competing) products to retailers.

Knowledge Check 18.5.5 §18.5 source ↗

________ are companies that agree with retailers to display and sell products in-store.
  1. a.
    Rack jobbers
  2. b.
    Cash-and-carry wholesalers
  3. c.
    Drop shippers
  4. d.
    Truck jobbers

Answer

A. Rack jobbers
Rack jobbers are companies that agree with retailers to display and sell products in-store.

Knowledge Check 18.6.1 §18.6 source ↗

What does caveat emptor translate to in English?
  1. a.
    Buyer beware
  2. b.
    Manufacturer beware
  3. c.
    Retailer beware
  4. d.
    Consumer protection

Answer

A. Buyer beware
Caveat emptor is Latin for “let the buyer beware.”

Knowledge Check 18.6.2 §18.6 source ↗

Justia saw on the news that chicken was recently recalled by the US Food and Drug Administration (FDA). The news anchor specified which sell-by dates, manufacturer, and retailers were affected. Justia doesn’t understand how the FDA can know, with such specificity, which chickens were affected. How would you describe to Justia this specificity?
  1. a.
    Increased competition
  2. b.
    E-commerce
  3. c.
    Caveat emptor
  4. d.
    Product traceability

Answer

D. Product traceability
Product traceability allows products to be traced throughout the distribution channel to the manufacturer.

Knowledge Check 18.6.3 §18.6 source ↗

Which of the following is NOT an advantage of product traceability?
  1. a.
    It makes it easier to trace counterfeit goods.
  2. b.
    It makes it easier to trace tainted food.
  3. c.
    It creates less work for distribution channel members.
  4. d.
    It makes it easier for consumers to know where products come from.

Answer

C. It creates less work for distribution channel members.
Product traceability does not make less work for distribution channel members.

Knowledge Check 18.6.4 §18.6 source ↗

Which of the following is NOT a growing trend in wholesaling?
  1. a.
    Decreased government regulations
  2. b.
    Increased competition
  3. c.
    Increase in globalization
  4. d.
    Increase in technological advances

Answer

A. Decreased government regulations
Government regulations are not decreasing but are increasing and becoming more complex.

Knowledge Check 18.6.5 §18.6 source ↗

Which regulation requires goods sold to be safe and include clear directions?
  1. a.
    Sale of Goods Act
  2. b.
    Food and Drug Act
  3. c.
    Caveat Emptor
  4. d.
    Better Business Bureau

Answer

A. Sale of Goods Act
The Sale of Goods Act requires the accurate, safe, and clear use of directions on goods and services sold.

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Problems and answers are adapted from Principles of Marketing by Maria Gomez Albrecht, Mark Green and Linda Hoffman, OpenStax, and are used under the CC BY-NC-SA 4.0 licence. Access for free at https://openstax.org/books/principles-marketing/pages/1-unit-introduction. Illustrations: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license. This adaptation is released under the same licence, is non-commercial, and is neither affiliated with nor endorsed by OpenStax or Rice University.